Nigeria is entering a new era of taxation. After decades of operating a system often criticized for its complexity and overlapping laws, the Federal Government has introduced a comprehensive tax overhaul that will take effect from January 1, 2026.

The reforms are anchored on four major legislations signed into law in June 2025: the Nigeria Tax Act, the Nigeria Tax Administration Act, the Joint Revenue Board of Nigeria Act, and the Nigeria Revenue Service Act. Together, they aim to simplify tax administration, expand compliance, and strengthen government revenue without relying solely on higher rates.

For individuals, investors, and businesses, the changes go far beyond paperwork. They directly affect how income is taxed, how investments are treated, how loans are assessed, and how financial planning should be approached going forward.

A shift toward a Unified Tax System

Nigeria’s tax structure has historically been fragmented, with different laws governing income tax, capital gains, VAT, and stamp duties. This often made compliance costly and confusing, particularly for small businesses and individual taxpayers.

The new framework consolidates many of these rules under a single, modern tax regime, reducing ambiguity and limiting opportunities for loopholes. While the reforms promise clarity, they also demand higher levels of transparency and record-keeping from taxpayers.

Capital Gains and Income Tax now treated as one

One of the most significant changes is the merging of company income tax and capital gains tax.

Previously, companies paid:

• 30% corporate income tax on profits
• 10% capital gains tax on asset disposals

Under the new Nigeria Tax Act, all company profits—including capital gains—are taxed together at a flat rate of 30%. This means selling assets is no longer a separate tax consideration but part of overall profit planning.

For individuals, capital gains are no longer taxed independently. Instead, they are assessed under personal income tax bands, a change that directly affects investors, property owners, entrepreneurs, and professionals who earn from asset sales.

This integration makes long-term financial planning more critical, especially when structuring investments, applying for loans, or managing wealth.

Minimum Tax Rules for Multinationals

The reforms also introduce a 15% minimum effective tax rate for qualifying multinational companies operating in Nigeria. The objective is to prevent large firms from aggressively minimizing tax liabilities through complex structures.

While the rule targets global corporations, its impact could extend to:

• Supply chains
• Pricing strategies
• Employment and contracting decisions

For local businesses that depend on multinational clients, these indirect effects may influence revenue and cost structures.

New Rules for Foreign Subsidiaries

Another notable change is the introduction of a Controlled Foreign Company (CFC) framework.

Nigerian companies with controlling stakes in foreign subsidiaries may now be taxed on undistributed foreign profits, unless they can justify why such earnings cannot be repatriated. This is designed to curb profit shifting and expand Nigeria’s taxable base.

For firms with international operations, this marks a shift toward stricter oversight and requires closer coordination between tax planning and corporate strategy.

What it means for Small and Medium-Sized Businesses

Small and medium-sized enterprises (SMEs) gain some relief under the reforms. Businesses below a specified turnover threshold remain exempt from corporate income tax, preserving incentives for growth.

However, expectations around compliance have risen sharply. Accurate bookkeeping, timely filings, and transparent financial records are no longer optional. As lenders place greater emphasis on tax compliance, SMEs seeking credit will need to show clean and verifiable tax histories.

VAT goes digital

One of the most visible changes for everyday business operations is the reform of Value Added Tax administration.

The introduction of a mandatory Electronic Fiscal System requires businesses to digitally record and report taxable transactions. The goal is to improve transparency, reduce disputes, and close revenue leakages.

The new system also allows businesses to recover input VAT on services and fixed assets, provided claims are properly documented and submitted within the required timeframe. For compliant businesses, this could improve cash flow and reduce operational costs.

Clear Tax Rules for Digital Assets

For the first time, Nigeria’s tax laws clearly address digital assets. Profits from digital asset transactions are now explicitly taxable, ending years of uncertainty around crypto and other digital investments.

As more Nigerians explore digital investments, the clarification helps investors plan responsibly and avoid unexpected tax exposure.

Implications for Loans, Investments, and Financial Planning

The reforms have direct consequences for how Nigerians access credit and manage investments. Financial institutions increasingly rely on verified income, tax compliance, and consistent cash flow when assessing loan applications.

Businesses seeking financing must demonstrate proper tax records, while individuals need to understand how taxable income is calculated under the new rules. In practical terms, tax compliance is becoming a key factor in financial credibility.

Preparing for 2026

With the implementation date approaching, individuals and businesses are advised to:

• Review how the new laws affect their income and investments
• Update accounting and reporting systems
• Seek professional guidance where necessary

The new Nigerian tax regime reflects a broader shift toward efficiency, accountability, and transparency. Those who prepare early are likely to navigate the transition with fewer disruptions and stronger financial footing.

As Nigeria moves toward this new tax era, understanding the rules is no longer just about compliance, it is about protecting your finances and positioning yourself for sustainable growth.