The Federal Inland Revenue Service (FIRS) has clarified that Nigeria’s newly enacted tax laws are intended to enhance economic competitiveness, attract investments, and secure long-term fiscal stability. In recent weeks, debates around the Nigeria Tax Act and the Nigeria Tax Administration Act have generated confusion among businesses and citizens, particularly regarding the four per cent development levy on imported goods. FIRS emphasized that this levy is not an additional tax but a consolidation of existing charges designed to simplify compliance.
FIRS explained that the four per cent development levy replaces multiple fragmented levies such as the Tertiary Education Tax, NITDA Levy, NASENI Levy, and Police Trust Fund Levy. This streamlining reduces compliance costs, eliminates unpredictability, and provides exemptions for small businesses and non-resident companies. Analysts note that the changes signal a move toward a more coordinated and transparent fiscal environment that encourages investment.
Clarifications have also been made regarding Free Trade Zones (FTZs). Earlier concerns suggested that tax incentives for FTZ enterprises were being rolled back, but the reforms preserve these exemptions. Companies can sell up to 25 per cent of their output in the domestic market without losing FTZ benefits, with a three-year transition period to adjust operations. The reforms aim to prevent abuse of FTZ licenses while maintaining Nigeria’s competitiveness in line with global models in the UAE and Malaysia.
Another major update addresses the 15 per cent minimum Effective Tax Rate (ETR) for large multinational and domestic companies. This aligns Nigeria with international tax agreements under the OECD/G20 framework, ensuring revenue stays within the country and discouraging profit-shifting. Capital gains taxation, now referred to as “chargeable gains,” has also been modernized, introducing incentives such as reinvestment relief for investors and exemptions for small transactions to support startups and emerging businesses.
Taken together, these reforms bring clarity, structure, and competitiveness to Nigeria’s tax landscape. Government officials emphasize that the new tax regime is strategic rather than punitive, balancing investor incentives with national revenue needs. By simplifying compliance, protecting incentives, and enhancing transparency, Nigeria positions itself as a more predictable and attractive destination for global capital, while ensuring a sustainable revenue stream for national development.
source: punch