What businesses should know about the new tax laws with Toyin Olufon, Managing Partner, Lefort

Nigeria’s new tax framework marks the most significant reform in decades. With the introduction of the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), businesses are now operating under a more consolidated, digital, and enforcement-driven system. These laws replace several fragmented tax statutes with a single modern framework designed to simplify compliance, remove conflicts, and strengthen revenue administration.

Building on the earlier overview of Nigeria’s new tax laws published here, Toyin Olufon, Managing Partner at Lefort, deepens the discussion by focusing on the practical implications for businesses, the risks many are underestimating, and the actions leaders must take now.

The NTA replaces multiple existing laws (Companies Income Tax Act, VAT Act, Personal Income Tax Act, Capital Gains Tax Act, Stamp Duties Act, etc.) with one consolidated system. The goal is to remove conflicts, simplify compliance, and improve enforcement.

1. Small companies (≤ ₦100 million turnover and ≤ ₦250 million in assets) are exempt from:

• Corporate Income Tax (CIT)

• Capital Gains Tax (CGT)

• Development Levy

2. The standard corporate tax rate remains 30% for other companies.

3. A minimum effective tax rate (ETR) of 15% now applies to:

• Multinationals meeting global revenue thresholds

• Large Nigerian companies with a turnover above ₦50 billion

A 4% Development Levy on assessable profits replaces several old earmarked levies, such as:

• Tertiary Education Tax

• Police Trust Fund Levy

• IT Levy, and others

• Capital allowances are now claimed on a straight-line basis at fixed annual rates (e.g., 10%, 20%, 25%).

• Only capital expenditure with paid VAT or import levies qualifies.

• A “Nigerian company” now includes firms centrally managed or controlled from Nigeria, even if incorporated abroad.

• Non-resident companies can be taxed based on economic presence, not just physical presence, bringing digital and service-based income firmly into the tax net.

• Free zone companies retain tax exemptions on export income (subject to conditions).

• New Economic Development Incentives (EDI) include a 5% tax credit on qualifying capital expenditure.

• Personal income tax now ranges from 0% to 25%, with individuals earning ≤ ₦800,000 annually exempt.

• CGT for companies rises from 10% to 30%, aligned with corporate tax.

• CGT now covers digital and virtual asset gains and indirect transfers.

• Mandatory use of a single TIN

• Digital filing and payment platforms

• Clearer penalty and interest rules

• Stronger audit, enforcement, and dispute resolution systems

Review your position across CIT, VAT, WHT, CGT, levies, and PAYE. Map old obligations to the new structure to avoid paying obsolete taxes or missing new ones. 

Confirm whether you qualify as a small, medium, or large company using audited accounts. Many firms are over- or under-paying simply because they haven’t reclassified.

Adjust for:

• Straight-line capital allowances

• The new Development Levy

• CGT changes

• Minimum effective tax rules

Revisit WHT clauses, VAT assumptions, and gross-up provisions, especially for service, digital, and long-term contracts.

Ensure accurate invoices, audit trails, and related-party documentation. Compliance is shifting from just paying tax to proving correctness.

Ensure your TIN data is harmonised, and systems can support e-filing, data matching, and rapid assessments.

Assess whether you now have economic presence or management/control exposure in Nigeria.

Procurement, HR, sales, and operations all create tax risk. Most penalties come from operational mistakes, not bad intentions. 

Where there is ambiguity, seek clarity early. It’s cheaper than audits and disputes. 

Update budgets, cash-flow forecasts, and effective tax rate projections.

There are also serious risks that many businesses are underestimating. A N5million fines apply for dealing with vendors that are not registered for tax purposes. Failure to adopt e-filing and e-invoicing systems can trigger penalties and audits. Weak documentation can lead to expenses being disallowed, which inflates taxable profits. Late payments now attract compounding interest, and non-compliance can result in sealed premises, public notices, and reputational damage.

In today’s environment, tax risk is no longer just a finance issue; it is a strategic and operational one.

For growing businesses without formal tax structures, the advice is simple but urgent: start early and build discipline. Register properly, separate business and personal finances, and keep basic records from day one. Build a culture of documentation, understand what your advisers are doing on your behalf, and make compliance routine rather than reactive. As revenue grows, tax exposure grows with it, and budgeting for tax is just as important as budgeting for rent or salaries.

Looking ahead, businesses must prepare for further regulatory change by building flexible systems, staying intentionally informed, strengthening governance, and using data proactively. Training staff, especially in finance, HR, procurement, and operations, is essential because most tax risks arise from everyday decisions, not deliberate evasion. Finally, businesses should cultivate trusted advisory relationships and use professional guidance for planning, not just crisis response.

The future belongs to businesses that treat regulation not as a burden, but as a design constraint for smarter, safer, and more scalable growth. 

Ms. Toyin Olufon is a Chartered Accountant in both Nigeria and the UK, a seasoned tax consultant with over 15 years of experience, a financial service expert and a Mandela Washington Fellow, among other notable achievements. She is the Managing Partner at Lefort, a tax, finance, and business advisory firm helping African businesses operate with global standards. She is also the convener of The AccounTech Summit.