NIGERIA TAX ADMINISTRATION ACT(NTAAL
DM CHIDIEBERE@michaelchidieberedavid863694
1 month ago
The new Nigeria tax reform has been a controversial issue among Nigerian specifically tax payers. I am not here to criticize or support the narrative instead I just want to clearly state the real meaning of the tax law, it's effect and rates, how to dodge but not evade it and how to benefit from it.
Firstly the tax law is called NIGERIA TAX ADMINISTRATION ACT (NTAA) passed into law on 26 June 2025 by the National Assembly.
Formerly, there were bodies in charge of collecting tax, at the federal level it was called FEDERAL INLAND REVENUE SERVICE (FIRS). Which will be called NIGERIA REVENUE SERVICE (NRS) from 1st January 2026.
Also, the JOINT TAX BOARD (JTB) will be changed to JOINT REVENUE SERVICE (JRS).
PERSONAL INCOME TAX ACT(PITA) 2026
PITA 2026 reduced the tax of low income earners such as minimum wage earners (N70,000 per month). Therefore if you earn minimum wage you will not be liable to pay tax from your income. This does not mean you wouldn't pay other taxes like VAT/SURCHARGE, withholding tax
This is the breakdown of the new tax rate under PITA 2026
N800,000. @0%
N2,200,000. @15%
N9,000,000. @18%
N13,000,000. @21%
N25,000,000. @23%
N50,000,000 and above. @25%
For instance you earn N3,000,000 per annum. N2,200,000 will be charged for tax at 15% and the extra N800,000 will be charged at 18%
Therefore such a person will remit to the relevant tax authority N474,000 as his tax liability.
Also employees are liable to pay a withholding tax of 10%. This is taxed at source, that is before your salary comes to your account, your boss must have removed tax.
COMPANY INCOME TAX ACT (CITA) 2026
Under CITA 2026, Companies are generally grouped into two.
I) Small company. A small company under CITA 2026 is a company whose total fixed assets are not more than N250,000,000 AND has a turnover below N50,000,000. They are liable to zero (0%) tax rate
II) Large company. These are companies whose total fixed assets are more than N250,000,000 AND a turnover above N50,000,000. These companies are liable to a 30% tax rate.
You should know where your company falls into, if you do not understand send me a dm for breakdown.
Now, before this new tax law there was something every company pays for called education tax which was 2% of the company's accessible profit. But under this new tax law (NTAA) it was replaced with what is known as DEVELOPMENT LEVY OF 4% of the assessable or adjusted profit of the company. So whether a small or large company, they must pay development Levy of 4%
This is how this development Levy will be distributed among sectors that needs it
1. TETF 50%
2. NELFUND 15%
3. NIT 8%
4. NASEI 8%
5. NBTI 4%
6. DSIF 10%
7. NCSF 5%
ASK FOR EXPLANATION IF YOU DO NOT UNDERSTAND OR NEED FULL NAMES OF THIS SECTORS
VALUE ADDED TAX (VAT) OR SURCHARGE
There is VAT to be paid by all Nigerians who purchase Petroleum which is 5%
Therefore from 2026, if you buy fuel of N10,000 you will pay a surcharge of 5%
5% of N10,000=N500
Imagine you bought fuel of N100,000 in a week lol
HOW TO AVOID EXCESSIVE TAXING
I see some people saying, when someone wants to send money to you tell them to write in the description GIFT, MED BILLS and so on. But how many transactions do you want to write GIFT on? Are you Oba if Benin that is always receiving gifts? In fact if you always write stuffs like that in your description you will be sued for tax evasion.
1. Start a charitable or educational institution, any money into such accounts cannot be taxed
2. Register a cooperative society, they are exempted from tax
3. Belong to a trade union, so far the income is not derived from trade or business
4. Register a statutory society or a company that foster economic development
5. Work with those with pension accounts (put some money there)
6. File for life assurance relief but you must be assured and paid premium up to date
7. Start an agriculture or manufacturing company and always file for capital allowance because depreciation is a disallowed expenses while capital allowance is allowed
8. Start a company that promotes sporting activities and all the profits will be reinvested into this same company
9. Start an export company but the profit must be used to purchase raw materials plants, equipment and spare parts.
10. Have a cryptocurrency account accept and make payment through it (usdt, BTC, sol)
INCOME THAT CANNOT BE TAXED
1. Income from disposal of non current asset e.g sales of building
2. Minimum wage
3. Income from disposal of investments
4. Payment of doubtful debt (current asset)
5. Income from digital currencies
DIVIDEND EXEMPTED FROM TAX
1. dividend received from pioneer
2. Dividend received from a foreign investment
3. Dividend net of withholding tax by a Nigeria company from another Nigeria company
4. Dividend from small manufacturing company in not more than 5 years of establishment
5. Dividend from export oriented business
6. Dividend received from trust scheme
INTEREST EXEMPTED FROM TAX
1. Interest on a foreign loan
2. Interest on agricultural loan
3. Interest on export loan
PENALTIES
1. Failure to keep records, the penalty is N50,000 for individuals and N500,000 for companies
2. Incorrect deliberate record, the penalty is 10% of the correct tax and double of the amount undercharged
3. Submit false records, the penalty is 5 years imprisonment
4. Failure to pay tax at the right time, the penalty is N5,000 or 10% of the tax amount due whichever one is higher and you will pay interest.
Ladies and Gentlemen, take it or leave it you need the service of an accountant or a grounded tax consultant else you go cry .
To all accountants and tax experts, this administration has come to stay. Tax farming is the only way we can benefit from this administration, so take the opportunity and help a confused business man out here
Long live HIS EXCELLENCE PRESIDENT BOLA AHMED TINUBU
God bless the Federal Republic of Nigeria
📸 Internet
DM CHIDIEBERE
