Summary of Some Key Updates to Nigeria’s Tax Laws – Effective January 2026
📌 Purpose
This brief article outlines some of the major changes introduced by four newly enacted tax laws in Nigeria, mostly effective from January 1, 2026. The reforms aim to simplify compliance, broaden the tax base, and enhance revenue collection.
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🧾 Overview of Enacted Legislation
Nigeria Tax Act – Revises tax rates and deductible expenses.
Nigeria Tax Administration Act – Streamlines tax procedures.
Nigeria Revenue Service (Establishment) Act – Rebrands and regulates FIRS.
Joint Revenue Board (Establishment) Act – Clarifies roles of the Joint Revenue Board.
💼 Key Highlights of the Nigeria Tax Act:
Benefits in Kind (BIK)
Assets provided to employees now attract 5% deemed income for PIT.
Employer-provided housing and rented accommodations are taxable.
Exemptions: meals, uniforms, relocation-related benefits.
Personal Income Tax (PIT)
Current Consolidated Relief Allowance (20% of Gross Income) now removed; new progressive rates:
₦0–800K: 0%
₦800K–3M: 15%
₦3M–12M: 18%
₦12M–25M: 21%
₦25M–50M: 23%
₦50M+: 25%
Corporate Income Tax (CIT)
Small companies (≤₦50M turnover): 0%
Others: 30%
Large companies (≥₦50B turnover): Minimum 15% Effective Tax Rate
Capital Gains Tax (CGT)
With exemption for shares disposals under N150M and gains under N10M, CGT rate has been increased to 30%. However due to discussions with concerned market operators, this rate is likely to be reduced.
Deductions & Allowances
Only expenses wholly and exclusively incurred are deductible.
VAT/customs duties must be paid for deductibility.
Interest on borrowing deductible under PPTA, not under PIA.
Development Levy
New 4% levy replaces multiple older levies such as Education Tax, NASENI Levy, etc.
Tax deductible for Petroleum Operations; Non-Tax deductible for non-petroleum operations.
Not applicable to Small Companies and Non-Resident Companies.
VAT Updates
Rate remains 7.5%.
Input VAT recovery allowed only for taxable supplies.
Mandatory fiscalisation (e-invoicing).
🔍 Implications & Recommendations
Review compensation structures for BIK exposure, increased PIT band rates and expanded income coverage.
Reassess deductible expenses and VAT compliance.
Prepare for fiscalisation and surcharge costs.
Monitor FIRS guidance for further clarifications, especially for upstream operations and CIT implications for small companies.
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Dapo (Femi) Otunla is an experienced fiscal and commercial finance specialist with over 20 years in the oil & gas industry. Recognized as an industry fiscal leader, he has built a valuable network and is passionate about continuous improvement and people development.
Throughout his career, Dapo has served in numerous pivotal roles including as the Country Tax Manager at Shell Petroleum Development Co. of Nigeria Ltd (2019 – March 2024) and Country Tax Manager at Shell Nigeria & Shell Gabon (2014 – 2018), Tax Analyst at Shell UK Exploration & Production (2006 – 2009), Senior Tax Adviser at Shell Petroleum Development Co. of Nigeria Ltd (2001 – 2006), Manager in Commercial Banking at GT Bank Plc (2001) and Corporate Banking at Stanbic Merchant Bank (2000 – 2001), as well as holding board directorships at Shell Nigeria Oil Products (SNOP), BG Exploration & Production Nigeria Ltd, and BG Upstream Nigeria Ltd.
Dapo notably worked with the FIRS and others to introduce Cooperative Compliance as a tool for resolving long outstanding tax disputes with the FIRS – a move that has generated significant annual tax savings in excess of USD 100 million. He has managed Nigeria’s largest income tax and royalty portfolio, with estimated contributions of USD 1.1billion per annum to the Federal Government of Nigeria.
His career highlights also include contributions to major funding solutions, resolving complex disputes—such as the Deepwater Disputes with the FGN in 2022—and facilitating significant acquisitions and disposals.
Dapo holds a B.Sc. in Accounting from the University of Lagos and an MBA in Business Management from Robert Gordon University in Aberdeen, Scotland. Dapo is a Fellow of both the Institute of Chartered Accountants of Nigeria (FCA) and the Chartered Institute of Taxation of Nigeria (FCIT). Beyond his professional accomplishments, he is a devoted family man, married with four children.
IG: oluwafemioladapootunla
https://www.linkedin.com/feed/
📞: 08033078256.
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