Nigeria Tax Act 2025: A Complete Summary

Nigeria's tax law changed more on 1 January 2026 than it had in the previous thirty years. The Nigeria Tax Act 2025 — signed on 26 June 2025 alongside three companion Acts — pulled most of the country's scattered tax statutes into one instrument, wiped out Companies Income Tax for small businesses entirely, rewrote the personal income tax bands, and replaced four separate corporate levies with one.

This is the whole reform in plain English. If you only want one part of it, each section links to a deeper guide.

The four Acts, and what each one does

People say “the Nigeria Tax Act” as shorthand, but the reform is four separate laws that work together. Knowing which is which saves a lot of confusion when an adviser cites one at you.

The practical consequence of the third one is small but everywhere: if your invoice templates, engagement letters or website still say FIRS, they are out of date.

The small company exemption

This is the provision that matters most to the largest number of businesses. A company that qualifies as small pays no Companies Income Tax at all — not a reduced rate, nothing — and is also outside Capital Gains Tax and the new Development Levy.

Two tests, both of which must be satisfied:

There is no taper. A company on ₦99 million of turnover pays nothing; the same company on ₦101 million pays 30% Companies Income Tax plus the 4% Development Levy. The asset test catches people out more often than the turnover test — a haulage operator with a modest revenue but a large fleet can fail it without ever approaching ₦100 million in sales.

The detail is in our guide to company income tax and the Development Levy, and you can test your own figures in the Nigeria Business Tax Calculator.

The 4% Development Levy

Four levies became one. The Tertiary Education Tax, the NITDA levy, the NASENI levy and the Police Trust Fund levy were consolidated into a single 4% Development Levy charged on assessable profits.

For a company that was paying all four before, this is closer to a simplification than an increase — one calculation, one payment, one line in the accounts. For small companies it is simply irrelevant: they are exempt.

Personal income tax: new bands, no more CRA

The personal side was rewritten as thoroughly as the corporate side. The Consolidated Relief Allowance is gone. In its place the tax-free band rose sharply, and a new rent relief was introduced.

Rent relief is 20% of the rent you actually pay, capped at ₦500,000 a year, and it is not automatic — you have to declare the rent and be able to evidence it. The old 1% minimum tax on individuals has also been abolished, so a nil liability is now genuinely nil.

Full working, including what this does to take-home pay at different salaries, is in the personal income tax guide, and the PAYE calculator runs the numbers for you.

VAT: same rate, wider exemptions

VAT stayed at 7.5%. What changed around it is the list of zero-rated essentials, which widened to cover more basic food, medical and educational supplies, and the input VAT recovery rules, which were broadened so registered businesses can reclaim VAT on services and fixed assets rather than goods alone.

Registration becomes mandatory once taxable supplies reach ₦25,000,000 over a twelve-month period. Below that, registering is a commercial decision rather than a legal one — see the VAT guide for how to make it.

Where to get the official text

The authoritative version of the Act is the one published in the Federal Government Gazette, obtainable through the Federal Ministry of Justice and the Nigeria Revenue Service. This matters more than it sounds. A great many PDFs circulating under the name “Nigeria Tax Act 2025” are in fact the harmonised bill, an earlier committee draft, or a professional firm's summary — all of which differ from the Act as passed in ways that will cost you if you rely on them.

• Check the document says Act, not Bill.
• Check it carries a gazette number and a commencement date of 1 January 2026.
• Treat any figure you cannot trace to the gazetted text as provisional.

Who wins and who pays more

Broadly, the reform moved the burden up the size curve. Small companies and lower earners pay materially less; larger companies and higher earners pay the same or more, with fewer separate levies to track.

The businesses that benefit most are the ones that can prove they qualify. The exemption is generous, but it is evidenced by records — turnover, asset registers, filings. A business that cannot produce them does not get the benefit of the doubt.

That is the practical sting in the tail. Nearly every relief in the Act is conditional on documentation, and the NRS e-invoicing rollout means those records increasingly have to be structured and machine-readable rather than a folder of PDFs. Our NRS e-invoicing guide covers what that means in practice.

What to do this quarter

1. Check your turnover and fixed assets against the ₦100m and ₦250m tests, and write down the figures you relied on.
2. Replace every FIRS reference on invoices, templates and correspondence with NRS.
3. If you are near the ₦25m VAT threshold, decide deliberately whether to register rather than drifting over it.
4. Ask your payroll provider to confirm they are on the 2026 bands and have removed the CRA.
5. Put the 2026 filing dates in a calendar with reminders.

ereQa keeps invoices, VAT and expenses in one place so the figures the NRS wants are already there when the return is due. Start free →

This is general information, not tax advice. Thresholds and reliefs turn on facts specific to your business, and the Nigeria Revenue Service issues clarifications as the Act beds in. Confirm your position with a licensed tax adviser before you file.