The Federal Government has rolled out new measures aimed at curbing double taxation, widening the tax base, and improving compliance under Nigeria’s revised tax laws, according to a Frequently Asked Questions (FAQ) document issued by the Nigeria Revenue Service (NRS).
The document, obtained on Sunday, provides detailed explanations of key provisions in the new tax framework, including reliefs for foreign-sourced income, taxation of digital services, penalties for non-compliance, and incentives for research and development.
According to the NRS, the law addresses double taxation through unilateral tax relief and the recognition of double taxation agreements entered into by Nigeria. These provisions, contained in Sections 120 to 123 of the Act, are designed to prevent the same income from being taxed twice.
Under the framework, Nigerian residents whose income has already been taxed abroad may claim relief on that income, subject to the applicable Nigerian tax rate and within the period allowed by law. The NRS said this measure is intended to encourage cross-border investment while shielding taxpayers from excessive tax burdens.
“The Act provides for unilateral relief and recognition of double taxation agreements to avoid double taxation on foreign-sourced income,” the document stated.
On collective investment schemes, the FAQs clarified that such schemes are treated as companies for tax purposes. Income generated by the schemes is taxed at the scheme level, while distributions paid to unit holders are treated as dividends in the hands of investors.
The report also addressed the treatment of foreign income, noting that dividends earned from investments in wholly export-oriented businesses, as well as dividends, interest, rent, or royalties earned outside Nigeria and repatriated through approved channels, are exempt from tax.
To promote innovation, the new tax regime allows companies to deduct up to five per cent of their turnover as research and development expenses, provided the costs are incurred within Nigeria.
On digital taxation, the NRS said non-resident digital service providers with significant economic presence in Nigeria are now liable to both income tax and value-added tax on Nigerian-sourced income, in line with Sections 17 and 151 of the Act.
The document further emphasised record-keeping obligations under the Nigeria Tax Administration Act 2025. Taxpayers are required to maintain accurate records, including invoices, receipts, contracts, and financial statements. Failure to comply may attract penalties, interest, or prosecution.
Under the law, all taxable persons — including individuals, companies, ministries, departments and agencies, as well as non-residents supplying goods or services in Nigeria — must register with the relevant tax authority and obtain a Taxpayer Identification Number.
Special filing requirements have also been introduced for Virtual Asset Service Providers, who are now required to submit monthly transaction reports, including customer information and asset values, in addition to their annual returns.
The FAQs outlined penalties for non-compliance, stating that failure to register for tax attracts an administrative penalty of ₦50,000 for the first month and ₦25,000 for each subsequent month. Late filing of returns may result in interest, additional penalties, and prosecution, while failure to remit withheld taxes attracts a penalty of 10 per cent per annum plus interest at the prevailing Central Bank monetary policy rate.
Companies are required to file self-assessment returns within six months after the end of their accounting year. Newly incorporated companies must file within 18 months of incorporation or six months after their first accounting period, whichever comes first.
Taxpayers who are dissatisfied with tax assessments may file objections within 30 days of receiving the notice, stating the grounds for dispute. Disputes may also be resolved through appeals and other administrative processes provided under the Act.
The report clarified that while the Nigeria Revenue Service administers taxes on companies, non-resident persons, petroleum operations, value-added tax, fossil fuel surcharges and stamp duties, State Internal Revenue Services remain responsible for assessing and collecting certain taxes from individuals, estates, trusts and businesses within their jurisdictions.
The new tax laws form part of the Federal Government’s broader fiscal reform agenda aimed at boosting revenue mobilisation, improving transparency, and reducing Nigeria’s reliance on borrowing. With Nigeria’s tax-to-GDP ratio still among the lowest globally, the reforms are intended to close loopholes, modernise tax administration, and align the country’s tax system with global best practices, while balancing compliance with targeted reliefs and incentives for businesses.
Anchored by the Nigeria Tax Administration Act 2025, the reforms represent one of the most comprehensive overhauls of Nigeria’s tax system in decades, introducing clearer rules on double taxation relief, digital economy taxation, virtual assets, record-keeping, dispute resolution, enforcement powers, and incentives for research, development, and export-oriented enterprises.
