Nigeria’s new tax laws to boost competitiveness, attract investments — FIRS

The Federal Inland Revenue Service (FIRS) has stated that Nigeria’s newly enacted tax laws are designed to strengthen economic competitiveness, attract investments and improve long-term fiscal stability.

In a statement on Monday, the agency also clarified that the much-debated 4 per cent Development Levy on imported goods is not a new or additional tax burden, but a streamlined consolidation of several existing levies.

In recent weeks, the new Nigeria Tax Act (NTA) and Nigeria Tax Administration Act (NTAA) sparked widespread debate among citizens and businesses seeking clarity on how the reforms will affect them and their respective businesses.

However, the tax authority emphasised that these concerns stem largely from misinterpretations, insisting the laws are aimed at simplifying compliance, protecting incentives and improving Nigeria’s investment environment.

According to FIRS, one of the most misunderstood elements of the new tax framework is the 4 per cent Development Levy.

The agency explained that the levy replaces a range of fragmented charges, such as the Tertiary Education Tax, NITDA Levy, NASENI Levy and Police Trust Fund Levy, that businesses previously paid separately.

FIRS added that this consolidation reduces compliance costs, eliminates unpredictability and ends the era of multiple agency-driven levies.

The agency further noted that the law also exempts small businesses and non-resident companies, offering protection to firms most vulnerable to economic shocks.

Free Trade Zones

Relying on analysts’ estimations, FIRS stated the new levy structure sends an important message to investors, that Nigeria is moving toward a more coordinated, transparent and predictable fiscal environment.

According to the agency, the citizens equally need major clarification in relation to Free Trade Zones (FTZs).

The agency added that the reforms introduce clearer guidelines to preserve the purpose of the zones.

According to the agency, under the new rules, FTZ companies can sell up to 25 per cent of their output into the domestic market without losing tax exemptions.

Additionally, a three-year transition period has also been provided to allow firms to adjust smoothly to the new reform.

This is to ensure implementation of the reforms, which also aim to curb abuses where companies used FTZ licences to evade domestic taxes while competing within the Nigerian market.

Foreign trade

With the new measures, FIRS stated that Nigeria aligns with global FTZ models in places like the UAE and Malaysia, where the zones function primarily as export hubs for logistics, manufacturing and technology.

In the agency’s future explanation, FIRS argued that the introduction of a 15% minimum Effective Tax Rate (ETR) for large multinational and domestic companies has also been met with public concern.

It noted that this policy aligns with a global tax agreement endorsed by over 140 countries under the OECD/G20 framework.

According to the tax authority, without this adoption of the ETR, Nigeria risked losing revenue to other countries through the “Top-Up Tax” mechanism, where the home country of a multinational collects the difference when a host country charges below 15 per cent.

However, the agency further explained that by localising the rule, Nigeria will ensure that tax revenue from multinational operations remains within its borders.

The ETR is also extended to large domestic companies to ensure a level playing field and discourage profit-shifting practices that undermine the fiscal system.

FIRS reiterated that the reforms also introduce sweeping changes to capital gains taxation, now termed “chargeable gains,” describing it as a new framework that contains several incentives to promote investment and capital mobility.

Reinvestment relief

Moreover, FIRS identified reinvestment relief as one of the key innovations that allows investors who sell shares and reinvest in another Nigerian company within the same year to avoid tax on gains.

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The agency noted experts’ position that the provision will unlock capital for startups, private equity and other emerging enterprises.

It added that the law also modernises capital loss treatment and exempts low-value transactions to protect small investors. At the same time, loopholes that previously allowed companies to disguise business income as capital gains have been closed.

FIRS said that the reforms introduce structure, clarity and competitiveness into Nigeria’s tax environment.

The agency maintained that the measures will strengthen investor confidence, support industrial expansion and secure a sustainable revenue pipeline for national development.

According to the tax authority, the new tax regime is not punitive but strategic, which will balance investor incentives with national revenue needs, and positioning Nigeria as a more predictable and attractive destination for global capital.