New Tax Law: Nigerians Questions and Answers
Chairman FIRS Zaccheus Adedeji
The Nigeria Tax Act 2025, signed into law by President Bola Tinubu in June, will come into force on January 1, 2026. The new laws, embodied in several new acts, including the Nigeria Tax Act, the Nigeria Tax Administration Act, and the Nigeria Revenue Service Act, are designed to streamline the tax system, broaden the tax base, and promote economic growth and outlook of the nation.
Here are a few questions and answers to clear our minds.
Q: Which specific individual does the Nigerian Tax Law apply to?
A: Individuals who earn income in Nigeria (workers, content creators, remote workers, influencers, traders, etc.) and to Nigerians earning income abroad if they are residents in Nigeria
Q: Will transfers and deposits into my bank account be taxed?
A: No. Moving money around (via POS, transfers, deposits, or withdrawals) is not taxable. What is taxed is income earned.
Q: Will tax authorities now monitor bank accounts of businesses more closely?
A: Yes. It will be easier for authorities to track compliance. However, your bank balances will not be taxed; profits and income are.
Q: I run a one-man business. Do I pay personal income tax or company income tax?
A: If registered as an enterprise (business name), you pay Personal Income Tax. If registered as a limited liability company, you pay Company Income Tax.
Q: Who is exempt from personal income tax?
A: Individuals, earning the national minimum wage or less, and those earning below N800,000 annually, are exempt.
Q: If I sell shares and make a profit, will I pay tax in 2026?
A: No. As long as the shares you sold are not more than N150 million in value, and the gain is not above N10 million. If it is higher than this threshold, however, the gain becomes taxable.
Q: I am a pensioner. Will my pension income be taxed in 2026?
A: No. Approved pension and retirement benefits are exempt from tax.
Q: Are military salaries taxable?
A: No. The salaries of military officers are now tax-exempt.
Q: Do creative (authors, musicians, actors, comedians, sportsmen) still enjoy tax exemptions on foreign income?
A: No. They must now pay Nigerian tax on their income earned within Nigeria and outside.
Q: Are crypto gains taxable?
A: Yes. Profits from crypto, NFTs, and other digital assets are now taxed.
Q: What are the new progressive tax bands?
A: First N800,000 – 0%
N2.2m – 15%
N9m – 18%
N13m – 21%
N25m – 23%
Above N50m – 25%
Q: If I get a big severance package when leaving my job, will I pay tax on it?
A: You won’t pay tax if it is N50 million or less, but if it is more than the amount, it will be taxed using the progressive tax band above.
Q: If I earn dividends on rent abroad. Will Nigeria tax it?
A: Dividends, interests, rent, royalties earned from outside Nigeria are exempt from tax provided they are brought into Nigeria through approved channels (banks).
Q: My uncle wants to start an agriculture company next year. Will his company be taxedin Nigeria?
A: No. Agriculture businesses such as those in crop production, livestock, forestry, dairy, and cocoa processing, will enjoy a five-year tax holiday from the date they begin operation.
Q: Is income from federal or state bonds taxable?
A: No. All government bonds are exempt from tax.
Q: What does rent relief entail under the new tax law?
A: From 2026, individuals can claim rent relief of 20% of the annual rent paid, but capped at N500,000. For instance, if your yearly rent is N5 million, 20% would be N1million, but the law caps it at N500,000. To enjoy this relief, you must declare your actual rent and provide the details to the relevant tax authorities.
Q: If my company’s turnover is below N50 million, will I pay tax?
A: No. Small companies with a turnover of less than N50 milion are exempt from taxes.
Q: As a remote worker in Nigeria for an international organisation, will I pay tax?
A: Yes. You will pay tax in Nigeria if the country where the international organisation is based exempts your salary under a treaty or diplomatic arrangement.
