Nigeria Tax Law: Rates, Deadlines, and Penalties

Nigeria’s tax law was rewritten by a package of three statutes that took effect on January 1, 2026: the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, and the Joint Revenue Board of Nigeria (Establishment) Act 2025. Together they set new personal income tax brackets, keep VAT at 7.5%, consolidate four older corporate levies into a single 4% development levy, change how capital gains are taxed, and impose penalties starting at ₦100,000 for a missed filing. Both residents and non-residents earning Nigerian-source income are covered.

What Changed on January 1, 2026

Before 2026, taxation ran on separate statutes like the Companies Income Tax Act, the Personal Income Tax Act, the Value Added Tax Act, and the Capital Gains Tax Act, patched year by year through Finance Acts. Three new laws now anchor the system.

The Nigeria Tax Act (NTA) carries the substantive rules for income tax, VAT, capital gains, and the development levy, and it revised personal income tax brackets and capital gains rates.¹ The Nigeria Tax Administration Act (NTAA) governs filing, audits, penalties, and enforcement, and establishes the 4% development levy.² The Joint Revenue Board Act creates a coordinating body over federal and state tax authorities, maintains a unified TIN database, and sets up an Office of the Tax Ombud to hear complaints about official conduct.³

The federal collector, formerly the Federal Inland Revenue Service, now operates as the Nigeria Revenue Service (NRS). Each of the 36 states still has its own State Internal Revenue Service that collects personal income tax from residents within its borders. Older figures and procedures in circulation predate these changes.

Personal Income Tax

Individuals pay tax on a graduated scale applied to taxable income after the consolidated relief allowance and other allowable deductions:

First ₦800,000: 0%
Next ₦2,200,000: 15%
Next ₦9,000,000: 18%
Next ₦13,000,000: 21%
Next ₦25,000,000: 23%
Above ₦50,000,000: 25%

The 0% band on the first ₦800,000 is new. The old system began taxing at 7% from the first naira of taxable income, so lower earners now have a genuine tax-free threshold.¹

Before the rates hit, every individual deducts a consolidated relief allowance (CRA): ₦200,000 or 1% of gross income, whichever is higher, plus 20% of gross income. Someone earning ₦5,000,000 a year gets a CRA of ₦200,000 plus ₦1,000,000, cutting taxable income to ₦3,800,000 before further deductions like pension contributions and life insurance premiums.

Employees have tax withheld monthly through Pay-As-You-Earn (PAYE); the employer computes the liability, deducts it from salary, and remits it to the state tax authority. Self-employed people and those trading under a business name or partnership use direct assessment and calculate their own liability. Both groups file annually by March 31.

Corporate Income Tax

Companies are placed in a tier by annual gross turnover:

Small companies (turnover of ₦25 million or less): 0%
Medium companies (turnover above ₦25 million but below ₦100 million): 20%
Large companies (turnover of ₦100 million and above): 30%

A small company pays no corporate income tax on its profits, but it still has to file and may owe other levies. Companies that report no taxable profit, or whose calculated tax comes in below the statutory floor, pay a minimum tax of 0.5% of gross turnover minus franked investment income. Companies in their first four calendar years, primary agriculture businesses, and small companies are exempt from the minimum tax.

The 4% Development Levy

One of the most practical changes: four older corporate levies have been folded into a single 4% development levy on assessable profits. The consolidation replaces the Tertiary Education Tax (3%), the NITDA levy (1% on qualifying tech and financial sector companies), the NASENI levy (0.25%), and the Police Trust Fund levy (0.005% of net profit).² Small companies and non-resident companies are exempt from the development levy.

Value Added Tax

VAT is 7.5% on most goods and services. Sellers collect the tax at the point of sale and remit it to the federal tax authority. Businesses supplying taxable goods or services must register and file regularly.

The NTA separates exempt supplies from zero-rated supplies. Exempt supplies carry no VAT and include land and buildings, government licenses, baby products, shared passenger transport, and military equipment. Zero-rated supplies are technically taxable at 0%, which matters because their suppliers can claim input VAT credits on their purchases. Zero-rated categories include basic food items, medical and pharmaceutical products, educational books and materials, fertilizers, and exported goods.¹

Withholding Tax

Withholding tax (WHT) is deducted at source on certain payments as an advance on the recipient’s eventual liability. The payer withholds and remits by the 21st of the following month. Rates vary by transaction and by whether the recipient is resident:

Dividends and interest: 10% (companies and individuals)
Rent, hire, or lease payments: 10%
Professional, consulting, and management fees: 5% resident, 10% non-resident
Construction and related activities: 2%–5% resident, 5%–10% non-resident
Supply of goods: 2%
Directors’ fees: 15% resident, 20% non-resident
Royalties: 10% for companies, 5% for individuals

For resident recipients, WHT is a credit against the final tax bill. For non-residents without a permanent establishment in Nigeria, the withholding often is the final Nigerian tax on that income. Businesses making qualifying payments must register as withholding agents and issue WHT credit notes to recipients.

Capital Gains Tax

Capital gains treatment changed substantially. The old flat 10% is gone. Companies now pay capital gains tax at 30%. Individuals pay at their applicable personal income tax rate using the same progressive brackets that apply to their other income.⁴

A gain arises when you sell an asset for more than its acquisition cost, and the tax applies to all forms of property, including land, buildings, and shares. Gains are reported in the assessment year the disposal occurs. Lower-income individuals disposing of assets may pay less than they did under the old flat rate; high earners and companies pay more.

Non-Residents and Digital Businesses

A non-resident company providing digital services triggers a “significant economic presence” in Nigeria once its Nigerian-sourced gross turnover exceeds ₦25 million in an accounting year. Crossing that threshold makes it liable for corporate income tax on profits attributable to Nigerian operations, and requires registration with the NRS and annual filings.

For non-residents providing technical, management, consulting, or professional services, there is no monetary threshold: any income received from a Nigerian-resident payer can establish a taxable presence. WHT at 10% on those payments typically serves as the final Nigerian tax where there is no permanent establishment.

Filing Deadlines and How to Pay

Returns are filed electronically. The TaxProMax portal handles federal taxes; states have their own digital platforms. After filing, the system generates a payment reference code used to settle the liability through a commercial bank or by online transfer.

Individuals file by March 31 each year. Companies file within six months after the end of their accounting year, or within 18 months of incorporation, whichever comes first. Companies can split the payment into up to four installments through the portal instead of settling in one payment.

Filing without paying leaves the liability open on official records. The electronic receipt generated after payment is the valid proof of compliance during an audit, so keep it.

Penalties for Late Filing and Payment

The NTAA sets the penalty for failing to file, or filing incomplete or inaccurate returns, at ₦100,000 for the first month of default and ₦50,000 for each subsequent month the failure continues.² Petroleum operations face far steeper numbers: ₦10,000,000 on the first day of default and ₦2,000,000 for each subsequent day.

Late payment of tax owed carries a separate 10% penalty on the unpaid amount, plus interest at the prevailing Central Bank of Nigeria monetary policy rate plus a spread set by the Minister of Finance. The CBN monetary policy rate is not fixed and has been high in recent years, so unpaid balances get expensive quickly.

Audits and Disputing an Assessment

The tax authority can audit any taxpayer going back up to six preceding assessment years. Audits are field exercises at the taxpayer’s premises and must be preceded by a pre-audit meeting. Authorized officers can access books, records, and documents, including digital records; where records exist only in digital form, the authority can take possession of the storage media or make exact duplicate copies.² Where an audit finds a shortfall, the authority issues an additional assessment. Missing or disorganized records tend to lead the authority to estimate the liability.

If you disagree with an assessment, you can appeal to the Tax Appeal Tribunal within 30 days of the assessment notice.⁵ The TAT hears the case before any escalation to the Federal High Court. Appeals can be filed through the tribunal’s e-filing portal, and virtual hearings are allowed on request.⁶ The TAT covers disputes under all major tax statutes, including corporate income tax, personal income tax, VAT, capital gains tax, and stamp duties, and either side can initiate an appeal. If the 30-day window closes, the tribunal can still hear the case where it finds sufficient cause for the delay, but that is discretionary.

Where the complaint is about how a tax official has behaved rather than a disagreement over the numbers, the Office of the Tax Ombud created under the Joint Revenue Board Act provides a separate route to raise the issue.³

1
Nigeria Revenue Service. Nigeria Tax Act 2025
2
Africa Check. Nigeria Tax Administration Act 2025
3
Nigeria Official Gazette. Joint Revenue Board of Nigeria Establishment Act 2025
4
Policy and Legal Advocacy Centre. Capital Gains Tax Act
5
Tax Appeal Tribunal. Tax Appeal Tribunal Procedure Rules 2021
6
Tax Appeal Tribunal. Tax Dispute Resolution