News Investigators/ As Nigerians look forward to the implementation of the new tax laws from January next year, a policy think tank, the Independent Media and Policy Initiative (IMPI) has said that the Nigeria Tax Act (NTA) 2025 stands out as a piece of legislation that would boost the country’s foreign investment drive as well as create more employment opportunities for Nigerians.
This according to IMPI is because the new law has various provisions which would abolish double taxation and encourage businesses to expand their operations when it takes effect.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, the think tank noted that it came to that conclusion after a cursory look at the NTA vis-a-vis its potential impact on all categories of Nigerian tax payers
It said: “With the implementation of the Nigerian tax laws starting in January 2026, foreign direct investment inflows into the country are expected to be reinvigorated. A major thrust in this regard is the adoption of the Minimum Effective Tax Rate (ETR) in the Nigerian Tax Act 2025 and other fiscal measures.
“Whereas the normal company income tax rate on a large company in Nigeria is 30 percent of the company’s profit, with the adoption of the ETR, Nigerian companies that are members of a multinational group with an aggregate group turnover of 750 million euros and above or have an annual turnover of 50 billion Naira and above will now be subject to a minimum effective tax rate (ETR) of 15% of their net Income.
“The goal is to avoid the double taxation of dividends and unrealised gains or losses. This reduction in tax rates and clarity around double taxation for multinational companies will undoubtedly influence the flow of global capital to Nigeria.
“This is in addition to introducing the Economic Development Incentive, which replaces the “pioneer” tax holiday incentive. This incentive introduces a 5% tax credit per annum for 5 years on qualifying capital expenditure purchased by eligible companies within 5 years, effective from the production date.
“The Act further provides that if a company has unused tax credits or qualifying capital expenses, it can carry them forward for 5 years. The EDI effectively reduces the company’s income tax obligation for a five-year consecutive period if it is part of a multinational group. Another attraction for global entrepreneurial capital is the prospect of establishing a residence in Nigeria.
“In addition, the tax exemption threshold for selling company shares in Nigerian companies has been increased to 150 million Naira (from 100 million Naira) in any 12 consecutive months, provided that the gains do not exceed 10 million Naira. This is another ease-of-doing-business policy.”
IMPI also provided some insight into how the new tax law will benefit local businesses especially the small ones through tax reliefs.
According to the think tank, a reduced tax burden would pave way for business expansion and job creation.
“This results from the simplified compliance and reduction in tax burden on businesses, particularly Micro, Small, and Medium Enterprises (MSMEs), as enunciated in the NTA 2025. This will foster a more favourable environment for business expansion and job creation. Besides, lowering business taxes (e.g., Corporate Income Tax), as exemplified in the Act, can encourage investment and capital formation, potentially boosting economic growth.
“The overall tax structure, including the progressivity of income taxes, can influence income distribution and aggregate demand, affecting economic growth. This is substantially reflected in the NTA 2025. Section 56 of the Act stipulates that small companies with a gross turnover of 100 million Naira or less per annum and total fixed assets not exceeding 250 million Naira now enjoy zero per cent income tax.
“This is an extension of the threshold for benefiting companies from 25 million Naira in turnover under the 2020 Finance Act to 100 million Naira in the NTA 2025. This higher threshold captures more Nigerian companies, especially those considered to be medium-sized, in categorising companies that are no longer required to pay Company Income Tax (CIT).
“Consequently, companies with a turnover of 100 million Naira and above are now subject to paying CIT of 30%. However, as outlined in the NTA 2025, the 30% rate for large companies can be reduced to 25%, effective from a date to be determined in an Order issued by the President on the advice of the National Economic Council (NEC).”
IMPI added that the Tinubu tax reforms have the potentials to transform the Nigerian economic space more than any policy deployment in a generation, if well implemented.
“In the tradition of objective analysts, we have reviewed the new tax laws within the framework of policy contextuality, realism, and pertinence. Our verdict is that Nigeria’s federal administration, led by President Tinubu, has gifted the country a body of legacy fiscal policies with the potential to transform the Nigerian economic space more than any policy deployment in a generation.
“Based on our evaluation, the four tax acts — the Nigeria Tax (Fair Taxation) Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act — meet all the fiscal conditions required for accelerated and inclusive economic growth.
“By our reckoning, these tax reforms, as reflected in the substance of the four tax acts, alongside the removal of fuel subsidies and the harmonisation of foreign exchange transactions windows, are at the heart of the coordinated effort to reset the Nigerian economy on a sustainable and inclusive growth path,” it surmised.
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