Nigeria Tax Act 2025 — Plain-English Summary

The Act re-writes how Nigerian salaries are taxed. The old Consolidated Relief Allowance (CRA) — previously calculated as the higher of ₦200,000 or 1% of gross income, plus 20% of gross — is abolished from 1 January 2026.

In its place the Act introduces a targeted Rent Relief (Section 30): the lower of 20% of the annual rent you actually pay for residential accommodation or ₦500,000 per year. Employer-provided housing is excluded.

Deductions still allowed before PAYE is computed:

• Employee pension contribution — 8% of Basic + Housing + Transport (Pension Reform Act 2014).
• National Housing Fund (NHF) — 2.5% of basic salary.
• NHIS / NHIA health-insurance contributions.
• Life-insurance premiums on your own life or that of your spouse.
• The new Rent Relief described above.

Section 29 also introduces presumptive taxation for informal-sector and small-scale earners — a simplified turnover-based assessment for those without full accounting records. New progressive PAYE bands apply to chargeable income (gross less reliefs); use our 2026 PAYE calculator to see your take-home.

Chapter Two, Parts VI and IX consolidate company taxation. Highlights:

• Company tax rate (Section 56) — re-enacted with reliefs for small companies; the small-business exemption thresholds are preserved and indexed in the schedules.
• Effective Tax Rate rule (Section 57) — large multinational groups must pay a minimum effective rate, aligning Nigeria with the global OECD Pillar Two framework.
• Specialised trades (Sections 60–64) — bespoke rules for export-processing/free-trade-zone entities, insurance, lottery & gaming, collective investment schemes, and mining operations.
• Development Levy (Section 59) — see below.

VAT is re-enacted within the same Act (Sections 146 onwards), defining the rate, the value of taxable supplies, exempt and zero-rated items, registration thresholds and input-tax recovery rules. Bringing VAT into the same statute as income tax simplifies cross-referencing and aligns definitions.

Capital Gains Tax (CGT) is covered in Sections 33 to 55. Familiar exemptions are preserved:

• Principal private residence (Section 51).
• Personal chattels under defined limits (Section 52).
• Motor vehicles for personal use (Section 53).
• Gifts (Section 54) and assets held in trust for charities (Section 55).
• Compulsory acquisition of land (Section 37).

A notable change: indirect transfers of Nigerian companies or assets through offshore vehicles are now expressly chargeable (Section 47), closing a long-standing loophole.

Chapter Three (Sections 65–119) consolidates petroleum taxation. It covers the Hydrocarbon Tax (Part I), the Petroleum Profits Tax (Part II), and the Deep-Offshore and Inland Basin Production-Sharing-Contract regime (Part III). Fiscal stabilisation, royalties, capital allowances and the rules for decommissioning and abandonment funds are all carried over and clarified from the Petroleum Industry Act 2021.

A new Development Levy is imposed on the assessable profits of Nigerian companies. Revenue from the levy is distributed to:

• TETFUND — Tertiary Education Trust Fund.
• NELFUND — Nigerian Education Loan Fund (student loans).
• NITDA — National Information Technology Development Agency.
• NASENI — National Agency for Science and Engineering Infrastructure.

The Development Levy replaces and consolidates several previously separate earmarked taxes (e.g. tertiary education tax, IT levy, NASENI levy) into a single charge.

Sections 183 and 184 set out the exclusion-from-other-reliefs and transition arrangements. In summary:

• Income earned in 2025 is assessed under the old PITA/CITA framework.
• Income earned from 1 January 2026 is assessed under the new Act.
• Reliefs claimed under PITA cannot be double-claimed under the new Act.
• Existing tax incentives in pioneer-status, free-trade-zone and PIA agreements continue subject to fiscal-stabilisation rules.