The Federal Authorities has outlined recent measures to curb double taxation, broaden the tax internet, and strengthen compliance beneath Nigeria’s new tax legal guidelines, based on a Often Requested Questions report.
The doc, issued by the Nigeria Income Service, offers detailed clarifications on key provisions of the brand new tax framework, together with reliefs for foreign-sourced revenue, the taxation of digital companies, penalties for default, and incentives for analysis and improvement.
In line with the FAQs, the regulation addresses double taxation by offering for unilateral reduction and recognising double taxation agreements entered into by Nigeria, with a purpose to stop the identical revenue from being taxed twice. The related provisions are contained in Sections 120 to 123 of the Act.
It defined that Nigerian residents whose revenue has already been taxed overseas might declare reduction on such revenue, topic to the relevant Nigerian tax charge and throughout the timeframe allowed by regulation.
This reduction, the NRS mentioned, is designed to encourage cross-border funding whereas defending taxpayers from extreme tax burdens.
The report learn, “The Act offers for unilateral reduction and recognition of double taxation agreements to keep away from double taxation on foreign-sourced revenue (Sections 120-123).”
On the tax therapy of collective funding schemes, the report clarified that such schemes are handled as corporations for tax functions. Their revenue is taxed on the scheme degree, whereas distributions to unit holders are handled as dividends within the arms of buyers.
It added that “a Nigerian resident whose revenue has been subjected to tax in a overseas jurisdiction might declare reduction for such tax, topic to the relevant Nigerian tax charge and throughout the time allowed beneath the regulation.”
Explaining the therapy of collective funding schemes, the doc famous that “collective funding schemes are handled as corporations for tax functions, with revenue taxable on the scheme degree and distributions handled as dividends within the arms of unit holders.”
The FAQs additionally addressed considerations round overseas revenue, stating that dividends obtained from investments in wholly export-oriented companies, in addition to dividends, curiosity, lease, or royalties earned exterior Nigeria and repatriated by way of accredited channels, are exempt from tax.
In a transfer aimed toward selling innovation, the brand new tax regime permits corporations to deduct as much as 5 per cent of their turnover for analysis and improvement bills incurred in Nigeria.
The report additional highlighted how the regulation seeks to seize income from the digital financial system. It acknowledged that non-resident digital service suppliers with important {economic} presence in Nigeria are liable to revenue tax and value-added tax on Nigerian-sourced revenue, in step with Sections 17 and 151 of the Act.
Taxpayers are additionally required to take care of correct data, together with invoices, receipts, contracts, and {financial} statements, as stipulated beneath the Nigeria Tax Administration Act 2025. Failure to conform, the NRS warned, may appeal to penalties, curiosity, and doable prosecution.
Underneath the regulation, each taxable particular person, together with people, corporations, ministries, departments, and companies, in addition to non-residents supplying items or companies in Nigeria, should register with the related tax authority and acquire a Taxpayer Identification Quantity.
Particular submitting obligations had been launched for Digital Asset Service Suppliers, which are actually required to submit month-to-month returns detailing transactions, buyer data, and asset values, along with their annual returns.
The FAQs additionally outlined penalties for non-compliance. A taxable one who fails to register for tax faces an administrative penalty of N50,000 for the primary month of default and N25,000 for every subsequent month. Late submitting of returns might end in curiosity, extra penalties, and prosecution, whereas failure to remit withheld taxes attracts a penalty of 10 per cent each year plus curiosity on the prevailing Central {Bank} financial coverage charge.
Firms are required to file their self-assessment returns inside six months after the top of their accounting yr, whereas newly included companies should file inside 18 months of incorporation or six months after their first accounting interval, whichever comes first.
Taxpayers dissatisfied with assessments might file objections inside 30 days of receiving the discover, stating the grounds for dispute. Disputes may additionally be resolved by way of appeals and different administrative processes supplied beneath the Nigeria Tax Administration Act.
The report defined that whereas the Nigeria Income Service administers taxes on corporations, non-resident individuals, petroleum operations, VAT, fossil gasoline surcharges, and stamp duties, State Inner Income Providers stay liable for assessing and amassing sure taxes from people, estates, trusts, and companies inside their jurisdictions.
The brand new tax legal guidelines type a part of the Federal Authorities’s broader fiscal reforms aimed toward boosting income mobilisation, enhancing transparency, and lowering Nigeria’s reliance on borrowing. With the tax-to-GDP ratio nonetheless among the many lowest globally, authorities say the reforms are designed to shut loopholes, modernise administration, and align Nigeria’s tax system with international finest practices, whereas balancing compliance with focused reliefs and incentives for companies.
Underneath the brand new authorized regime, the NRS is liable for administering taxes on corporations, non-resident individuals, petroleum operations, value-added tax, fossil gasoline surcharges, stamp duties, and different taxes specified by regulation, whereas the State Inner Income Providers retains duty for taxes collectable on the subnational degree. The reforms are aimed toward strengthening coordination between federal and state tax authorities, lowering overlaps, and enhancing the taxpayer expertise.
The brand new tax legal guidelines, anchored by the Nigeria Tax Administration Act 2025, signify one of the sweeping overhauls of Nigeria’s tax system in many years. The Act introduces clearer guidelines on double taxation reduction, digital financial system taxation, digital asset service suppliers, record-keeping, dispute decision and enforcement powers, whereas additionally setting out penalties for non-compliance and incentives for analysis, improvement, and export-oriented companies.
The laws types a part of the Federal Authorities’s broader fiscal reform agenda to lift Nigeria’s tax-to-GDP ratio, enhance income mobilisation, and scale back dependence on borrowing. With the enlargement of the digital financial system and cross-border transactions, the brand new framework is designed to align Nigeria’s tax system with international finest practices whereas balancing income era with investment-friendly insurance policies.