11/12/2025
โ*NIGERIAN TAX LAW QUESTION & ANSWER (SPECIFIC FOCUS ON INDIVIDUALS AND SMALL BUSINESSES)*
โ
โ๐ข *Q1*:
โ*When will the new Nigeria Tax Act take effect?*
โ
โ*A1:*
โ*The new Nigeria Tax Act takes effect from *1st January 2026.*
โ
โ๐ข *Q2*:
โ*Which specific individuals does the Nigerian Tax Law apply to?*
โ
โ *A2*:
โ*It applies to all individuals who earn income in Nigeria (workers, content creators, remote workers, influencers, traders, etc.) and to Nigerians earning income abroad if they are tax residents in Nigeria*
โ
โ๐ข *Q3*:
โ*Will transfers and deposits into my bank account be taxed?*
โ
โ *A3*:
โ*NO. Moving money around (via POS, transfers, deposits, or withdrawals) is not a taxable event. What is taxed is income earned.*
โ
โ๐ข *Q4*:
โ*Will the money I KEEP in my bank account be taxed from 2026?*
โ
โ*A4*
โ*NO.*
โ*Just having money in your account is not taxable.*
โ
โ*Only the income you earn (like salary, business profits, or interest) is what can be taxed.*
โ
โ๐ข *Q5* :
โ*Iโm a student with no job. Will I pay tax in 2026?*
โ
โ*A5*:
โ*NO.*
โ* If you have no taxable income, you won't pay tax.*
โ
โ๐ข *Q6*:
โ*Will tax authorities now monitor bank accounts of businesses more closely?*
โ
โ*A6*:
โ *YES,*
โ* It will be easier for authorities to track compliance.*
โ
โHowever,
โ*Your bank balances will not be taxed; profits and income are.*
โ
โ๐ข *Q7* :
โ*Will I pay tax on the loan I borrow from Fairmoney or any lender?*
โ
โ *A7*:
โ*NO.*
โ*Loans are not taxable given that they are not income.*
โ
โ*However, the interest income earned by Fairmoney will be taxed in their own hands.*
โ
โ๐ข *Q8*:
โ*I run a one-man business.*
โ
โ*Do I pay personal income tax or company income tax?*
โ
โ *A8*:
โ*If registered as an enterprise (business name), you pay Personal Income Tax.*
โ
โ*If registered as a limited liability company then you pay Company Income Tax.*
โ
โ๐ข *Q9*:
โ*If I sell shares and make a profit, will I pay tax in 2026?*
โ
โ*A9*:
โ*NO,*
โ*as long as the shares you sold are not more than โฆ150 million in value, and the gain is not above โฆ10 million.*
โ
โ*However, if it is higher than this threshold, the gain becomes taxable.*
โ
โ๐ข *Q10*:
โ*I am a pensioner.*
โ*Will my pension income be taxed in 2026?*
โ
โ *A10*:
โ*NO.*
โ*Approved pension and retirement benefits are exempt from tax.*
โ
โ๐ข *Q11*:
โ*Are military salaries taxable?*
โ
โ*A11*:
โ* NO.*
โ* The salaries of military officers are now tax-exempt.*
โ
โ๐ข *Q12*:
โ*Do creatives (authors, musicians, sportsmen) still enjoy tax exemptions on foreign income?*
โ
โ*A12*:
โ*NO.*
โ* They must now pay Nigerian tax on their income earned within Nigeria and outside.*
โ
โ๐ข *Q13*:
โ*Are crypto gains taxable?*
โ
โ*A13*:
โ*YES.*
โ* Profits from crypto, NFTs, and other digital assets are now taxed.*
โ
โ๐ข *Q14*:
โ*Who is exempt from personal income tax?*
โ
โ*A14*:
โ*Individuals earning the national minimum wage or less, and those earning below โฆ800,000 annually, are exempt.*
โ
โ๐ข *Q15*:
โ*What are the new progressive tax bands?*
โ
โ*A15*:
โ
โ๐First โฆ800,000 @ 0%
โ๐Next โฆ2.2m @ 15%
โ๐Next โฆ9m @ 18%
โ๐Next โฆ13m @ 21%
โ๐Next โฆ25m @ 23%
โ๐Above โฆ50m @ 25%
โ
โ๐ข *Q16*:
โ*If I get a big severance package when leaving my job, will I pay tax on it?*
โ
โ *A16*:
โ*You won't pay tax if it is โฆ50 million or less,*
โ*BUT if it is more than the extra amount, it will be taxed using the progressive tax band in no 15 above.*
โ
โ๐ข *Q17* :
โ*If I earn dividends or rent from abroad,
โ* Will Nigeria tax it?*
โ
โ *A17*:
โ*Dividends, interests, rent, royalties earned from outside Nigeria are EXEMPT from tax provided they are brought into Nigeria through approved channels (banks).*
โ
โ๐ข *Q18*:
โ*If a soldier or anyone in the armed forces gets injured in service and starts receiving a disability pension, will it be taxed in Nigeria?*
โ
โ *A18*:
โ* NO.*
โ*The disability pensions earned by the soldier or anyone in the armed forces will be completely tax-exempt.*
โ
โ๐ข *Q19*:
โ*My uncle wants to start an agricultural company next year.*
โ*Will his company be taxed in Nigeria?*
โ
โ *A19*:
โ*NO.*
โ*Agricultural companies such as those in crop production, livestock, forestry, dairy, and cocoa processing will enjoy a 5-year tax holiday from the date they begin operation.*
โ
โ๐ข *Q20*:
โ* Is income from Federal or State Government bonds taxable?*
โ
โ *A20*:
โ*NO,*
โ*All government bonds are exempt from tax.*
โ
โ๐ข *Q21*:
โ*What does rent relief entail under the new tax law?*
โ
โ*A21*:
โ*YES.*
โ*From 2026, individuals can claim rent relief of 20% of the annual rent paid, but capped at โฆ500,000.*
โ
โFor instance,
โ*If your yearly rent is โฆ5 million, 20% would be โฆ1 million, but the law caps it at โฆ500,000.*
โ
โ*To enjoy this relief, you must declare your actual rent and provide the details to the relevant tax authority.*
โ
โ๐ข *Q22*:
โ*I earn 6m yearly, will I be better off under the new tax law?*
โ
โ*A22*:
โ* Old law:*
โ
โ๐CRA = 20% of โฆ6m (โฆ1.2m) + โฆ200k = โฆ1.4m.
โ
โ๐Taxable income = โฆ6m โ โฆ1.4m = โฆ4.6m.
โ
โ๐Applying old tax bands gives a total tax of โฆ896,000.
โ
โ๐New law (NTA 2025):
โ*Rent relief = โฆ500k (must declare actual rent).*
โ
โ๐Taxable income = โฆ6m โ โฆ500k = โฆ5.5m.
โ
โ๐Applying new bands:
โ๐First โฆ800k @0% = 0
โ
โ๐Next โฆ2.2m @15% = โฆ330k
โ
โRemaining โฆ2.5m @18% = โฆ450k
โ
โ*Under the new law, tax reduces from โฆ896k to โฆ780k, saving โฆ116k.*
โ
โ*This will increase your net pay (take-home pay).*
โ
โ๐ข *Q23*:
โ*If my company's turnover is below โฆ50 million, will I pay tax?*
โ
โ*A23*:
โ* NO.*
โ*Small companies with a turnover of less than โฆ50m are exempt from taxes.*
โ
โ๐ข *Q24*:
โ*As a remote worker in Nigeria for an international organisation, will I pay tax?*
โ
โ *A24*:
โ* YES,*
โ*You will pay tax in Nigeria if the country where the international organisation is based exempts your salary under a treaty or diplomatic arrangement.*
โ
โ๐ข *Q25*:
โ*Will a foreigner earning a salary in Nigeria be taxed?*
โ
โ*A25*:
โ* NO,*
โ*if their employer is a start-up,*
โor operates in tech or creative arts, and their income is already taxed in their country of residence.
โ
โ
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