DR. AUSTIN EJAIFE & CO.
(Auditors, Tax Consultants, Advisory & Financial Reporting Specialists)
CLIENT ADVISORY CIRCULAR
Nigeria Tax Act 2025 (Effective 1 January 2026): Key Changes, Compliance Requirements & Action Steps for Businesses
Date: April 2026
- Introduction
We wish to formally notify our esteemed clients of the implementation of the Nigeria Tax Act, 2025 (NTA 2025), which took effect from 1 January 2026.
This new legislation introduces significant reforms to Nigeria’s tax system, including consolidation of tax laws, revised tax rates, digital compliance requirements, and new levies.
This advisory outlines the key changes, implications, and immediate actions required to ensure full compliance and avoid regulatory penalties.
- Key Highlights of the New Tax Regime
2.1 Redefinition of Small Companies
A company now qualifies as a small company where:
- Annual turnover does not exceed ₦100 million
- Net assets do not exceed ₦250 million
Implication:
Eligible companies are exempt from Company Income Tax (CIT).
2.2 Company Income Tax (CIT) Exemption
- Small companies are subject to 0% CIT
- Medium and large companies remain taxable under applicable rates
Important:
This exemption does not remove obligations for:
- VAT compliance
- PAYE remittances
- Withholding tax deductions
2.3 Introduction of Development Levy (4%)
A 4% Development Levy on assessable profits has been introduced, replacing:
- Education Tax
- NASENI Levy
- IT Levy
Implication:
Applies mainly to non-small companies and increases overall tax burden for growing businesses.
2.4 Elimination of Minimum Tax
- Businesses will no longer be taxed in loss-making years
Benefit:
Improves liquidity and supports struggling businesses.
2.5 Capital Gains Tax Integration
- Capital gains are now treated as part of taxable business income
- Effective tax exposure may rise to 30%
2.6 Mandatory E-Invoicing & Digital Compliance
All VAT-registered entities are now required to:
- Issue electronic invoices
- Maintain digital financial records
- Ensure proper audit trails
2.7 Strengthened Enforcement & Penalties
Tax authorities now have:
- Expanded access to financial data
- Enhanced audit capabilities
Non-compliance may result in:
- Monetary penalties
- Disallowance of expenses
- Regulatory sanctions
- Practical Implications for Clients
For Small Businesses (≤ ₦100m Turnover)
- Benefit from 0% CIT
- Must maintain proper records to retain eligibility
- Still subject to VAT and payroll taxes
For Growing Businesses
- Crossing ₦100 million turnover triggers:
- Full CIT liability
- Development Levy exposure
Key Risk: Sudden increase in tax obligations (“threshold effect”).
For All Businesses
- Increased compliance burden due to:
- Digital reporting requirements
- Enhanced documentation standards
- Immediate Action Steps Required
We strongly advise all clients to take the following steps:
4.1 Review Your Company’s Tax Status
- Confirm whether you qualify as a small company
- Monitor turnover thresholds regularly
4.2 Upgrade Accounting Systems
- Implement reliable accounting software
- Ensure capability for e-invoicing compliance
4.3 Strengthen Record-Keeping
Maintain proper documentation for:
- Revenue transactions
- Expenses
- Payroll
- Asset acquisitions/disposals
4.4 Implement Tax Planning Strategies
- Plan business growth to manage tax exposure
- Evaluate restructuring options where necessary
4.5 Conduct a Tax Health Check
We recommend a comprehensive tax review to:
- Identify compliance gaps
- Assess risk exposure
- Optimize tax efficiency
- How We Can Support You
At DR. AUSTIN EJAIFE & CO., we are fully equipped to assist you with:
- Tax compliance and filings under the new regime
- E-invoicing implementation advisory
- Tax planning and restructuring
- Audit and financial reporting support
- Regulatory liaison and dispute resolution
- Conclusion
The Nigeria Tax Act 2025 represents a major shift toward a more transparent, digital, and structured tax environment.
While it provides significant relief for small businesses, it also introduces stricter compliance obligations and enforcement mechanisms.
Early preparation and professional guidance are essential to avoid penalties and optimise your tax position.
- Contact Us
For further clarification or professional assistance, please contact:
DR. AUSTIN EJAIFE & CO.
(Auditors, Tax Consultants, Advisory & Financial Reporting Specialists)
📧 Email: info@daepro.com.ng
📞 Phone: +234 703 166 4488
📍 Office: VGC – Lekki, Lagos
Signed:
Dr. Austin Ejaife
Managing Partner
This advisory is for general guidance only and should not be construed as professional advice. Clients are encouraged to seek tailored advisory services based on their specific circumstances.