Reform of the UK Non-Dom tax regime What has changed?

Newsroom

Navigating the Impact of Nigeria’s Tax Reform Acts 2025 on Foreign Investors

August 14, 2025

Authors:
Tunde Adaramaja
Managing Consultant/CEO
E: [email protected]

James Oni
Director, Taxation & Regulatory Advisory
E: [email protected]

Integra International Grant Gilmour, CPA (Canada, BC) CPA (USA, Arizona)
Integra Tax World Newsletter Editor
E: [email protected]

Navigating the Impact of Nigeria’s Tax Reform Acts 2025 on Foreign Investors

Introduction

The enactment of the Nigeria Tax Reform Acts 2025 (“NTA” or “The Acts”) represents a landmark shift in the country’s fiscal and regulatory landscape. It is designed to modernize the tax system, improve revenue generation, and enhance alignment with international tax principles, these reforms introduce far-reaching provisions that directly affect foreign investors, multinational enterprises, and non-resident individuals operating in or engaging with Nigeria’s economy.

The 2025 reforms seek to address some gaps that were embedded in the previous laws through clearer definitions, broader tax base, and stricter compliance rules- particularly for non-resident entities deriving income from Nigeria.

The key areas impacted by these Acts include the redefinition of permanent establishment and significant economic presence, taxation of passive incomes and digital transactions, stricter rules around shipping and air transport income, and updated frameworks for taxing income from services rendered from abroad. These changes reflect Nigeria’s determination to assert its taxing rights and ensure that value generated within its borders.

For foreign investors, these developments present both risks and opportunities. While the expanded tax net implies increased compliance obligations and potential exposure to Nigerian tax, the clarity and structure now embedded in the law also provide a more predictable and transparent framework for cross-border transactions.

This article provides a detailed analysis of the key provisions of the Nigeria Tax Acts 2025 as they relate to non-resident companies and individuals, highlights the significant deviations from previous tax practice, and explores the wider implications for international investment and business strategy in Nigeria.

“What we did a few minutes ago is the way forward for our country’s prosperity. … We have shown the world that Nigeria is ready and open for business.” President Bola Ahmed Tinubu, at the signing of the Tax Reform Acts 2025

The Acts

The Acts are categorized into four parts:

  • Joint Revenue Board (Establishment) Act, 2025: This Act establishes three bodies: the Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombud, for the harmonization, coordination and settlement of disputes arising from revenue administration in Nigeria.
  • The Nigeria Tax Administration Act, 2025: The objective of this Act is to provide uniform procedures for a consistent and efficient administration of tax laws in order to facilitate tax compliance by taxpayers; and optimize tax revenue.
  • Nigeria Revenue Service (Establishment) Act, 2025: This Act repeals the Federal Inland Revenue Service (Establishment) Act, 2007 and enacts the Nigeria Revenue Service (Establishment) Act, 2025 to establish the Nigeria Revenue Service, charged with powers of assessment, collection of, and accounting for revenue accruable to the Government of the Federation
  • Nigeria Tax Act, 2025: The Nigeria Tax Acts (NTA) 2025 consolidates major tax laws, into a single framework. This addresses the overlapping, conflicting, or ambiguous provisions by bringing uniformity and transparency into tax legislation

Implementation Date

The Nigeria Tax Acts 2025 officially took effect on June 26, 2025, following The Nigeria President’s assent. However, recognizing the significant adjustments required for compliance, the government has introduced a transition period to ease the adoption process. Hence, the full compliance deadline is by January 1, 2026: By this date, it is expected that foreign Investors and Non-residents entities should have aligned their systems and reporting structures with the new regime.

Key Legal Framework

PART III of the NTA, 2025 generally deals with the “Taxation of Non- Resident persons”. Below are key provisions, specifically guiding the taxation of Non-residents.

  1. Section 17 of NTA, 2025- Permanent Establishment and Significant Economic Presence
  2. Sections 19 of NTA 2025 & Section 51 of NTAA 2025- Withholding Tax on Dividends and Service fees as it relates to Non-resident persons
  3. Section 13 (2): Employment Income of Non-Residents- Taxation rules for Non-resident individuals and remote employees.
  4. Section 151: Taxable Supply by Non-Residents
  5. Section 18: Shipping and Air Transport: Conditions for taxation, exemptions, and thresholds.
  6. Section 124: Imposition of Stamp Duties

Major Highlights

A “Foreign company” is defined in the NTA as a non-resident company or any company other than a Nigerian company.

  1. Taxation of Non-Resident Companies: Prior to the NTA, the basic principles for subjecting a non-resident to income tax in Nigeria are accruing in, derived from, brought into or received in Nigeria but the rules has been restricted to profits “accruing in”, or “derived” from Nigeria and where the person has Significant Economic Presence (SEP) or Permanent Establishment (PE) to include digital and remote services. This means that an income need not be derived in or brought into Nigeria from outside Nigeria before it is considered for tax in Nigeria.
  2. Revised Taxation Rules for Non-Resident Persons (NRPs): The Acts specifies certain conditions for ascertaining the income, profits and gains of a non-resident that are attributable to a permanent establishment in Nigeria such as credit rating, equity and loan capital, sale of goods, furnishing of services etc. However, if the conditions cannot be ascertained, the NTA requires that the rule of profit margin of the non-resident to the total income generated in Nigeria and where the income is not liable to deduction of tax, a flat rate of 4% will be applied on the total income generated in Nigeria. This provision secures Nigeria’s taxing rights over foreign entities operating in-country.
  3. Taxation of Digital and Virtual Assets: The Act broadens the scope of taxable income to include digital assets, prizes, honoraria, and grants. Non-residents engaging in virtual asset transactions- such as crypto assets, utility tokens, security tokens, non-fungible tokens (NFT), such other similar digital representation and now subjected to tax in Nigeria. This also confirms their taxability in Nigeria, if sourced locally.
  4. Development Levy- Exclusion of Non-residents: Section 59 of NTA: A development levy of 4% is imposed on assessable profits of all Companies in Nigeria which consolidates all other levies into a special account and distributed to other designated government agencies’ account. However, non-resident companies are excluded from paying this levy.
  5. Minimum Effective Tax Rate (ETR) :The new law imposes a minimum ETR of 15% on companies with turnover above ?50 billion or members of a multinational enterprise (MNE) group with global turnover of €750 million or more. If foreign taxes paid fall below this threshold, Nigerian companies must pay what is known as a top-up tax. This aligns Nigeria with the OECD’s BEPS Pillar II reforms. Prior to this, Nigeria had no statutory minimum effective tax requirement, allowing base erosion through low-tax jurisdictions.
  6. Introduction of Controlled Foreign Corporation (CFC) Rules: Relevant Section: Section 7(1)The Act introduces CFC rules which require Nigerian companies with foreign subsidiaries to declare and pay tax on retained earnings of the foreign entities if those profits could be distributed without adversely affecting operations. This curbs profit shifting and income deferral, practices used by Multinational entities [MNE] to reduce tax exposure. It aligns Nigeria with global anti-avoidance principles. The CFC rules represent a fundamental shift, as Nigeria previously lacked robust anti-deferral legislation.
  7. Interest Deductibility on Foreign Loan from Connected person: Relevant Section: Section 20 (1) (a) Section 92 (1)(g). The rule guiding the provision of deductibility of interest and similar expenses incurred by a Nigerian company, in respect of debt issued by a foreign connected person, will be limited to 30% of the Nigerian company’s earnings before interest, tax, depreciation and amortization (EBITDA) is retained in the NTA (the Act exempts a Nigerian subsidiary of a foreign company which is engaged in the business of banking or insurance from the provision) in a particular accounting year.
  8. Increased Capital Gains Tax (CGT) rate – The Capital Gains Tax rate has increased from 10% to 30% for companies. This ensures that the CGT and Companies Income Tax rate are aligned and reduces any tax arbitrage that could have been unduly enjoyed in the classification between chargeable gains and trading income. For individuals, capital gains will be taxed at the applicable income tax rate based on the progressive tax band of the individual. Foreign Investors should note this aspect of the NTA before implementing transactional strategies.
  9. Taxation of    Capital    Gains:    Relevant   Section:   Section   34 Capital gains from asset disposals, including shares and digital property, are now taxable unless specific exemptions apply. Non-residents disposing of Nigerian shares should consider reinvestment strategies or structuring to meet exemption thresholds.
  10. Indirect transfer of ownership of companies or assets for CGT purpose: Section 46 : Gains accruing to any person (including non-resident persons), in respect of an indirect disposal of shares or interest in any asset of a Nigerian company will now be considered a chargeable gain.
    1. Shares: The shares of a foreign company would be deemed as situated in Nigeria, where in any 365 days preceding the alienation, more than 50% of the value of the shares or other interest is derived directly or indirectly from:
      1. a Nigerian company, in which such alienation will result in the change of ownership of such company or
      2. an immoveable property situated in Nigeria.
    2. Incorporeal property: The new legislation has expanded the definition of incorporeal property to include digital assets, which will be deemed to be situated in Nigeria where the holder (with direct or indirect ownership) is resident in Nigeria or has a PE in Nigeria to which the digital asset relates to.
  11. Company Tax  Rates  for  Non-Residents:  Relevant  Section:  Section  56 Non-resident companies are excluded from small company tax relief and taxed at 30% of Nigerian-source profits or a minimum of 4% of turnover. This ensures foreign entities contribute equitably to national revenue.
  12. Employment income: Employment Income is considered to be derived from Nigeria and thus taxable in Nigeria if the employee is a Nigerian resident or performs any duties in Nigeria, and the income is either:
      1. Paid by a Nigerian resident employer,
      2. Charged to a Nigerian permanent establishment or fixed base of a non resident, or
      3. Not taxed in the employee’s home country.
    2. Exception: Non-resident employees will not be taxed in Nigeria if:
      1. Their employer is a start-up, or operates in technology or creative sectors, and
      2. Their income is taxable in their country of residence.
  13. Introduction of New Graduated Rate: A person is considered non-resident if they stay in Nigeria less than 183 days within 12 months. Meanwhile, Non-residents pay tax on Nigerian-sourced income using the same progressive rate structure as residents:
    ANNUAL INCOME Nigerian Naira TAX RATE
    0 – 800,000 0%
    800,001 – 3,000,000 15%
    3,000,001 – 12,000,000 18%
    12,000,001 – 25,000,000 21%
    25,000,001 – 50,000,000 23%
    Above 50,000,000 25%
  14. Non-resident Persons employing Resident Employees: Section 17(9) (c) non- resident person shall not be deemed to have a permanent establishment or significant economic presence in Nigeria solely by reason of employing persons resident in Nigeria, to the extent that the duties of such employment are not performed primarily for customers in Nigeria.
  15. Taxable Supply by Non-Residents for VAT purpose: Relevant Section: Section 151 Where a non-resident person is making taxable supplies from outside Nigeria to persons in Nigeria, the taxable person to whom the supply is made in Nigeria shall withhold the VAT due on the supply and remit it to the Service. The NTA also retains a situation whereby an import is made through electronic mean and digital platform operated by the Non-resident entity, and VAT has been collected by the FIRS. The Act requires that the transaction would be exempted from VAT upon showing proof of deduction.
  16. Input VAT Recovery: Relevant Section: Section 185. Foreign entities registered for Nigerian VAT can recover input VAT on assets and services used for taxable supplies. Prior to this Act, there was a limitation under the VAT Act which previously excluded non-goods inputs from being relieved from output VAT. This development improves efficiency for compliant foreign suppliers and service providers.
  17. VAT Compliance and Fiscalisation: Relevant Sections: Sections 157 & 23 (Tax Admin Act) – All taxable persons must adopt fiscal tools (e.g., electronic invoicing) for VAT reporting once introduced by NRS. This aims to enhance compliance and reduce evasion. The measure reflects a shift to technology- driven tax systems but raises cost and cybersecurity concerns, especially for SMEs. For more details, please read our article on https://einvoice.firs.gov.ng/.
  18. Expanded Definition of Interest: Relevant Section: Section 4(c) Interest now covers penal charges, foreign exchange differences, and payments tied to derivatives. This means that non-resident lenders and financiers receiving such payments from Nigerian borrowers could face withholding tax obligations under the new Nigerian tax law.
  19. Broadened Definition  of  Dividend:  Relevant Section: Section 5(2) The Act includes capital distributions during liquidation as dividends, thereby, bringing the transaction to the tax net- withholding tax. This affects foreign investors exiting Nigerian companies through winding-up arrangements.
  20. Definition of Royalty Introduced: Relevant Section: Section 6 Royalties now encompass any payments for the right to use intellectual property. Non-resident licensors of IPs, software, or trademarks to Nigerian companies should expect withholding tax on these payments unless relieved by a tax treaty.
  21. Tax deducted at source: Any amount of tax deducted at source in accordance with section 51 of Nigeria Tax Administration Act, 2025 from the payments made for any of the activities relating to Education, foreign permanent establishment, risk premium shall be the final tax on that payment unless the person has a permanent establishment or significant economic presence in Nigeria to which the payment is attributable.
  22. Stamp Duty on Transactions and Capital: Relevant Sections: 124 (b), 136 Foreign investors must stamp instruments within 30 days and pay duties on long-term debt instruments. This affects M&A, debt, and real estate transactions involving foreign capital.
  23. Free Trade Zones and Tax Exemption Criteria: Relevant Section: Section 60 & Second Schedule Non-residents operating in Export Promotion Zones [EPZ] enjoy tax exemption if all sales are export-based. From 2028, all sales to Nigeria’s customs territory become fully taxable. This shifts the incentive structure for foreign exporters.
  24. Economic Development  Incentives  (EDI):  Relevant  Sections:  164–172 The EDI replaces the PSI, offering a 5% tax credit annually on qualifying capital expenditures. Non-resident investors in priority sectors must meet minimum thresholds and comply with certification requirements. The EDI rewards investment scale and performance, not just presence.

Conclusion

The Nigeria Tax Act 2025 signals a move toward a more transparent, performance-based and globally aligned tax regime.

While some provisions introduce new compliance obligations, others provide clarity and targeted incentives. Non-resident and foreign investors should carefully review the implications of these changes and engage in proactive planning to optimize their Nigerian tax position before the date of implementation of the Acts.

Disclaimer

This communication contains general information only based on collective research, and none of TAC group, Integra International  or their related entities are, by means of this communication, rendering professional advice or services.

Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of TAC, Integra International, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication.

TAC and Integra International, and their related entities, are legally separate and independent entities.

© 2025 TAC Group

About the Author:

Tunde Adaramaja

Tunde Adaramaja is a seasoned chartered accountant with over 30 years of professional experience in accounting, auditing and business consulting. A certified forensic accountant and Fellow of the Institute of Chartered Accountants of Nigeria.

He founded TAC Professional services in 1999, and he has led the firm to high-profile Audit, Forensic, Taxation, Business Consulting & Advisory assignments covering all sectors of the economy; growing the firm to be one of the most visible professional practice firms in Nigeria.

Tunde is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), Chartered Institute of Taxation of Nigeria (CITN), and Nigerian Institute of Management (NIM). He is a Certified Forensic Accountant (CFA) and a Certified Fraud Examiner; He also holds a Master’s degree in Business Administration. He is an alumnus of Harvard Business School, Lagos Business School, and has attended various conferences both locally and internationally.

James Oni

James is a Director & Head of our Taxation & Regulatory Advisory unit within the firm. He is a seasoned tax professional with over 15 years of experience in tax compliance, advisory, financial reporting across diverse industries, including Manufacturing, Fast Moving and Consumer Goods (FMCG), Technology, Oil & Gas, and Financial Services. A Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), an Associate member of Chartered Institute of Taxation of Nigeria (CITN), and Association of Accounting Technicians West Africa. (AATWA). He holds a Bachelor’s degree in Accounting from Olabisi Onabanjo University.

James began his career at Ijewere & Co. (Chartered Accountants and Chartered Tax Consultants), where he gained six years of experience. He then worked with Ascension Consulting Services as a Senior Consultant before joining Pedabo Professional Services (now Kreston Pedabo) in 2020 as a Manager. His expertise includes handling complex tax audits, managing tax risks, securing tax-efficient business structures, due diligence and navigating regulatory requirements to optimize compliance. His ability to resolve high-stakes tax disputes and provide strategic tax planning has led to significant cost savings and minimized tax exposures for organizations.

James has also facilitated tax training and discussions in professional settings, providing insights on tax compliance and regulatory updates. His analytical skills and regulatory knowledge contribute to effective tax planning and risk management.

About TAC:

TAC is a composite Professional Service & Business Consulting organization, providing Professional Services, Business Consulting & Financial Advisory Services to clients in various sectors of the economy. Our services include Tax Advisory & Management, Statutory and Special Audit & Assurance, Forensic Investigation & Accounting, Reporting Accounting &Due Diligence, Consulting, Financial & Business Advisory Services to diverse range of clients.

TAC is a member firm of Integra International, a worldwide organization of independently owned and managed professional service firms in over 150 countries, providing audit, tax, consulting and specialist advisory services. Integra International shares knowledge openly and regularly, offering expanded professional services to member firms, including meeting their national and international needs.

Integra International Bio: 

https://integra-international.net/find-an-integra-firm/find-firm-profile/name/tac-professional-services/