Nigeria tax Act ‘ll boost FDI inflows, small businesses from January 2026 – IMPI

The Independent Media and Policy Initiative (IMPI) says the Nigeria Tax Act (NTA) 2025 will boost the country’s foreign investment drive and create more employment opportunities for Nigerians.

The Chairman of the initiative, Dr Omoniyi Akinsiju, said this in a statement on Tuesday.

Akinsiju said the law which would take effect from January 2026 following its implementation, had various provisions which would abolish double taxation and encourage businesses to expand their operations.

He explained that the conclusion was reached after a cursory look at the NTA vis-a-vis its potential impact on all categories of Nigerian tax payers

“With the implementation of the Nigerian tax laws starting in January 2026, foreign direct investment inflows into the country are expected to be reinvigorated.

“A major thrust in this regard is the adoption of the Minimum Effective Tax Rate (ETR) in the Nigerian Tax Act 2025 and other fiscal measures.

“The normal company income tax rate on a large company in Nigeria is 30 per cent of the company’s profit.

”But with the adoption of the ETR, Nigerian companies that are members of a multinational group with an aggregate group turnover of 750 million Euros and above or have an annual turnover of over N50 billion will now be subject to 15 per cent of their net Income,” he explained.

According to him, the goal is to avoid the double taxation of dividends and unrealised gains or losses.

Akinsiju said this reduction in tax rates and clarity around double taxation for multinational companies would undoubtedly influence the flow of global capital to Nigeria.

“This is in addition to introducing the Economic Development Incentive (EDI), which replaces the pioneer tax holiday incentive.

“This incentive introduces a five per cent tax credit per annum for five years on qualifying capital expenditure purchased by eligible companies within five years, effective from the production date.

“The Act further provides that if a company has unused tax credits or qualifying capital expenses, it can carry them forward for five years.

“The EDI effectively reduces the company’s income tax obligation for a five-year consecutive period if it is part of a multinational group.

“Another attraction for global entrepreneurial capital is the prospect of establishing a residence in Nigeria,” he added.

The IMPI chairman also said that the tax exemption threshold for selling company shares in Nigerian companies increased from N100 million to N150 million in any 12 consecutive months, provided that the gains do not exceed N10 million.

According to him, a reduced tax burden will pave way for business expansion and job creation. This will result from the simplified compliance and reduction in tax burden on businesses, particularly Micro, Small, and Medium Enterprises (MSMEs) as enunciated in the NTA 2025.

“It will foster a more favourable environment for business expansion and job creation; besides, lowering business taxes as exemplified in the Act, can encourage investment and capital formation and potentially boosting economic growth.

“The overall tax structure, including the progressiveness of income taxes, can influence income distribution and aggregate demand affecting economic growth.

“This is substantially reflected in the NTA 2025; Section 56 of the Act stipulates that small companies with a gross turnover of N100 million or less per annum and total fixed assets not exceeding N250 million now enjoy zero per cent income tax.”

He noted that this was an extension of the threshold for benefiting companies from N25 million in turnover under the 2020 Finance Act to N100 million in the NTA 2025.

Akinsiju said that this higher threshold captured more Nigerian companies, especially those considered to be medium-sized in categorising those that were no longer required to pay Company Income Tax (CIT).

“Consequently, companies with a turnover of N100 million and above are now subject to paying CIT of 30 per cent.

“However, as outlined in the NTA 2025, the 30 per cent rate for large companies can be reduced to 25 per cent effective from a date to be determined in an Order issued by the President Bola Tinubu on the advice of the National Economic Council (NEC),” he further explained.

The IMPI boss added that the Tinubu tax reforms had the potentials to transform the Nigerian economic space more than any policy deployment in a generation, if well implemented.

“In the tradition of objective analysts, we have reviewed the new tax laws within the framework of policy contextualisation, realism, and pertinence.

“Our verdict is that Nigeria’s federal administration has gifted the country a body of legacy fiscal policies with the potential to transform the Nigerian economic space more than any policy deployment in a generation.

“Based on our evaluation, the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act, and Joint Revenue Board (Establishment) Act — meet all the fiscal conditions required for accelerated and inclusive economic growth.

“By our reckoning, these reforms, as reflected in the substance of the four tax acts, alongside the removal of fuel subsidies and the harmonisation of foreign exchange transactions windows, are at the heart of the coordinated effort to reset the Nigerian economy. (NAN)(