On 26th, June 2025, President Bola Ahmed Tinubu signed the Nigeria Tax Act, 2025 (NTA), along with three related bills: the Nigeria Revenue Service (Establishment) Bill, the Nigeria Tax Administration Bill and the Joint Revenue Board (Establishment) Bill, collectively known as the Tax Reform Bills. These laws will take effect from 1st January 2026.
As a company owner/business owner, there are new areas and improvements hinged in the newly signed Nigeria Tax Act 2025, you need to be aware of. Hence, it will be to the detriment of your company’s progress. Thus, the improvement in the NTA has brought many novel issues—it aims to structure companies’ activities and development of the Nigerian economy.
In the new Tax Act, some existing taxes are improved while some are newly enshrined in the NTA 2025. This includes:
1. Company Income Tax (CIT): It’s a direct tax imposed on the profits of companies (except those engaged in petroleum operations) registered in Nigeria. This tax also includes the companies which are not registered in Nigeria but are deriving their profits in Nigeria.
The owners of micro companies ( earning annually less than ₦25 million) are fully exempted from this tax. While the owners of small companies (earning annual turnover of ₦50 million or less and total fixed assets of ₦250 million or less) are to pay 20% of their annual income. And the owners of medium and large companies (earning above ₦100 million) are to pay 30% of their annual income.
2. Value Added Tax (VAT): It’is a consumption tax levied on the goods and services at each stage of production and distribution. At the tax rate, 7.5% is the charge rate of VAT.
The company owners who are earning below ₦25 million per year are exempt from VAT registration and filing. VAT only applies to goods and services, with select exemptions mentioned by law (including basic food items, educational materials, medical products). But companies earning beyond ₦25 million must register with the Federal Inland Revenue Service (FIRS) and file monthly VAT returns, pay any VAT collected, and issue VAT invoices. The company owners must file the VAT return on or before the 21st day of the following month.
3. Personal Income Tax (PIT): This tax is not targeted at companies, but directly to an individual based on their income, including salaries, wages, business profits, rents, dividends, and other sources of earnings. It’s administered at the state level through the State Inland Revenue Services (SIRS). This tax directly targets employees, entrepreneurs, professionals, and business owners.
The concerned people are to be informed that the tax rate of PIT is from 7% to 24%, depending on income band. The lowest band applies to people who are earning up to ₦300,000 annually, while the highest rate applies to people who are earning over ₦3.2 million annually. This also includes the Pay-As-You-Earn (PAYE) scheme—deducted monthly from the employee’s incomes and remitted to the relevant state tax authority.
4. Digital and Asset Gains Tax: This is a novel tax introduced by the new Tax Act 2025. It refers to taxes imposed on profits realized from the sale of digital assets, virtual currencies, shares, and other financial assets. This includes, NFT, Cryptocurrencies and digital assets.
The company owners, entrepreneurs, business owners e.t.c., who are engaging in digital and financial assets are subject to the same rates as Capital Gains Tax (CGT), which is typically 10% in Nigeria.
5. Minimum Effective Tax Rate (METR) is the lowest rate of tax a company must effectively pay on its profits, even after all exemptions and incentives. Under Nigeria’s new Tax Act 2025, the METR is 15%, meaning every qualifying company, especially foreign companies that are subsidiaries of Nigerian companies, must pay at least 15% tax on its profits. If a company’s actual tax rate falls below 15%, it will pay a “top-up tax” to reach that level. This rule ensures fairer taxation and prevents profit shifting to low-tax countries.
This tax rate is majorly applicable in the Controlled Foreign Company (CFC) i.e many companies registered outside Nigeria that are controlled by a Nigerian company. If a Nigerian company controls more than 50% of a foreign company’s shares or voting rights, that foreign business is considered a Controlled Foreign Company.
As a Nigerian, if you have or control a company in another country (Burkina Faso), that foreign business is CFC, then your tax rate will be METR.
The new tax rates employed in the NTA 2025 focus on building Nigeria’s economy from the depreciation.
