The Federal Government has introduced fresh measures to curb double taxation, broaden the tax net, and strengthen compliance under Nigeria’s revamped tax laws, according to a Frequently Asked Questions report, which was Issued by the Nigeria Revenue Service, the document clarifies key aspects of the Nigeria Tax Administration Act 2025, including relief for foreign-sourced income, taxation of digital services, penalties for default, and incentives for research and development.
To prevent double taxation, the law provides unilateral relief and recognises double taxation agreements, ensuring Nigerian residents do not pay tax twice on the same income. Residents whose foreign income has already been taxed may claim relief within the timeframe stipulated by law, encouraging cross-border investment while shielding taxpayers from excessive burdens.
The framework also clarifies the treatment of collective investment schemes, which are taxed at the scheme level, with distributions to unit holders treated as dividends. Dividends, interest, rent, or royalties earned abroad and repatriated through approved channels, as well as returns from wholly export-oriented businesses, are exempt from tax.
In a bid to promote innovation, companies can now deduct up to five per cent of their turnover for research and development expenses incurred in Nigeria. At the same time, non-resident digital service providers with a significant economic presence in Nigeria are liable for income tax and VAT on Nigerian-sourced income, expanding the tax base to the growing digital economy.
Taxpayers are required to maintain accurate records, including invoices, receipts, contracts, and financial statements. Failure to comply attracts penalties, interest, and possible prosecution. Registration with the relevant tax authority and obtaining a Taxpayer Identification Number is mandatory for all taxable persons, including individuals, companies, ministries, agencies, and non-residents supplying goods or services in Nigeria.
Virtual Asset Service Providers now have special obligations, including monthly reporting of transactions, customer data, and asset values, in addition to annual returns. Non-compliance carries escalating penalties, with initial administrative fines for failure to register, interest and penalties for late filings, and a 10 per cent per annum surcharge plus interest on unremitted withheld taxes.
Companies must file self-assessment returns within six months of the accounting year-end, while newly incorporated firms have 18 months from incorporation or six months after their first accounting period, whichever comes first. Taxpayers may file objections within 30 days of assessments, with disputes resolved through appeals and other administrative processes under the Act.
The reforms also redefine the roles of federal and state tax authorities. The NRS now administers taxes on companies, non-resident persons, petroleum operations, VAT, fossil fuel surcharges, and stamp duties, while the State Internal Revenue Services remain responsible for certain taxes on individuals, estates, trusts, and businesses within their jurisdictions. The changes aim to improve coordination, reduce overlaps, and enhance the taxpayer experience.
Nigeria Tax Administration Act 2025, the overhaul introduces clearer rules on double taxation relief, digital economy taxation, virtual asset service providers, record-keeping, dispute resolution, enforcement powers, and penalties, while offering incentives for research, development, and export-oriented businesses.
The reforms are part of the Federal Government’s broader fiscal agenda to raise Nigeria’s tax-to-GDP ratio, improve revenue mobilisation, modernise administration, and reduce reliance on borrowing, while aligning the country’s tax system with global best practices and investment-friendly policies.
