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.Source:
