Questions & Answers On The New Nigeria Tax Law

QUESTIONS & ANSWERS ON THE NEW NIGERIA TAX LAW

Summary from the Nigeria Tax Act, 2025 (Official PDF)

(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 (salary, business profits, or interest) 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. 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 since they are not income. Interest income earned by Fairmoney will be taxed in their 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, you pay Company Income Tax.

🟢 Q9:

If I sell shares and make a profit, will I pay tax in 2026?

A9: NO. If shares sold are not more than ₦150 million and gain not above ₦10 million. Above this, the gain is taxable.

🟢 Q10:

I am a pensioner. Will my pension income be taxed in 2026?

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

🟢 Q11:

Are military salaries taxable?

A11: NO. Salaries of military officers are tax-exempt.

🟢 Q12:

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

A12: NO. They must pay Nigerian tax on income earned both within Nigeria and abroad.

🟢 Q13:

Are crypto gains taxable?

A13: YES. Profits from crypto, NFTs, and other digital assets are taxable.

🟢 Q14:

Who is exempt from personal income tax?

A14: Individuals earning the national minimum wage or less, or below ₦800,000 annually.

🟢 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: No tax if ₦50 million or less. Above that, taxed using the progressive tax bands.

🟢 Q17:

If I earn dividends or rent from abroad, will Nigeria tax it?

A17: Dividends, interests, rent, and royalties earned from outside Nigeria are exempt if brought through approved channels (banks).

🟢 Q18:

If a soldier or armed forces member gets injured and receives a disability pension, will it be taxed?

A18: NO. Disability pensions are completely tax-exempt.

🟢 Q19:

My uncle wants to start an agricultural company next year. Will it be taxed in Nigeria?

A19: NO. Agricultural companies (crops, livestock, forestry, dairy, cocoa processing) enjoy a 5-year tax holiday from start.

🟢 Q20:

Is income from Federal or State Government bonds taxable?

A20: NO. All government bonds are tax-exempt.

🟢 Q21:

What does rent relief entail under the new tax law?

A21: From 2026, individuals can claim rent relief of 20% of annual rent paid, capped at ₦500,000. Must declare actual rent to the 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

Total tax = ₦896,000

New law:

Rent relief = ₦500k

Taxable income = ₦6m − ₦500k = ₦5.5m

Applying new bands:

First ₦800k @0% = 0

Next ₦2.2m @15% = ₦330k

Remaining ₦2.5m @18% = ₦450k

Total tax = ₦780k, saving ₦116k

🟢 Q23:

If my company's turnover is below ₦50 million, will I pay tax?

A23: NO. Small companies with turnover < ₦50m are tax-exempt.

🟢 Q24:

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

A24: YES. You pay tax in Nigeria unless exempted by treaty/diplomatic arrangement.

🟢 Q25:

Will a foreigner earning a salary in Nigeria be taxed?

A25: NO. If employer is a start-up or operates in tech/creative arts, and income is taxed in country of residence.