Fiscal & Tax

Nigeria Tax Act 2025

Consolidates 50+ tax statutes into a single substantive code — replaces PITA, CITA, VAT Act, Petroleum Profits Tax Act, Stamp Duties Act, CGT Act and others.

Signed
2025-06-26
Effective
2026-01-01
Status
In force

1 Background

The Nigeria Tax Act is the substantive heart of the 2025 tax reform. It folds the Personal Income Tax Act, Companies Income Tax Act, VAT Act, Capital Gains Tax Act, Petroleum Profits Tax Act, Stamp Duties Act and 40-odd other revenue statutes into a single, harmonised code. It raises the personal income tax exemption floor to ₦800,000/year, restructures the VAT-sharing formula in states' favour, phases the corporate income tax rate from 27.5% to 25% by 2027, and introduces a consolidated 4% Development Levy for large companies.

2 Key provisions (7)

01
PIT exemption floor raised to ₦800,000/year — about 30 million low-income earners now pay zero PIT
02
Top personal income tax rate set at 25% (was 24%), starting at ₦50M/year
03
Corporate income tax: 0% for companies with turnover ≤ ₦100M; 27.5% for large companies (>₦100M), phasing to 25% in 2027
04
New 4% Development Levy consolidates Education Tax (2.5%) + NITDA Levy (1%) + NASENI Levy (0.25%) + Police Trust Fund Levy (0.25%)
05
Rent relief: 20% of annual rent paid, capped at ₦500,000/year — deductible from taxable income
06
VAT rate stays at 7.5%; sharing formula: FG 10% (was 15%), States 55% (was 50%), LGAs 35%
07
Zero-rated items expanded: food staples, healthcare, education, baby products, sanitary products, electricity

3 What changed in practice

~30 million Nigerians pulled out of the PIT net (earning ≤₦800K/year)
Lagos, Rivers and FCT collect substantially more VAT under the new 60% derivation rule
Large companies face a marginally lower effective rate (CIT down + 4% Levy consolidated)
Petroleum upstream operators migrate to standardised CIT-like regime

4 Who it affects

Salary earnersSMEsLarge companiesState governmentsOil & gas operators

5 What it repealed / replaced

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