The Federal Government has rolled out new measures aimed at eliminating double taxation, widening Nigeria’s tax base, and strengthening compliance under the country’s recently introduced tax laws.
The details are contained in a Frequently Asked Questions (FAQs) document issued by the Nigeria Revenue Service (NRS), which provides clarity on major provisions of the new tax framework, including foreign income reliefs, digital economy taxation, compliance obligations, penalties, and incentives for innovation.
According to the document, the law addresses double taxation through unilateral tax reliefs and the recognition of Nigeria’s double taxation agreements, ensuring that the same income is not taxed twice. Nigerian residents whose income has already been taxed abroad may claim relief, subject to Nigerian tax rates and timelines prescribed by law.
The FAQs also clarified the tax treatment of collective investment schemes, stating that they are treated as companies for tax purposes. Income is taxed at the scheme level, while payouts to investors are classified as dividends.
On foreign income, the NRS explained that dividends from wholly export-oriented businesses, as well as dividends, interest, rent, or royalties earned abroad and repatriated through approved channels, are exempt from tax.
To encourage innovation, companies are allowed to deduct up to five per cent of turnover for research and development expenses incurred locally.
The new regime also targets the digital economy. Non-resident digital service providers with a significant economic presence in Nigeria are now liable to income tax and value-added tax on Nigerian-sourced earnings. In addition, Virtual Asset Service Providers must file monthly transaction returns alongside annual filings.
Taxpayers are required to maintain proper records, including invoices, contracts, and financial statements. Failure to register for tax attracts penalties starting from ₦50,000 in the first month of default, with additional monthly charges thereafter. Late filing and failure to remit withheld taxes may result in interest, penalties, and prosecution.
The NRS will administer taxes on companies, non-resident persons, petroleum operations, VAT, stamp duties, and related levies, while State Internal Revenue Services will continue to collect taxes within their jurisdictions.
The reforms, anchored by the Nigeria Tax Administration Act 2025, form part of broader fiscal efforts to boost revenue, improve transparency, modernise tax administration, and reduce Nigeria’s reliance on borrowing.
