QUESTIONS & ANSWERS ON THE NEW NIGERIA TAX LAW (SPECIFIC FOCUS ON INDIVIDUALS AND SMALL BUSINESSES)

🟢 Q1:
* When will the new Nigeria Tax Act take effect?

A1:
* The new Nigeria Tax Act takes effect from 1st January 2026.

🟢 Q2:
* Which specific individuals does the Nigerian Tax Law apply to?

A2:
* It applies to all individuals who earn income in Nigeria (workers, content creators, remote workers, influencers, traders, etc.) and to Nigerians earning income abroad if they are tax residents in Nigeria

🟢 Q3:
* Will transfers and deposits into my bank account be taxed?

A3:
* NO. Moving money around (via POS, transfers, deposits, or withdrawals) is not a taxable event. What is taxed is income earned.

🟢 Q4:
* Will the money I KEEP in my bank account be taxed from 2026?

A4
* NO.
* Just having money in your account is not taxable.
* Only the income you earn (like salary, business profits, or interest) is what can be taxed.

🟢 Q5 :
* I’m a student with no job. Will I pay tax in 2026?

A5:
* NO.
* If you have no taxable income, you won’t pay tax.

🟢 Q6:
* Will tax authorities now monitor bank accounts of businesses more closely?

A6:
* YES,
* It will be easier for authorities to track compliance.

However,
* Your bank balances will not be taxed; profits and income are.

🟢 Q7 :
* Will I pay tax on the loan I borrow from Fairmoney or any lender?

A7:
* NO.
* Loans are not taxable given that they are not income.

* However, the interest income earned by Fairmoney will be taxed in their own hands.

🟢 Q8:
* I run a one-man business.

* Do I pay personal income tax or company income tax?

A8:
* If registered as an enterprise (business name), you pay Personal Income Tax.

* If registered as a limited liability company then you pay Company Income Tax.

🟢 Q9:
* If I sell shares and make a profit, will I pay tax in 2026?

A9:
* NO,
* as long as the shares you sold are not more than ₦150 million in value, and the gain is not above ₦10 million.

* However, if it is higher than this threshold, the gain becomes taxable.

🟢 Q10:
* I am a pensioner.
* Will my pension income be taxed in 2026?

A10:
* NO.
* Approved pension and retirement benefits are exempt from tax.

🟢 Q11:
* Are military salaries taxable?

A11:
* NO.
* The salaries of military officers are now tax-exempt.

🟢 Q12:
* Do creatives (authors, musicians, sportsmen) still enjoy tax exemptions on foreign income?

A12:
* NO.
* They must now pay Nigerian tax on their income earned within Nigeria and outside.

🟢 Q13:
* Are crypto gains taxable?

A13:
* YES.
* Profits from crypto, NFTs, and other digital assets are now taxed.

🟢 Q14:
* Who is exempt from personal income tax?

A14:
* Individuals earning the national minimum wage or less, and those earning below ₦800,000 annually, are exempt.

🟢 Q15:
* What are the new progressive tax bands?

A15:

👉First ₦800,000 @ 0%
👉Next ₦2.2m @ 15%
👉Next ₦9m @ 18%
👉Next ₦13m @ 21%
👉Next ₦25m @ 23%
👉Above ₦50m @ 25%

🟢 Q16:
* If I get a big severance package when leaving my job, will I pay tax on it?

A16:
* You won’t pay tax if it is ₦50 million or less,
* BUT if it is more than the extra amount, it will be taxed using the progressive tax band in no 15 above.

🟢 Q17 :
* If I earn dividends or rent from abroad,
* Will Nigeria tax it?

A17:
* Dividends, interests, rent, royalties earned from outside Nigeria are EXEMPT from tax provided they are brought into Nigeria through approved channels (banks).

🟢 Q18:
* If a soldier or anyone in the armed forces gets injured in service and starts receiving a disability pension, will it be taxed in Nigeria?

A18:
* NO.
* The disability pensions earned by the soldier or anyone in the armed forces will be completely tax-exempt.

🟢 Q19:
* My uncle wants to start an agricultural company next year.
* Will his company be taxed in Nigeria?

A19:
* NO.
* Agricultural companies such as those in crop production, livestock, forestry, dairy, and cocoa processing will enjoy a 5-year tax holiday from the date they begin operation.

🟢 Q20:
* Is income from Federal or State Government bonds taxable?

A20:
* NO,
* All government bonds are exempt from tax.

🟢 Q21:
* What does rent relief entail under the new tax law?

A21:
* YES.
* From 2026, individuals can claim rent relief of 20% of the annual rent paid, but capped at ₦500,000.

For instance,
* If your yearly rent is ₦5 million, 20% would be ₦1 million, but the law caps it at ₦500,000.

* To enjoy this relief, you must declare your actual rent and provide the details to the relevant tax authority.

🟢 Q22:
* I earn 6m yearly, will I be better off under the new tax law?

A22:
* Old law:

👉CRA = 20% of ₦6m (₦1.2m) + ₦200k = ₦1.4m.

👉Taxable income = ₦6m − ₦1.4m = ₦4.6m.

👉Applying old tax bands gives a total tax of ₦896,000.

👉New law (NTA 2025):
* Rent relief = ₦500k (must declare actual rent).

👉Taxable income = ₦6m − ₦500k = ₦5.5m.

👉Applying new bands:
* 👉First ₦800k @0% = 0

* 👉Next ₦2.2m @15% = ₦330k

* Remaining ₦2.5m @18% = ₦450k

* Under the new law, tax reduces from ₦896k to ₦780k, saving ₦116k.

* This will increase your net pay (take-home pay).

🟢 Q23:
* If my company’s turnover is below ₦50 million, will I pay tax?

A23:
* NO.
* Small companies with a turnover of less than ₦50m are exempt from taxes.

🟢 Q24:
* As a remote worker in Nigeria for an international organisation, will I pay tax?

A24:
* 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.

🟢 Q25:
* Will a foreigner earning a salary in Nigeria be taxed?

A25:
* NO,
* if their employer is a start-up,
* or operates in tech or creative arts, and their income is already taxed in their country of residence.