Understanding intersection between you and new tax laws (II)

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In this second part, Tax Alexa plans to simplify questions that may arise in the minds of taxpayers concerning the various provisions of the new tax laws which took effect in January

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How does the Act handle transfer pricing?

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Transactions between related parties must be conducted at arm’s length. The tax authorities may adjust non-arm’s length transactions (Section 192).

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What is the treatment of dividends received by non-residents?

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Dividends received by non-residents from Nigerian companies are subject only to withholding tax under the Nigeria Tax Administration Act 2025, with no further tax charged (Section 19).

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Are there tax exemptions for charitable organisations?

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Yes, income of religious, charitable, educational, and similar public institutions is exempt, provided it is not derived from a trade or business (Section 163).

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How are insurance businesses taxed?

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Insurance companies are taxed separately on life and non-life businesses, with specific rules for reserves, deductions, and profit computation (Section 61).

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What deductions are allowed for bad debts?

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Bad or doubtful debts incurred in the course of trade are deductible, subject to certain conditions while recoveries are taxable (Section 20).

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How are chargeable gains computed?

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Chargeable gains are computed as disposal proceeds less acquisition cost and incidental expenses, with specific rules for part-disposals, losses, and replacements (Sections 33-55).

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Are gifts subject to tax?

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Gifts are generally not subject to tax, except where the asset is acquired by way of gift and disposed of for consideration (Section 54).

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How is rental income taxed?

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Rental income is included in taxable income and may be subject to deductions for repairs, interest, and other expenses (Section 4).

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What is the tax treatment of collective investment schemes?

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Collective investment schemes are treated as companies for tax purposes, with income taxable at the scheme level and distributions treated as dividends in the hands of unit holders (Section 63).

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Is income earned outside Nigeria taxable?

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Dividend received from investments in wholly export-oriented businesses; businesses; and dividend, interest, rent or royalty derived outside Nigeria and brought into Nigeria through approved channels are exempt from tax.

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What is the tax credit for research and development?

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Companies may deduct up to 5% of turnover for research and development expenses incurred in Nigeria (Section 165).

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How does the Act address double taxation?

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The Act provides for unilateral relief and recognition of double taxation agreements to avoid double taxation on foreign-sourced income (Sections 120-123).

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How is unilateral relief of double taxation claimed?

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A Nigeria resident whose income has been subject to tax in a foreign land may claim a relief for such tax to the limit of the applicable tax rate in Nigeria and within the time frame allowed under the law (Sections 120-123).

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How are digital service providers taxed?

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Non-resident digital service providers with significant economic presence in Nigeria are subject to income tax and VAT on Nigerian-sourced income (Sections 17, 151)

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What records must be maintained for tax purposes?

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Taxable persons must maintain accurate records, including invoices, receipts, contracts, and financial statements, as required under the Nigeria Tax Administration Act 2025.

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How are disputes with tax authorities resolved?

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Disputes may be resolved through objections, appeals, and other administrative processes as provided in the Nigeria Tax Administration Act 2025 and referenced in various sections of this Act.

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What your taxes do

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Benin-Asaba highway rehabilitation

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The Benin-Asaba highway rehabilitation is a major infrastructure project aimed at improving connectivity between Edo and Delta states with other parts of the country. It was officially flagged off by President Bola Tinubu in March 2025.

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Length: Approximately 125 kilometres.

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Routes: Starts at Onitsha Head Bridge, extending through Asaba (including failed sections like Ezenei Junction), Alifekede (Ika South LGA, Delta-Edo boundary), and Benin.

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Estimated cost: About N200bn, funded through a concession by the Benin-Asaba Expressway Concession Company Limited – Africa Plus Partners (Nigeria) Limited Consortium.

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Contractor: Africa Plus Partners (Nigeria) Limited Consortium.

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Dateline: 30 months – From March 2025 to September 2027.

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Features: It’s a 10-lane carriageway (five lanes on each side) from King Square to the Benin bypass for smooth traffic flow.

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Tax reform to create opportunities, promote fairness – Minister

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The Federal Government has maintained that Nigeria’s tax reform will ultimately be judged not by how much revenue it generates, but by how fairly it distributes opportunities across society.

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The Minister of State for Finance and Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, said this at the unveiling of on book on policy guide aimed at advancing gender equity and social inclusion in Abuja recently.

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The presentation organised by the Policy Innovation Centre brought together policymakers, development partners, private sector leaders, and civil society representatives.

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Attendees engaged in high-level discussions on the 2026 tax reforms, addressing how the ongoing tax reforms can expand economic opportunities for women, youth, and persons with disabilities.

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• The PUNCH
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FG bans cash tax collection, revenue roadblocks

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The Federal Government on Tuesday formally prohibited cash collection of taxes and banned the mounting of roadblocks for revenue enforcement as part of fresh regulations to implement new tax laws.

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The Executive Secretary of the Joint Revenue Board, Mr Olusegun Adesokan, stated this during the signing of the Presumptive Tax Regulations and Guidelines on the Implementation of the Tax Laws at the Federal Ministry of Finance.

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Adesokan said the new framework was designed to end informal, coercive and fragmented tax practices, particularly at the sub-national level.

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“It bans all forms of cash collection by tax authorities. It also bans the mounting of roadblocks for the collection of taxes,” he said.

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• The PUNCH
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Taxable Line: The power of taxing people and their property is essential to the very existence of government – Former US President James Madison (speeches between 1780 and 1790s)

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Q & A: Do taxpayers need to re-register or obtain new Tax Identification Numbers?

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No. All existing taxpayer registrations, TINs, and records issued under FIRS remain valid and will migrate seamlessly to NRS systems.

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Powered by: AADPM; Contact: 08116759796, 07067204545

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