NIGERIA TAX ACT, 2025

This schedule establishes a fund for national security and defense infrastructure in Nigeria, funded by a percentage of development levies. It outlines how the fund will be managed and allocated among various security agencies.

This section states that the main goal of the Nigeria Tax Act is to create a single set of tax laws for the country.

This section explains that the tax laws apply to everyone in Nigeria, whether they are acting on their own or for someone else.

This section outlines how income tax is calculated and who it applies to, including companies, individuals, and estates.

This section details the types of income, profits, or gains that are subject to tax in Nigeria, including various forms of earnings from businesses, employment, and investments.

This section explains how companies and individuals can be charged taxes, including the different names under which they can be taxed.

This section defines how profits of Nigerian companies are taxed, including rules for foreign companies controlled by Nigerian firms.

This section explains what constitutes Nigerian dividends and when they are considered to be earned.

This section states how companies should treat dividend income for tax purposes, including exemptions for certain dividends.

This section outlines the tax implications for companies declaring dividends when they have no taxable profits.

This section allows the tax authority to treat certain undistributed profits of a company as if they were distributed, making them taxable for shareholders.

This section explains how profits from partnerships between companies are taxed, including rules for non-resident companies.

This section states that individuals living in Nigeria are taxed on their income, regardless of where it comes from.

This section defines when employment income is considered to be derived from Nigeria and thus taxable, including specific conditions for non-residents.

This section describes how benefits provided by employers to employees are valued for tax purposes, including specific exemptions.

This section outlines how profits from partnerships between individuals are calculated and taxed, including registration requirements.

This section specifies how income from trusts and estates is taxed, referring to additional guidelines in the Fifth Schedule.

This section outlines how non-resident individuals and companies are taxed on income and profits derived from Nigeria, including specific conditions for taxation.

This section details the tax obligations for non-resident companies involved in shipping or air transport when operating in Nigeria.

Non-residents receiving dividends from Nigerian companies will not pay additional taxes beyond what is already deducted at the source. They also cannot claim back any taxes already paid.

Businesses can deduct various expenses from their income to determine their taxable profits. This includes costs like salaries, rent, repairs, and certain contributions to employee benefits.

Certain expenses cannot be deducted when calculating taxable income, such as personal expenses, capital repayments, and taxes. This means businesses need to be careful about what they claim.

For tax purposes, a business's profits are usually calculated based on the previous year's earnings. However, for new businesses, profits are calculated from the start of their operations.

If a business changes its accounting period, it must adjust how it calculates its taxable profits accordingly and inform the tax authority at least 30 days in advance.

When a business stops operating, it must calculate its profits up to the cessation date and pay taxes within six months. Any further transactions after this date must be reported to the tax authority.

A person's business activities are not considered to have started or stopped just because they moved to a different location or changed their partnership status, as long as the business type remains the same.

An individual's taxable income from employment or pension is based on what they earn in that assessment year. Special rules apply for bonuses and asset disposals.

A company's total profits for tax purposes include all assessable profits and chargeable gains, minus any losses and capital allowances. Special rules apply for digital assets and priority activities.

An individual's total income for tax purposes is calculated by subtracting allowable deductions from their taxable income, which includes various sources of income and profits.

If a person's income cannot be accurately determined due to poor record-keeping, they will be taxed based on estimates set by the tax authorities.

An individual's chargeable income is calculated by subtracting eligible deductions from their total income, which includes various contributions and expenses.

To claim deductions for tax purposes, individuals must submit their claims in a specific written format as required by the tax authority.

The tax authority may ask for proof when claiming deductions, and if the required evidence is not provided, the claim may be denied.

Any profits made by individuals or entities during a tax year are subject to taxation, and the calculation of these gains follows specific rules outlined in the Act.

Most types of property, including shares and digital assets, are considered chargeable assets for tax purposes. However, there are exceptions for certain share disposals.

Disposing of an asset includes selling, leasing, or transferring it, and can also involve receiving compensation for various reasons. This includes partial disposals.

When acquiring or disposing of an asset, the transaction is usually valued at market price, especially in cases of gifts or when the transaction isn't at arm's length. Special rules apply for assets held in trust.

If land is acquired by a government authority, the owner won't be taxed on any gains if they didn't know the acquisition was likely or didn't try to sell the land.

The date for tax purposes when an asset is considered acquired or disposed of is based on when the rights or obligations regarding that asset become enforceable.

When calculating taxable gains from asset disposals, specific rules apply depending on whether capital allowances were claimed on the asset.

Costs directly related to selling an asset can be deducted from the sale price when calculating taxable gains.

When only part of an asset is sold, the costs and values must be divided between the sold and unsold portions to determine taxable gains accurately.

If payment for an asset is made in installments over more than a year, the taxable gain is recognized gradually over the assessment periods until the final payment is made.

If an asset is lost or destroyed and compensation is received, the tax implications depend on whether the compensation exceeds the cost of a replacement asset.

When multiple transactions are part of a single deal, they are treated as one for tax purposes, and any agreed prices must be divided appropriately.

The market value of an asset is based on what it would sell for in a fair market, and discounts are not considered when calculating this value.

The location of various assets for tax purposes is determined by where they are situated or where the owner resides, including rules for different types of property.

Non-residents selling shares that affect the ownership of Nigerian companies or assets will be taxed on any gains from those sales.

Gains from life assurance policies are generally not taxed unless the rights are sold by someone other than the original owner.

Rights under certain types of insurance policies can be taxed upon disposal, but most insurance policies do not create taxable gains unless specified.

Compensation payments for personal injuries or losses up to ₦50 million are not taxed, but any amount above that is taxable.

Individuals can sell their homes without paying taxes on the gains, but this exemption applies only once in their lifetime.

Gains from selling personal items are not taxed if the total value is below ₦5 million or three times the minimum wage. Multiple sales may be combined for tax purposes.

Private vehicles used for personal purposes are not considered taxable assets, but this exemption applies to a maximum of two vehicles per year.

Gifts do not incur tax on any gains, as long as no payment is made for the asset.

Assets held in trust for charities are generally exempt from tax, as long as the gains are used for charitable purposes and not from business activities.

This section outlines the tax rates for companies: small companies pay no tax, while larger companies are taxed at 30% on their profits.

This section requires companies with an effective tax rate below 15% to pay additional taxes to reach that rate. It applies to large companies and those part of multinational groups.

This section states that individuals, except those earning minimum wage, must pay income tax based on the rates outlined in a specific schedule of the Act.

This section imposes a 4% development levy on profits of most companies, which will be used to fund various educational and security initiatives. Small and non-resident companies are exempt from this levy.

This section indicates that businesses operating in export processing or free zones must follow specific rules outlined in another schedule of the Act.

This section specifies how insurance companies are taxed, distinguishing between general and life insurance. It outlines how profits are calculated for tax purposes based on where income and expenses occur.

This section states that income from lottery and gaming businesses is taxable under this Act. It also allows certain deductions for expenses like winnings and commissions when calculating taxable profits.

This section outlines how mutual funds are taxed, treating them like companies for tax purposes. It explains how profits are calculated and distributed to investors, who are taxed on their share of the profits.

This section states that businesses involved in mining must pay taxes according to specific rules. It allows deductions for contributions to environmental protection funds and imposes royalties on minerals extracted.

This section states that companies cannot deduct costs for decommissioning and abandonment funds from their taxes unless they deposit a minimum of 30% of the fund in a Nigerian bank that meets certain criteria.

This section outlines that certain provisions do not apply to oil licenses unless a conversion contract is made. It also states that indigenous companies may still be subject to some provisions even if they haven't converted their licenses.

This section states that fiscal stabilisation clauses in contracts made after the Petroleum Industry Act won't apply to certain fiscal provisions, ensuring fairness in tax changes for the petroleum industry.

This section establishes that all petroleum production is subject to royalties, and the relevant tax authority will manage these royalties.

This section states that a petroleum profits tax will be applied to companies with oil licenses that haven't converted under the Petroleum Industry Act.

This section explains how to calculate a company's revenue from petroleum operations, including sales and disposals, and outlines the process for determining adjusted, assessable, and chargeable profits.

This section lists the expenses that companies can deduct when calculating their adjusted profits from petroleum operations, including rents, royalties, and certain costs related to drilling and repairs.

This section provides incentives for companies using associated gas, including tax benefits for investments in gas separation and delivery facilities, while also outlining conditions for these incentives.

This section states that any incentives given for associated gas investments also apply to non-associated gas investments.

This section lists expenses that companies cannot deduct when calculating their adjusted profits, including capital withdrawals, taxes, and certain payments.

This section states that profits or losses from transporting oil by ocean tankers will not be included when calculating a company's adjusted profits.

This section explains how companies can deduct losses from previous periods when calculating their assessable profits, allowing them to carry forward losses to future accounting periods.

This section outlines how to calculate chargeable profits for companies, including the deductions allowed and the conditions under which these deductions can be applied.

This section specifies that a company's assessable tax will be 85% of its chargeable profits, with a reduced rate for companies that haven't started selling oil yet.

This section outlines additional tax obligations for companies that sell oil to connected persons or dispose of oil in certain ways, ensuring they pay the correct amount of tax based on established fiscal prices.

This section addresses the taxation of individuals and companies involved in petroleum operations, outlining penalties for unregistered partnerships and the regulations for assessing taxes on joint ventures.

This section states that the rules in this part apply to production sharing contracts in deep offshore and inland basin areas that haven't converted under the Petroleum Industry Act.

This section specifies that oil prospecting licenses for production sharing contracts in deep offshore and inland basin areas will last between five to ten years, as determined by the Minister.

This section outlines that the petroleum profits tax for production sharing contracts will be 50% of chargeable profits, while also clarifying that other taxes may still apply.

This section states that companies involved in production sharing contracts can receive a 50% investment tax allowance for qualifying capital expenditures related to their operations.

This section establishes that royalties for deep offshore production sharing contracts will be determined according to the Seventh Schedule of the Petroleum Industry Act.

This section states that the calculation of petroleum profit tax will be done in US dollars based on the returns filed.

This section outlines how royalty oil will be allocated to ensure it meets the actual royalty payments due each month.

This section specifies that cost oil will be allocated to contractors to cover their operating costs, and these costs will be recovered in US dollars.

This section states that tax oil will be allocated to ensure it covers the actual petroleum profit tax liabilities due each month.

This section explains how profit oil will be distributed among parties after deducting royalties, tax oil, and cost oil.

This section states that the holder is responsible for paying all royalties and taxes on behalf of itself and the contractor, and separate tax receipts will be issued for these payments.

This section outlines that the chargeable tax for petroleum operations will be divided between the holder and contractor based on the profit oil split.

This section states that the realisable price set in the production sharing contract will be used to calculate royalties and taxes on crude oil produced.

This section requires the holder to provide the contractor with copies of tax receipts related to petroleum profits tax payments.

This section states that existing laws will be adjusted to align with the provisions in this part of the Act.

This section mandates that the Minister will ensure a review of production sharing contracts occurs every eight years.

If a Nigerian resident earns income from abroad and pays tax on it there, they can get a credit for that tax against what they owe in Nigeria. This helps avoid being taxed twice on the same income.

When Nigeria makes agreements with other countries to avoid double taxation, these agreements help ensure that income tax paid abroad can be credited against taxes owed in Nigeria. This prevents people from being taxed twice on the same income.

This section explains how to calculate tax relief for double taxation. It states that foreign taxes paid can be credited against Nigerian taxes, but only if the person was a resident of Nigeria during the tax year.

This section defines key terms related to double taxation, such as 'foreign tax' and 'treaty partner', which are important for understanding how tax relief works.

This section states that duties are imposed on certain legal documents, with specific rates outlined in a schedule. It applies to documents executed in Nigeria or related to Nigerian property.

This section explains how to pay and show that duties on legal documents have been paid, including options like tax stamps and electronic receipts.

This section requires that legal documents executed in Nigeria must be stamped within 30 days, and specifies who is responsible for paying the duty.

This section states that unstamped legal documents cannot be used as evidence in court, except in criminal cases.

This section defines what a 'bill of exchange' is, including various forms like cheques and drafts, and explains how they can be used for payments.

This section explains what a 'promissory note' is, which is a document that promises to pay a specific amount of money.

This section states that the rules for contract notes also apply to options for buying or selling stocks or securities.

This section states that any transfer of property rights is subject to a duty, similar to a sales tax.

This section explains that if property is transferred as part of settling a debt, that debt is considered the payment for the property and is subject to duty.

This section states that transferring mineral assets is subject to a duty, as outlined in a specific schedule.

This section states that if two properties are exchanged and the value exceeds a certain amount, a duty will be charged similar to a sale.

This section explains that lease agreements are subject to duty, but those with low annual values may be exempt.

This section states that companies must pay a duty based on their share capital, as detailed in a specific schedule.

This section outlines that companies must pay a duty on their loan capital, with specific definitions and exceptions.

This section states that any instruments for issuing marketable securities are subject to duty, regardless of where they are issued.

This section states that appraisals for valuing real property are subject to duty, and defines who qualifies as an appraiser.

This section explains that copies of legal documents must also be stamped to be considered valid.

This section states that if a legal document covers multiple transactions, each one must be taxed separately.

This section clarifies that if several documents are created for the same transaction, only one will incur the full duty, while others will be charged a lower rate.

This section states that if a legal document involves non-monetary payment, its value will be based on the market value of that payment.

This section states that Value Added Tax (VAT) is applied as outlined in a specific chapter of the Act.

This section explains that VAT is applicable to all taxable goods and services in Nigeria, with some exceptions.

This section defines when a supply is considered taxable in Nigeria, based on the location of goods, services, and rights.

This section explains when a taxable supply is considered to have occurred, based on the timing of invoices, deliveries, and payments.

This section states that the VAT rate on taxable supplies is set at 7.5%, with some exceptions.

This section explains how to determine the value of taxable supplies, whether they involve money or not.

This section states that the value of imported taxable supplies includes the purchase price plus any additional costs and taxes, excluding VAT.

This section outlines the VAT obligations for non-residents supplying goods or services to Nigeria, including registration and payment processes.

This section states that businesses must pay VAT on taxable supplies they receive, which is referred to as input VAT.

This section requires businesses to issue VAT invoices for taxable supplies, detailing specific information, and allows for electronic invoicing.

This section states that businesses must collect VAT on taxable supplies they sell, which is referred to as output VAT.

This section explains that certain entities, including government bodies, must collect VAT on supplies and remit it to the tax authority, along with required documentation.

This section outlines how businesses can manage their VAT payments, including claiming credits for excess input VAT and the process for refunds.

This section states that specific rules apply to the sale or transfer of businesses in Nigeria.

This section requires businesses to use a fiscalisation system for VAT compliance, which may involve electronic invoicing and secure data transfer.

This section states that a 5% surcharge is added to fossil fuel products sold in Nigeria.

This section explains how the surcharge on fossil fuels is calculated based on the retail price at the time of sale.

This section outlines how the surcharge on fossil fuels will be managed and collected by the tax authority.

This section lists fossil fuel products that are exempt from the surcharge, including renewable energy sources and household fuels.

This section outlines various exemptions from income tax, including for certain organizations, dividends, and specific types of income, as well as additional deductions for companies that support low-income workers.

This section allows companies to deduct donations made to certain organizations from their taxable profits, regardless of whether the donations are considered revenue or capital.

If a tax authority believes that a transaction is fake or not genuine and is used to lower tax payments, they can ignore it and adjust the tax owed. This section also explains what counts as a 'disposition' and how transactions between related parties are viewed.

Companies must ensure that any deals with related parties are fair and similar to what they would agree to with unrelated parties. If not, tax authorities can adjust the terms to make them fair.

If a company has received a tax deduction for a cost and that cost is later waived or refunded, the amount waived or refunded will be considered income. This also applies to certain capital expenses.

This section clarifies that all types of income and profits that are taxed include those that are deducted at the source. It also states that any method used to divide income for tax purposes must be fair and applied consistently.

The tax authority can create rules and regulations to help implement the laws outlined in this Act, but they need the Minister's approval to do so.

This section lists various laws that are being repealed and no longer apply since the new Act has come into effect.

This section outlines various laws that are being amended to align with the new tax regulations, including deletions of specific sections from those laws.

This section revokes certain previous orders and regulations related to tax and makes amendments to others, ensuring they comply with the new Act.

This section ensures that actions taken under previous laws remain valid and that ongoing legal processes continue as if they were initiated under the new Act.

This section states that any duties and powers under this Act should follow the rules set out in the Nigeria Tax Administration Act, 2025, unless otherwise specified.

This section establishes that this Act takes priority over any conflicting laws regarding taxes. It also clarifies how taxable income and deductions should be determined.

This section provides definitions for various terms used throughout the Act, such as 'taxable person', 'income tax', and 'trade or business'. Understanding these definitions is crucial for interpreting the law correctly.

This section states the official name of the Act, which is the Nigeria Tax Act, 2025.