Nigeria

In Nigeria, the basic corporate tax rate is 0% for small companies and 30% for large companies. The Nigeria Tax Act 2025 (NTA) exempts every small company, defined as a company with an annual turnover of NGN 100 million or less and fixed assets not exceeding NGN 250 million, from corporate tax. The NTA further empowered the President by an executive order to reduce the applicable corporate tax rate from 30% to 25% (section 56, NTA). However, the President has not yet exercised this power.

In addition, Nigerian companies (excluding small companies) are required to pay a development levy of 4% of their assessable profits yearly. The development levy replaced and consolidated various earmarked taxes (Tertiary Education Tax (3%), National Information Technology Development Agency Levy (1%), National Agency for Science and Engineering Infrastructure Levy (0.25%), and the Police Trust Fund Levy (0.005%)) (section 59, NTA).

Prior to the enactment of the Petroleum Industry Act, 2021 (PIA), upstream oil and gas companies paid income tax at rates ranging between 50% and 85% of their profits, depending on the nature of each company’s operations. However, the PIA has now introduced the hydrocarbon tax (HT), which, together with the general corporate tax, has replaced the petroleum profit tax for upstream petroleum operators. HT is applicable on the profits of upstream companies operating onshore or in shallow waters, but the applicable rate depends on the operator’s licencing regime. For instance, HT is charged at a rate of 30% for operators with petroleum mining lease and 15% for operators with petroleum prospecting licence. Additionally, both the petroleum mining leases and petroleum prospecting licences holders are liable to corporate tax at 30%.

Nigeria recently introduced a 15% minimum effective tax rate, in line with the ongoing global tax reforms. This applies to multinational group entities with a consolidated global turnover of at least EUR 750 million (or its equivalent), or Nigerian companies with a turnover of NGN 50 billion or more in the relevant financial year. Therefore, where a foreign subsidiary pays tax at a rate below this threshold, the Nigerian parent is liable to pay the top-up tax to bring its tax up to the minimum 15% rate (section 6(3), NTA). This provision seeks to implement Pillar Two of the OECD-Inclusive Framework Two-Pillar Solution, which proposes a 15% global minimum tax rate for MNEs (section 57(1)(a), NTA).

The Nigeria Revenue Service (NRS) is empowered to issue regulations for the implementation and administration of the regime and may prescribe higher turnover thresholds (section 57(4), NTA).

Income tax

In Nigeria, resident companies are charged corporate income tax on their worldwide income irrespective of the source. This means that all income, whether derived within Nigeria or from foreign sources, is generally subject to corporate income tax, provided the income has not been subjected to any other Nigerian tax. This includes profits from business operations, interest, dividends, rents, royalties, digital transactions, incorporeal assets, and other forms of revenue.

In contrast, non-resident companies (NRCs) are taxed only on income generated from Nigeria sources or profits attributable to activities in Nigeria. Further, NRCs providing digital services to Nigerian residents are subject to income tax in Nigeria if they have a significant economic presence (SEP) in Nigeria and profits attributable to their activities in Nigeria.

Furthermore, NRCs providing services to Nigerian residents, and which do not have SEP in Nigeria (and are therefore not subject to Nigerian corporate income tax), will be subject to withholding tax (WHT) on their income generated from these services. The WHT rate is 10%, which shall be the final tax (section 56, NTA).

Furthermore, the law empowers the NRS to assess and charge tax on a fair and reasonable percentage of that part of the turnover attributable to the NRC’s operations in Nigeria. Thus, if it is not possible to reliably determine the profits of NRCs generated from Nigeria, the law mandates the Nigerian tax authority to apply the NRC’s profit margin to the total income generated from Nigeria. The law provides that, in cases where no withholding applies, the tax payable by NRCs must be at least 4% of the total income generated from Nigeria (section 17(8), NTA).

Please note that the taxation of NRCs is subject to any tax treaty between Nigeria and the country of residence of the relevant NRC.

Capital gains

Gains realised by a company from the disposal of chargeable assets are generally treated as part of the taxable profits of that company. Chargeable assets include all forms of property, whether situated in or outside Nigeria, including shares, rights, debts, intangibles, digital or virtual assets and incorporeal property. A disposal includes sale, transfer, assignment, compulsory acquisition or other forms of alienation of assets (section 36, NTA).

The NTA has integrated chargeable gains into the regular income tax base. For corporate entities, capital gains are taxed at the applicable corporate income tax rate of 30% for large companies or 0% for small companies. For individuals, gains are now subject to the same progressive tax bands (0% to 25%) as regular income.

For residents, capital gains from disposal of both domestic and foreign assets are subject to tax in Nigeria, unless specifically exempted from tax. On the other hand, non-residents are typically taxed only on gains from the disposal of Nigerian assets.

Foreign-source income received by resident companies is included in taxable profits, but Nigerian tax laws provide relief to mitigate the risk of double taxation in two significant ways. First, there are tax credits available to all taxpayers. These credits allow companies to offset taxes paid in another jurisdiction against their Nigerian tax liabilities on the same income. But this relief is limited to passive investment income (section 121(2), NTA). Second, if a double tax treaty exists between Nigeria and the source country, the treaty provisions help to mitigate double taxation by defining how taxing rights are allocated between Nigeria and the relevant treaty partner.

Every company must file annual self-assessment returns (section 11(1), Nigeria Tax Administration Act 2025 (NTAA)). A non-resident company must file returns limited to profits attributable to its Nigerian operations (section 11(2), NTAA). However, where a non-resident company earns only income on which tax deducted at source is final, filing obligations do not apply (section 11(3), NTAA).

Indirect taxes in Nigeria are as follows.

Value Added Tax (VAT)

VAT is chargeable at the rate of 7.5% on the supply of all goods and services in Nigeria, except those specifically exempted. A supply is deemed to occur in Nigeria where goods are physically present or imported into Nigeria, where services are provided to and consumed by a person in Nigeria, or where incorporeal rights are exploited or registered in Nigeria (sections 143–145, NTA).

All businesses and government agencies must charge and deduct VAT on their invoices and transactions with counterparties and remit the same to the NRS. However, businesses with an annual turnover of less than NGN 100 million are exempt from VAT filing obligations (section 22(4), NTAA). They may, however, opt out of the exemption, including registration, charging of tax on their taxable supplies and filing of returns by submitting a written notice to that effect to the NRS (section 22(5), NTAA).

VAT is also chargeable on services rendered by NRCs with no physical presence in Nigeria to a Nigerian recipient. NRCs that supply taxable goods or services in Nigeria are required to register for VAT and obtain a tax identification number. An NRC may, however, appoint a local agent or representative for tax compliance purposes. The list of VAT-exempt items has recently been expanded to specifically exempt goods and services, such as compressed natural gas, liquefied natural gas, electric vehicles and electric vehicle manufacturing, from VAT. The NTA also introduced a zero-duty rate on basic food items, all medical and pharmaceutical products, educational books and materials, and so on.

Customs and excise duties

Nigeria levies customs duties on goods imported into Nigeria. The amount payable is based on the costs of freight and insurance, which are the complete shipping value. Rates vary depending on the product and are assessed with reference to the prevailing Harmonised Commodity and Coding System (“HS code”).

Excise duties are levied on specific goods produced or imported into Nigeria, such as tobacco, alcohol, and petroleum products. Excise duties are collected by customs authorities and aim to both generate revenue and influence consumption behaviour.

Stamp duties

Stamp duties are imposed at either a fixed rate or ad valorem basis on written documents and a broad range of instruments. The duty is generally payable by the party deriving the benefit under the instrument and is calculated either as a fixed amount or as a percentage of the value stated in the document. Under Nigerian law, an instrument is required to be stamped where it is executed in Nigeria or, if executed abroad, when it is brought into Nigeria (section 123, NTA). In structured transactions involving multiple interrelated documents, parties may designate an instrument attracting the lowest ad valorem duty as the principal instrument, with related instruments stamped at nominal rates in accordance with the statutory framework.

Failure to pay the applicable duty may render the instrument inadmissible in evidence in civil proceedings, though it may still be admitted in criminal matters. Certain instruments are stamp duty exempt, including those executed by or in favour of the government, and documents executed outside Nigeria that do not relate to Nigerian property, assets, matters or parties (section 184, NTA).

In Nigeria, WHT is deducted on certain payments made to individuals and companies, including interest, dividends, rents, royalties, professional fees, management fees, and contracts for goods or services. The person making the payment to the counterparty is responsible for deducting the tax at the prescribed rate before issuing the payment to the recipient and remitting it to the NRS for federal taxes or the state revenue services for state-level taxes.

For residents, the tax deducted is generally creditable against their final tax liability, meaning that it is treated as an advance payment of income tax. For non-residents, withholding tax is the final tax on Nigerian-source income, unless there is a relevant tax treaty providing relief.

Rates of WHT vary depending on the type of payment, the recipient’s residency status, and applicable statutory provisions. For example, payments to non-residents often incur higher withholding tax rates in the absence of a tax treaty. Key withholding tax rates for corporates include:

• 10% on dividends, interest, royalties, rent, hire or lease for both residents and NRCs;
• 5% on commissions and professional/technical/management fees paid to residents (10% for NRCs);
• 2% on supply of goods (other than by manufacturers/producers) (not applicable for NRCs);
• 2% on general services to residents (5% for NRCs);
• 2% on construction of roads, bridges, buildings and power plants (5% for NRCs);
• 5% on brokerage fees for resident companies (10% for NRCs); and
• 15% for non-resident entertainers and sports persons (not applicable for NRCs).

(See Deduction of Tax at Source (Withholding) Regulations 2024; First Schedule).

Nigeria has a General Anti-Avoidance Rule (GAAR). The law empowers the tax authority to disregard, recharacterise, or otherwise vary any arrangement that is artificial, fictitious, or lacks commercial substance where its main purpose is to obtain a tax advantage. In applying the rule, the NRS may look beyond the legal form of a transaction to its economic substance and adjust taxable profits, accordingly, including disallowing deductions or reallocating income. Such adjustments are subject to the statutory objection and appeal process (section 190, NTA).

Nigeria now has some specific rules to prevent tax avoidance. First, the Transfer Pricing Regulations were first promulgated in 2012 and revised in 2018. The regulations compel a connected person to declare their relationship with the other connected persons, whether resident in or outside Nigeria, and to make an annual disclosure of all their related-party transactions.

Nigeria also introduced Controlled Foreign Company (CFC) rules to prevent tax avoidance by taxing undistributed profits of foreign subsidiaries controlled by Nigerian companies. If a CFC does not distribute profits within one year, the share attributable to the Nigerian parent may be deemed distributed and taxed in Nigeria (section 6, NTA).

Further, there is also an interest expense limitation rule for intercompany loans, which was once limited to foreign loans but has been extended to all intercompany loans. Interest expense on loans from affiliates is limited to 30% of earnings before interest, taxation, depreciation and amortisation (EBITDA).

Finally, the law requires taxpayers to disclose any tax avoidance schemes and transactions designed to confer tax advantages to the taxpayer.

In Nigeria, the most frequent causes of tax controversies include:

• Lack of clarity in the constitutional division of taxing powers between the federal and the constituent states.
• Additional assessments issued following tax audits or investigations. Disagreements over the amount of tax assessed, including alleged underpayment or miscalculation.
• Withholding tax and VAT compliance — disputes over deduction, collection, remittance, or applicable rates.
• Transfer pricing and related-party transactions — challenges on pricing of intercompany transactions and documentation.
• Tax incentives, reliefs and exemptions — disagreements over eligibility for statutory reliefs.
• Late or non-filing of tax returns, including penalties and interest accruing therefrom.
• Late or non-payment of tax due, including penalties and interest accruing therefrom.
• Interpretation of substantive tax laws — where statutory provisions are ambiguous, leading to differing positions.
• Disputes or controversies between the governments within the Federation on the constitutional allocation of taxing powers.

Tax controversies in Nigeria are governed by several legislative frameworks. They provide both substantive and procedural mechanisms for dispute resolution. These include:

• The Nigeria Tax Act, 2025 sets out the substantive tax rules on liability of companies and individuals, which form the basis of most tax disputes.
• The Nigeria Tax Administration Act, 2025 establishes the procedural framework for handling tax controversies, including assessments, objections, audits, enforcements, penalties, and recovery of unpaid taxes.
• The Joint Revenue Board of Nigeria (Establishment) Act 2025 establishes the Tax Appeal Tribunal (TAT) as the primary forum for formal tax dispute resolution. It also creates the Office of the Tax Ombud, which resolves taxpayer complaints through informal mechanisms such as mediation and conciliation.
• The Nigeria Revenue Service (Establishment) Act, 2025 defines the statutory powers of the Service to administer, assess, investigate, and enforce federal tax liabilities, forming the foundation for audits and dispute processes.

Together, these laws provide a structured system for managing and resolving tax controversies in Nigeria.

In Nigeria, alternative mechanisms are available for resolving tax controversies outside the ordinary court process. Relevant tax authorities and the taxpayer may resolve disputes amicably at any stage through a formal settlement, whether in whole or in part, subject to statutory conditions and exclusions. Any settlement agreement must be in writing, signed by authorised officers, and is enforceable as a debt (section 141, NTAA).

In addition, the Joint Revenue Board of Nigeria (Establishment) Act 2025, establishes the Office of the Tax Ombudsman, empowered to address taxpayer complaints through informal dispute resolution mechanisms, including mediation and conciliation, particularly where issues remain unresolved by the relevant tax authority.

Unresolved disputes may be referred to the Tax Appeal Tribunal (TAT), a specialised body established to hear tax appeals before recourse to the Federal High Court for further appeal.