The new tax law in Nigeria has brought into existence four new tax laws. The new laws were made by harmonizing all the tax laws already in force in the country. Four statutes – the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service (Establishment) Act 2025, and the Joint Board of Revenue (Establishment) Act 2025 – will govern the tax landscape in Nigeria from 2025 – 2026.
Although the tax law appears to have made considerable efforts to simplify tax procedures, bring administrative uniformity, reduce the tax burden on low-income earners, encourage small businesses, encourage large-scale investment and enhance fiscal justice in anticipation of higher levels of mutual understanding, transparency and voluntary compliance, there is no denying the fact that disputes over tax assessment, administrative proceedings and regulatory enforcement are still bound to occur.
However Nigeria's tax system has long been criticized for being fragmented, complex and difficult to navigate. With so many laws governing income tax, capital gains, VAT and stamp duty, compliance often requires expert intervention. In June 2025, the federal government took a decisive step to turn these challenges into law by signing four major pieces of tax legislation. These include the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Joint Board of Revenue Act 2025 and the Nigeria Revenue Service Act 2025.
Together, these laws introduce a unified and modern tax regime designed to streamline administration, eliminate loopholes, and improve transparency. The new system will officially take effect January 1, 2026, giving individuals and businesses a limited window to understand and prepare for the changes.
One of the most important reforms is the consolidation of income and capital gains taxation. Earlier, companies paid 30 percent income tax under the Company Income Tax Act, while capital gains were separately taxed at 10 percent. Under the new Nigerian Tax Act, all company profits, including capital gains, are taxed at a flat rate of 30 percent. This means that businesses must now consider the tax implications of asset sales as part of their overall profit planning.
Therefore, for individuals, capital gains are no longer taxed separately but are assessed under individual income tax rates. This change has significant implications for investors, entrepreneurs and professionals who earn income from asset disposals. This makes proper financial planning more important than ever, especially when applying for loans or making long-term investment decisions.
Another major development is the introduction of a minimum effective tax rate of 15 per cent for eligible multinational companies. This rule ensures that large companies operating in Nigeria cannot reduce their tax burden below this limit through aggressive tax planning. Although it primarily affects multinational enterprises, its impact can also be felt on supply chains, pricing structures, and employment decisions.
According to the Chairman of Nigeria's Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, an expert on taxation and fiscal matters, said the tax reforms are aimed at improving revenues, promoting economic growth and simplifying Nigeria's complex tax system. It should also be noted that the new tax law introduced a controlled foreign company structure.
Now, Nigerian companies with controlling interests in foreign subsidiaries can be taxed on undistributed foreign profits unless they can explain why such profits cannot be repatriated. It aims to reduce profit shifting and strengthen Nigeria's tax base. And, for small and medium-sized businesses, the new tax law brings both clarity and responsibility. The flat corporate tax rate simplifies calculations, while small companies below prescribed turnover limits remain exempt from corporate income tax. However, compliance expectations are higher, and keeping accurate records is no longer optional.
As the new tax takes effect, individuals and businesses are encouraged to assess the impact of the new tax laws on their income, update internal processes, and seek professional guidance where necessary. The new Nigerian tax regime represents a shift towards efficiency and accountability, and those who prepare early will be best placed to move forward.
Let us follow the rules and regulations of the new tax law, and this submission also provides an essential guide to taxable persons in Nigeria to avoid pitfalls in the new regime and the various settlement mechanisms available to parties to a tax dispute. While tax offenses and regulatory penalties create potential reputational risks and financial losses for non-compliant entities, taking note of the rights and obligations and defense mechanisms available in the law will enhance compliance and also ensure legal protection for compliant taxpayers.
Urunbon, a journalist, author, poet and public affairs analyst. can be accessed through [email protected] Or 08034493944 and 08029301122.
