Overview of the Notable Changes Introduced by the New Nigeria Tax Acts, 2025

The New Tax Acts repeal all principal tax statutes, amend the fiscal provisions of other enactments, and provide for the taxation of income, profits, and gains of companies, partnerships, trusts, families and individuals, as well as the taxation of instruments and transactions in Nigeria. The New Tax Acts introduce major changes to the Nigerian tax system and have significant potential implications for individuals and businesses, and all aspects of the Nigerian economy. This newsletter provides a highlight of the most significant changes introduced by the new tax regime.

Taxation of undistributed profits of non-resident companies controlled by Nigerian companies
The Nigeria Revenue Service (NRS) may deem as distributed the undistributed profits of a non-resident company controlled by a Nigerian company and tax the proportion of the deemed distribution attributable to the Nigerian company, provided that the non-resident company could have distributed the profits without detriment to its business.

Exemption of dividends of a capital nature
Dividends received by a Nigerian company by way of shares in the paying company shall be excluded from profits chargeable to tax.

Taxation of undistributed profits of Nigerian companies controlled by individuals
Under the current regime (Section 21 of the Companies Income Tax), the undistributed profits of a Nigerian company with five or less shareholders (otherwise called a closed company) may, in certain circumstances, be deemed distributed and taxed accordingly. The reenactment of Section 21 of the Companies Income Tax Act in the NTA now makes it clear that the five or less shareholders must all be individuals for the provision to apply. The restriction of the application of the deemed distribution basis of taxation of Nigerian companies to companies controlled by individuals introduces an important change to the current system, which applies to companies controlled by individuals or companies.

Taxation of Nigerians working in international organisations
The employment income of Nigerians working abroad for international organisations that enjoy immunity from taxation in their host countries pursuant to an international agreement to which Nigeria is a party will be taxable in Nigeria. The implication is that Nigerians who work in international organisations such as the World Bank will now be subject to tax in Nigeria, irrespective of their country of residence.

Minimum tax on profits of non-residents attributable to a permanent establishment
The NTA introduces a minimum tax on the profits of a non-resident from a trade, business, vocation or profession carried on in Nigeria to the extent that such profits are attributable to a permanent establishment of the non-resident in Nigeria. The minimum tax shall not be less than the amount to be withheld under Section 51 of the NTAA. Where such profits are not liable to deduction under Section 51 of the NTAA, the minimum tax shall be 4% of the profits.

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Should you have any questions regarding the information in this legal alert, please do not hesitate to contact Chukwuka Ikwuazom.