Nigeria implements major tax code overhaul and reforms

Nigeria has implemented a comprehensive overhaul of its tax code, with four new acts taking effect on January 1, 2026. These reforms, including the Nigeria Tax Act and Nigeria Tax Administration Act, have replaced the previous Personal Income Tax Act framework and resulted in the restructuring of the national revenue service.

Key changes to personal income tax include a progressive six-band Pay As You Earn (PAYE) structure with rates ranging from 0 percent to 25 percent. The Consolidated Relief Allowance has been abolished and replaced by a Rent Relief, capped at 500,000 naira, provided employees supply proof of payment. Additionally, the tax-free threshold for severance benefits has increased from 10 million to 50 million naira, while gratuity is now classified as taxable income.

For corporations, gains are taxed at 30 percent. A new share rule dictates that gains are only taxable if proceeds exceed US$113,000 and the gain itself exceeds US$7,540. Furthermore, offshore share sales that result in a change of control for a local company are now subject to taxation.

Despite these regulatory shifts, the Nigerian equity market has shown significant growth, with the main index rising approximately 56 percent this year. In dollar terms, it was noted as the best-performing equity market globally, supported in part by an eight percent appreciation of the naira against the dollar since the start of the year.