From 2026, there’ll be new tax implementations in place by virtue of four major Acts working together. The Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Act and the joint Revenue Board (Establishment) Act. Now what are the implications of this reforms?

FOR COMPANIES (before this new Tax reform): *If your company made ₦25m or less in a year, you paid 0% (nothing). *If your company made between ₦25m and ₦100m, you paid 20% tax on your profit. *If your company made above ₦100m, you paid 30% fixed rate on your profit.

The reform henceforth: The “small company” threshold has been raised from ₦25m turnover to ₦100m + ₦250m assets, making many more companies tax free. So If your company makes ₦100 million or less per year and owns ₦250 million or less in assets, you don’t pay CITA or CGT.

However if your turnover is above ₦100 million (and asset above ₦250m), you move into the 30% bracket I.e you continue paying the 30% fixed rate on profit. The 20% “medium” band has been scrapped. So now you either qualify as small (exempt) or you’re in the main 30% group.

PERSONAL INCOME TAX (Before the reform): There was no fixed threshold for low income earners. What was practiced was consolidated relief allowance. So generally, persons who earned a small salary, like ₦35,000 didn’t pay tax, the discount cleared it.……

However if your salary was bigger let’s say ₦50k (₦600k/year), the CRA discount doesn’t cover it anymore, so now your employer deducts some of that amount and pays it as Tax. That’s where the Pay as you Earn system came in.

After the Reform: The new Tax Act introduces a clear threshold. If you earn ₦800k or less in a year (that’s about ₦66k per month), no Personal Income Tax. If you earn above ₦800k, you start paying tax. The more you earn, the higher your rate. E.g (₦800k – ₦1.3m) =7% rate.

CAPITAL GAINS TAX (before the reform): This is basically the govt telling you “If you’ve made extra money by selling something at a profit, you should give us a small share.” That share of the profit is the capital gains tax. Before the reform, the rate was a flat 10%….

However the current capital gains tax didn’t cover assets like shares. There was also loopholes that people capitalized on. For e.g once some people gets this profit, they immediately re-invested the profit to avoid paying CGT. So our Tax-master tackled this loophole.

After the Reform: The new CGT is 15% flat rate deductible also on shares. If the total profit you make from selling shares or securities in one year is ₦5 million or less, you don’t pay any CGT. Other Assets like land, houses, crypto is taxable at 15%. Even if profit is 100k.

VALUE ADDED TAX (Before the reform): This is small extra charge added when you pay for goods/services. The rate before was 7.5% on goods/services (exceptions basic food items,education, medicals, books etc). Only businesses making ₦25 million or more in a year had to charge VAT.

After the reform: The rate has been raised to 10%. Now only businesses making ₦50M or more in a year now charges customers for VAT. Also online Services are now covered, so your Netflix, Spotify, bolt etc now charges Nigerians 10% for VAT. Essentials still remain exempted.

STAMP DUTIES (Before the reform): A common misconception is that stamp duties only relates to land but I bet you’ve been seeing ₦50 deducted from your account whenever you make a transfer of ₦10k or more, that wasn’t bank charges, that’s stamp duties. A tax imposed by the govt.

After the Reform: The Govt has scrapped the old system and replaced it with a Transaction Levy. Henceforth transfers below ₦50k attracts no more ₦50 charge. However Transfers of ₦50k and above attracts ₦50 flat levy. It also now applies to Fintech banks like Opay etc

5% FUEL SURCHARGE: There’s been series of misinformation about this. To put it plainly, The surcharge is not new. It was first introduced in the 2007 FERMA Act, It’s a tax specially meant for road upkeep and for consolidation purposes was restated in the Nigeria Tax reform Act…

…. Having the surcharge in the law does not mean it starts immediately. Before the surcharge can begin, the Minister of Finance must issue a gazette order specifying when it takes effect. So it’s in law but still remains dormant. So nobody is paying 5% tax on fuel purchases YET.

TAX IDENTIFICATION NUMBER (Before the Reform): This is where it gets interesting. Having a TIN was mainly for businesses & companies. Hence, a lot of Nigerians were outside the tax system, that’s why we could earn, trade, move money, yet govt couldn’t easily track us for tax.

After the Reform: TIN henceforth is Mandatory for Bank Accounts. Now individuals & companies must provide a TIN before opening a new bank account. Existing accounts may also be updated with a TIN. This now brings more Nigerians into the tax net and enables cross-checking of tax.

CRYPTO AND DIGITAL ECONOMY: ICYMI: Just to emphasize, the crypto bro’s y’all aren’t left out oo!! Certainly you didn’t think our Tax master would miss out on a fast moving market keh! Crypto being a grey area in Nigeria wasn’t taxed at all before this reform.

After the reform: Henceforth If you sell crypto or NFTs and make a profit, you must pay 15% capital gain tax on the profit.. If you use crypto to buy services E.g you pay for an online course with USDT, that service will attract 10% VAT. if you make money, you share with govt.

You might think Crypto is decentralized, so they wouldn’t track it. I’m sorry to burst your bubbles. The centralized exchanges are now being mandated to register with Nigerian Revenue service. So the same way they deduct gas fees, same way they’ll deduct the tax per transaction.

DIGITAL EARNERS (before the Reform): There was no direct mention of “content creators” in Nigerian tax laws. Many YouTubers, TikTokers, influencers earned income without declaring it. Also by virtue of these apps paying them online (ads, gifts) it wasn’t accessible to be taxed.

After the Reform: The new tax Act expressly includes “digital content creators, influencers, and online service providers” as taxable persons. So if you earn online, you’re now in the tax net. Henceforth personal and income tax deductions on profit & income now applies to you.

EXCISE DUTIES (Before the Reform): This is a tax levied on certain goods considered non-essential or harmful, e.g alcohol, tobacco etc. inorder to raise money for the govt and discourage people from consuming too much of them. It’s been a side revenue (side hustle) for govt…

…So there hasn’t been any aggressive Tax on Excise Duties over the years. Last I remember, In 2021, the govt introduced a ₦10 per litre excise duty on sweetened beverages like Coke, Fanta etc. so the rates were mostly low, and it was limited to a few “sin goods.”

After the Reform: Unfortunately, our tax master decided that excise duty should no longer be a small tax. The old ₦10 per litre for Sweetened beverages has shot up to ₦130 per litre. Cigarettes & alcohol has also been raised. If you consume any, you better start abstaining.

@NwannaChuka How will they know the profit a business makes

@MikeCMike1 You underestimate the govt.

@NwannaChuka Are we going to be tax monthly or yearly? We are even doom

@Enjoimenpapii Depends on the source of income. As an employee, you’d be taxed monthly. Normally your employer will deduct 15% (depending on the amount) and remit it to govt. For sole proprietors and companies, it’s annually, by end of financial year, they’ll file returns to revenue service.

@NwannaChuka How do they plan to track my crypto sells ?

@Markdre_ The centralized exchange would do that for them. This was the problem why Binance was taken to court but lack of enforcement made the case to elapse. Now CEX must register with revenue service. So the CEX will deduct the amount same way they deduct gas fees and remit it to govt.

@NwannaChuka Thank you Chuks Knowing how interchangeable people make of turnover, sales and profit, then a distinction needs to be made explaining if it’s based on Revenue(sales) or profit .

@tom_anney Okay. For Nigerian company income Tax, the threshold is based on turnover (sales) not profit. Mind you turnover is just used to decide which category a company falls into for taxing purposes. Once the category is known, the tax is then calculated on profit not turnover.