Nigeria has ushered in a new era of tax administration with a suite of legislative acts that are set to reshape the fiscal landscape for individuals and businesses. While misconceptions have swirled, the core facts provide clarity on who is affected, what has changed, and the critical exemptions in place.
The Joint Revenue Board of Nigeria (Establishment) Act (JRBEA), 2025 and the Nigeria Revenue Service (Establishment) Act (NRSEA) 2025 have been operational since June 26, 2025. The broader Nigeria Tax Act (NTA) and Nigeria Tax Administration Act (NTAA) will officially take effect from January 1, 2026.
Bank Accounts, Monitoring, and Taxpayer IDs
Contrary to widespread fears, the new laws do not authorize arbitrary access to or debiting from personal bank accounts. Mere deposits or transfers are not automatically taxed. Taxation only applies to transactions constituting taxable income that exceeds stipulated exemption thresholds.
Financial institutions are required to render returns to authorities for individual accounts with monthly transactions exceeding N25 million and business accounts exceeding N100 million. However, this is for reporting purposes and does not mean direct debits from accounts. The tax authority cannot debit an account without prior engagement and a series of demand notices.
Furthermore, bank accounts will not be closed on January 1, 2026, for lacking a Tax Identification Number (TIN). The law mandates that financial service providers ensure taxable persons provide a TIN, a pre-existing requirement. The process has been simplified by linking the Tax ID portal to the National Identification Number (NIN) database.
Exemptions and Reliefs for Individuals
A significant focus of the new regime is providing relief to vulnerable groups and low-income earners. Individuals earning up to the National Minimum Wage or N800,000 per annum are fully exempt from Personal Income Tax (PIT). An additional exemption applies to top-up amounts that bring an individual's total annual income to N1.2 million.
Other key exemptions include:
- Salaries of military officers.
- Pension funds, gratuity, and retirement benefits.
- Scholarships for students (though grants and awards are generally taxable).
- Gifts to family members, as they are not considered income from an economic activity.
Allowable deductions for PIT remain, including pension contributions, National Housing Fund payments, life insurance premiums, and interest on mortgages for personal use.
Rules for Businesses, Crypto, and Investments
The laws introduce clear distinctions for businesses. Small companies with a gross turnover of N50 million or less annually and fixed assets not exceeding N250 million pay a 0% Company Income Tax (CIT). However, professional service firms cannot be classified as small companies.
For VAT purposes, a "small business" is defined as one with a turnover of N100 million or less and is exempt from filing VAT returns.
Companies in agricultural businesses like crop production and livestock get a five-year tax holiday from CIT from their start date.
On investments, the treatment of cryptocurrencies has been clarified. With the repeal of the Capital Gains Tax Act, gains from cryptocurrencies are now liable to tax at either the corporate tax rate or personal income tax rate. Conversely, profits from the sale of shares are generally not taxed unless aggregate disposal proceeds exceed N150 million or the chargeable gain is more than N10 million in any 12-month period.
For Nigerians abroad, remittances into local accounts are not taxed, as this income has typically been taxed at the source. Remote workers residing in Nigeria, however, are liable to pay tax on income earned from abroad, as it is deemed to accrue in Nigeria.
The new framework, while comprehensive, maintains familiar mechanisms like Withholding Tax (WHT) as an advance payment for CIT, with credits claimable via certificates. The overarching message from experts is for taxpayers to understand their obligations, utilize available exemptions, and ensure clear transaction narrations to avoid confusion.
