Nigeria Tax Administration Act 2026: What Investors Really Need to Know

By: Abudu Olalekan

Okay, let’s talk about these new taxes. Seriously.

In recent weeks, the air has been thick with commentary. Analysts are worried sick that Nigeria’s massive new tax regime—slated to be fully effective in January 2026—will be a disaster. They see capital flight. They see businesses fleeing. They see global competitiveness damaged.

These concerns? While understandable, in a place where any fiscal change brings intense public scrutiny, they are largely misplaced. They are wrong.

The 2025 reforms, built around the new Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), are far from punitive. This is maybe the most pro-investment, pro-market, and modernizing tax policy update Nigeria has seen in decades. They simplify everything. They align us globally. They reduce the brutal compliance burdens that used to plague small and large firms alike. They protect businesses and individuals from old, dusty, pre-internet rules.

More importantly, these reforms are profoundly progressive, fully in line with Mr. President’s core promise to significantly improve the standard of living for all citizens. We need a modern economy. This law helps build it.

A careful look at the details proves that the NTA makes Nigeria more competitive, not less. It achieves this through significant structural improvements: consolidating fragmented levies into one streamlined Development Levy; fiercely maintaining the necessary incentives for Free Trade Zones (FTZs); implementing the globally agreed 15% minimum tax for multinational monsters; and finally, modernizing how we tax capital gains to reflect today’s digital and economic realities.

Let’s break it down, element by element.

The first thing most misunderstood is the 4% Development Levy. Critics shouted, “It is a new tax! Extortion!” Wrong. It is not a new tax. It’s a clean-up job. This levy replaces a whole chaotic regime of confusing, fragmented earmarked taxes: the 3% Tertiary Education Tax, the 1% NITDA Levy, the 0.25% NASENI Levy, and the Police Trust Fund Levy. They were a mess.

When you aggregated these distinct levies, the effective tax burden often exceeded 4%, especially for technology, telecoms, and financial companies. Now? One simple 4%. Also, small business, turnover under N100 million, they are out. Non-resident companies? They are exempted too.

Consolidating these disparate levies into a single one offers investors something invaluable: predictability. It dramatically reduces the complexity and the cost of compliance. Under the previous regime, the proliferation of agency-specific levies created immense uncertainty; investors constantly feared that every new government agency would inevitably demand its own new, distinct tax. The Development Levy establishes a unified framework for funding key sectors—education, defense, security, technology—from a single pool. It signals to investors that the era of ad hoc earmark taxes is finally over. Investors value simplicity. This law deliver it.

Next, Free Trade Zones. More anxiety here. People claim the government watered down the incentives for these zones. Again, incorrect information. A careful review of the NTA’s Section 60 shows a policy designed specifically to curb tax base erosion while fiercely sustaining incentives for genuine exporters. The core tax-exempt status of FTZ entities remains. But conditions are imposed.

Why? FTZs must serve their main purpose: generating foreign-exchange earnings through exports.

The NTA sets a clear 25 per cent threshold for domestic sales by FTZ companies. If an FTZ enterprise sells up to 25 per cent of its output into the Nigerian market, they still enjoy the full exemption for a three-year transition period (2026 to 2028). After 2028? They pay tax on those domestic sales. Fair is fair. Why should a company enjoy tax-free status just to compete unfairly with Nigerian firms operating inside the domestic economy? Countries like the UAE, Malaysia, and Mauritius have similar structures. Nigeria is not doing anything unusual here. The message is clear: Nigeria’s FTZs remain highly competitive for global manufacturing hubs.

Another misconception is the new 15 per cent minimum tax for large multinationals. This tax is not some local punishment. This is the result of a landmark OECD/G20 global agreement, endorsed by over 140 nations. It only applies to the world’s largest corporate groups, those with a global turnover of €750 million or more.

Section 57 of the NTA is a necessary defensive measure. If Nigeria continues to offer effective tax rates below 15% to these giants, their home countries (say, the US or France) will swoop in and collect the difference as a Top-Up Tax. By collecting this tax domestically, Nigeria retains the vital revenue that would otherwise be ceded to foreign treasuries. We keep our money. We protect fiscal sovereignty.

Furthermore, by extending the 15 per cent Effective Tax Rate to large domestic companies (turnover of N50 billion or more), the NTA ensures equity. It prevents a scenario where foreign multinationals are forced to pay 15 per cent, while huge domestic competitors use aggressive planning to pay significantly less. This stabilizes government revenue, which is absolutely essential for building the infrastructure investors demand. The 15 per cent Effective Tax Rate is not a deterrent to investment; it’s a mechanism for fiscal strength and fair play.

Finally, capital gains taxation, now called “chargeable gains.” The old Capital Gains Tax Act was dated 1967. It was irrelevant. The NTA modernizes it entirely. Now, gains are integrated into the company’s total profit (taxed at 30% CIT) or individual income (taxed at 0 to 25% PIT). While the rate appears higher, look at the built-in flexibilities.

The NTA introduces a comprehensive reinvestment relief for shares. Section 34 clearly states that gains on disposal of shares are not chargeable gains if the proceeds are reinvested within the same year of assessment into shares in the same or other Nigerian companies.

This is huge. It allows investors to rotate capital without any tax friction. Under the old, archaic law, selling a strategic stake to reinvest triggered an immediate tax event. Now, provided the capital remains within the Nigerian economy, the tax is effectively 0 per cent. This directly encourages portfolio fluidity and capital formation, completely debunking the narrative that the law is derailing investment.

Plus, the NTA substantially improves loss treatment. If an investment fails—because risk is real—the tax system absorbs part of the shock by lowering taxes on other profits. That’s a pro-innovation policy highly attractive to Private Equity.

The NTA also exempts low-value transactions entirely, protecting small investors. Gains are exempt if “disposal proceeds, in aggregate, are less than N150,000,000 and the chargeable gain does not exceed N10,000,000 in any 12 consecutive months.” Most retail investors are totally safe.

Nigeria is not raising tax barriers; it is creating a stronger foundation for a modern economy. The reforms simplify taxes, align us globally, and protect us fiscally. Investors, domestic and foreign, should see these reforms as a signal that Nigeria is serious about building a predictable, stable, and truly investment-friendly environment. We are open for business. You heard the detailed breakdown first via Reportersroom. (Attribution: Fasua is the special adviser to the President on economic affairs.)