Amanze Chinonye
Nigeria’s new tax framework, set to take effect in January 2026, is designed to modernize the country’s fiscal system, simplify compliance, and enhance economic competitiveness, the Special Adviser to President Tinubu on Economic Affairs, Dr. Tope Fasua, has said.
Addressing growing public concern that the reforms might scare investors, trigger capital flight, or undermine business competitiveness, Dr. Fasua described these narratives as “largely misplaced.”
He explained that the 2025 tax reforms, anchored in the Nigeria Tax Act (NTA) and Nigeria Tax Administration Act (NTAA), are among the most pro-investment, pro-market tax policy updates Nigeria has seen in decades.
Join our WhatsApp Channel“The reforms simplify the tax landscape, reduce compliance burdens, and protect both businesses and individuals from outdated rules,” Fasua said. “They are fundamentally progressive, aligned with President Tinubu’s promise to improve the standard of living for all Nigerians.”
Streamlined Development Levy
One of the key elements of the reforms is the consolidation of multiple earmarked levies into a single 4% Development Levy. This replaces fragmented charges such as the Tertiary Education Tax, NITDA Levy, NASENI Levy, and Police Trust Fund contributions. Small businesses with turnover below N100 million and non-resident companies are now exempt, providing predictability and lowering the cost of doing business.
“The Development Levy delivers certainty and simplicity for investors, replacing the previous era of ad hoc, agency-specific levies,” Fasua noted.
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Contrary to concerns that incentives for Free Trade Zones (FTZs) have been watered down, Fasua explained that the reforms preserve core exemptions for FTZ entities while imposing limits on domestic sales. Companies can sell up to 25% of their output domestically during a three-year transition period (2026–2028) without losing tax benefits. After this period, domestic sales will be subject to taxation, a move he said aligns Nigeria with global best practices in countries such as the UAE, Malaysia, and Mauritius.
15% Minimum Tax on Large Multinationals and Domestic Giants
The NTA also introduces a 15% minimum tax on large multinational enterprises and Nigerian companies with turnover above N50 billion. Fasua clarified that the measure, aligned with OECD/G20 global tax reforms, is designed to protect Nigeria’s tax base rather than discourage investment.
“By collecting this tax domestically, Nigeria retains revenue that would otherwise go to foreign treasuries, and it ensures fair competition with large domestic companies,” he said. The measure also includes credit for a broad range of fiscal contributions, preventing double taxation and signaling a transparent, rules-based system to investors.
Modernized Capital Gains Regime
The reforms also overhaul Nigeria’s outdated Capital Gains Tax Act, integrating gains into corporate and personal taxable income. New provisions allow reinvestment of capital gains within the Nigerian economy without triggering tax, encourage risk-taking by allowing capital losses to offset profits, and exempt smaller transactions from taxation entirely.
“This system actively encourages reinvestment, supports portfolio fluidity, and reduces the risk profile for investors, particularly in venture capital and private equity,” Fasua said.
A Signal to Investors
Fasua concluded that the reforms strengthen Nigeria’s investment climate rather than imposing new barriers. By simplifying taxes, protecting incentives, closing loopholes, and aligning with global standards, the government aims to create a predictable and stable environment for both domestic and foreign investors.
“Nigeria is open for business, and these reforms demonstrate that the country is serious about building a modern, competitive economy,” he said.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
