Nigeria’s new tax regulations have officially taken effect from 1 January 2026, bringing the most significant changes to the tax landscape in decades. Whether you are a salary earner, investor, or business owner, these reforms will impact your financial life in important ways.
If you earn ₦800,000 or less per year which is roughly ₦66,667 per month, you will pay ZERO tax on both your income and capital gains. Taxable income above the ₦800,000 threshold is taxed in ascending bands with progressive increases up to 25% for earnings above ₦50 million.
For the first time in Nigerian tax history, the law clearly defines who qualifies as a tax resident removing decades of ambiguity. You are considered a tax resident if you are domiciled in Nigeria, maintain a permanent home for domestic use in Nigeria, spend 183 days or more in Nigeria (including short leaves), have substantial economic or immediate family ties in Nigeria, or serve as a Nigerian diplomat or public servant abroad. This matters because residents are taxed on worldwide income, including foreign investments (though double-tax treaties may apply), whilst non-residents are taxed only on Nigeria-sourced income, such as local salaries, rent, or dividends. If you work remotely for foreign companies or split your time between Nigeria and other countries, understanding your residency status is crucial for tax planning.
The new law completely restructures how capital gains are taxed, with significant implications for investors. Most retail investors will likely not pay Capital Gains Tax (CGT) on stock sales. You are exempt if your total disposal proceeds in 12 months are below ₦150 million and your total gains in that period don’t exceed ₦10 million. Both conditions must be met. For example, if you bought shares for ₦50M and sold them for ₦140M, your disposal proceeds are ₦140M (under the ₦150M threshold), but your gain is ₦90M (over the ₦10M threshold). In this case, you would pay CGT on ₦80M that is above the ₦10M exemption threshold. For individuals, CGT is now charged at your personal income tax rate (0%-25%), based on your income band, replacing the previous flat rate system. For companies, there is a flat 30% on capital gains, matching the corporate income tax rate.
A 10% withholding tax applies to interest earned on Treasury Bills (T-Bills), Commercial Papers (CPs), Corporate Bonds, Promissory Notes, Bills of Exchange, and other similar short-term securities. Interest on Federal Government bonds and CBN OMO bills remains exempt from tax deduction.
Businesses with annual turnover below ₦100 million remain exempt from Company Income Tax (CIT). A 4% Development Levy now applies to companies’ assessable profits. It replaces Tertiary Education Tax, Information Technology Levy, NASENI Levy, and Police Trust Fund Levy. Companies qualify for full exemption from both CIT and the Development Levy if turnover is ≤ ₦100 million and fixed assets are ≤ ₦250 million. For large companies with global revenue ≥ €750M or Nigerian companies with turnover ≥ ₦50B a new 15% minimum tax rule applies. These entities must maintain a minimum effective tax rate of 15%.
The VAT rate remains at 7.5%, but important changes include the ability for businesses to now recover input VAT on all purchases tied to taxable supplies, zero-rating for basic foods, educational materials, medical supplies, electricity transmission, and mandatory e-invoicing for VAT-registered businesses. The new law introduces substantially higher penalties for non-compliance. Late return filing now costs ₦100,000 for the first month, plus ₦50,000 for each additional month. Awarding contracts to unregistered entities carries a ₦5 million fine. You must update your filings and records immediately, verify all vendors are properly registered, prepare for e-invoicing systems if you’re VAT-registered, and review international structures if you have foreign subsidiaries, as Controlled Foreign Company (CFC) rules now apply to undistributed foreign profits.
The ₦50 charge on electronic transfers of ₦10,000 and above is now classified as Stamp Duty. This ₦50 will now be paid by the sender (deducted from the sender’s account in addition to any transfer fees), rather than the recipient. However, transfers below ₦10,000, salary payments, and intra-bank transfers between your own accounts (same name/BVN) remain exempt.
If you’re a salary earner, calculate your new take-home pay using the updated PAYE brackets with the ₦800K exemption, update your deductions to ensure pension, NHF, NHIS, insurance, rent relief, and mortgage payments are properly documented, keep airtight records of all deductible expenses to avoid penalties. If you are an investor, track your cost basis by saving all purchase documents and broker statements, monitor the ₦150M disposal proceeds and ₦10M gains limits. If you are a business owner, assess whether the ₦100M exemption or 15% effective tax rate applies to you, prepare for e-invoicing by building or buying compliant invoicing systems, training finance staff, and testing integration, review your tax planning to ensure all arrangements are disclosed as required, check vendor registration to avoid the ₦5M fine by verifying all contractors are properly registered, and review foreign subsidiaries.
All taxpayers must now ensure their Tax Identification Number (TIN) is properly registered and linked to their accounts. For Individuals, your National Identity Number (NIN) serves as your TIN (please verify your NIN is linked to your account to maintain seamless banking services.) For businesses, your Corporate Affairs Commission (CAC) Registration Number (RC Number) serves as your TIN. If you use a personal account for business purposes, you must obtain a separate TIN.
Here’s how to comply:
- Verify and link your NIN via our Mobile App, USSD service, Online Banking, or visit any branch near you.
- Retrieve your TIN free of charge at the Joint Tax Board portal using your NIN or business registration number or visit your nearest Nigeria Revenue Service office.
Yes, Nigeria’s tax landscape has shifted, but the fundamentals of wealth building have not changed. The key is to stay informed, keep good records, and automate what you can control. Review your 2026 financial goals with the new tax brackets in mind. Set up automatic savings to maximise your higher take-home pay. Ensure all your deductions and vendor registrations are up to date.
Visit https://www.unionbankng.com/services/personal-banking/account/target-savings/ to automate your savings or email us at customerservice@unionbankng.com call us on 07007007000 for support.
