From January 1 2026, a new Nigerian Tax Law will take effect. Every business owner, freelancer, content creator, and professional earning income in Nigeria must understand how it works. The government is linking NIN, BVN, and financial platforms for better monitoring — meaning that tax compliance will soon be unavoidable.
Below are 40 key questions and answers to help you prepare for the new tax era — written in simple, practical language that every Nigerian can relate to.
1️⃣ When Will the New Nigerian Tax Act Take Effect?
It becomes effective on January 1, 2026. From that date, everyone earning income in Nigeria will operate under the new law.
2️⃣ Who Does the Law Apply To?
It applies to all individuals earning income in Nigeria, including employees, freelancers, influencers, traders, content creators, remote workers, and others. Even Nigerians living abroad but classified as tax residents in Nigeria will pay tax on income brought into the country.
3️⃣ Will Transfers and Deposits Be Taxed?
No. Transfers, POS deposits, and withdrawals are not taxable events. Only earned income — salaries, business profits, or interest — will be taxed. However, repeated unexplained transfers may trigger an audit. Always use clear descriptions when sending or receiving money.
4️⃣ Will Money Saved in My Account Be Taxed?
No. Simply keeping money in your bank account is not taxable. Only what you earn as profit or salary counts. Keep proper records to prove where your money comes from.
5️⃣ Will Students Without Jobs Pay Tax?
No. If you do not earn taxable income, you owe no tax. Taxes apply only to profits, salaries, or investment returns.
6️⃣ Will Tax Authorities Monitor Bank Accounts More Closely?
Yes. Financial institutions will now send regular reports to EFCC and tax authorities. Businesses must appoint compliance officers to handle these reports, especially for transactions above certain thresholds.
7️⃣ Will Loans Be Taxed?
No. Loans are not taxable, but the interest earned by lenders is. To avoid confusion, document every loan with receipts, agreements, or WhatsApp proof showing it is a loan — not income.
8️⃣ I Run a One-Man Business — Which Tax Applies?
If you registered a Business Name (Enterprise), you’ll pay Personal Income Tax.
If you registered a Limited Liability Company, the company itself will pay Company Income Tax (CIT) because it is treated as a separate legal entity.
9️⃣ Are Profits from Shares Taxed?
Not if the shares sold are worth ₦150 million or less, and your profit (capital gain) is below ₦10 million. Anything above these thresholds becomes taxable.
10️⃣ Are Pension Incomes Taxed?
No. All approved pensions and retirement benefits are tax-exempt. Ensure your pension fund administrator (PFA) is recognized to qualify.
11️⃣ Are Military Salaries Taxed?
No. The government has exempted military and armed-forces salaries from tax to encourage national service.
12️⃣ Are Creatives, Authors, and Influencers Still Exempt on Foreign Income?
No. From 2026, all foreign and local income earned by Nigerians — musicians, athletes, YouTubers, freelancers — will be taxable in Nigeria.
13️⃣ Are Crypto and NFT Profits Taxable?
Yes. Gains from cryptocurrency, NFTs, and other digital assets will now be taxed under the new law.
14️⃣ Who Is Exempt from Personal Income Tax?
Anyone earning the national minimum wage or less, or earning under ₦800,000 per year, will not pay tax.
15️⃣ What Are the New Tax Brackets?
- ₦0 – ₦800,000 = 0%
- ₦801,000 – ₦3 million = 15%
- ₦3 – 12 million = 18%
- ₦12 – 25 million = 21%
- ₦25 – 50 million = 23%
- ₦50 million + = 25%
16️⃣ Will Severance Packages Be Taxed?
No tax on packages ₦50 million or less. Only the amount above ₦50 million will be taxed based on your income bracket.
17️⃣ Are Foreign Dividends or Rent Taxed?
Not if they are brought into Nigeria through an approved bank channel. Using official transfer routes protects you and helps Nigeria’s foreign-exchange flow.
18️⃣ Are Disability Pensions for Soldiers Taxed?
No. Disability pensions received by military personnel are fully tax-exempt.
19️⃣ Are Agricultural Companies Taxed?
No, for the first five years. Businesses in crop production, livestock, forestry, dairy, or cocoa processing enjoy a 5-year tax holiday from commencement.
20️⃣ Are Government Bonds Taxed?
No. Income from federal or state government bonds is completely tax-free.
21️⃣ What Is Rent Relief Under the New Law?
From 2026, individuals can claim 20% of annual rent (up to ₦500,000) as tax relief. You must, however, present receipts or agreements to prove rent payment.
22️⃣ I Earn ₦6 Million Yearly — Am I Better Off Under the New Law?
Yes. Under the old system, your tax would be about ₦896,000. Under the new law with rent relief, it drops to roughly ₦780,000 — saving you ₦116,000 if you declare your rent properly.
23️⃣ If My Company’s Turnover Is Below ₦50 Million, Will I Pay Tax?
No. Small companies earning below ₦50 million yearly and owning less than ₦250 million in assets are exempt from Company Income Tax. You must still file annual returns and keep records.
24️⃣ Will Remote Workers in Nigeria Pay Tax?
Yes. If your foreign employer does not deduct tax abroad, you must pay Nigerian tax. If tax has already been deducted, provide documentation to avoid double taxation.
25️⃣ Will Foreigners Working in Nigeria Be Taxed?
No, if their income is already taxed in their home country and they work for tech or creative startups in Nigeria.
26️⃣ Are NGOs and Incorporated Trustees Taxed?
No, unless they run business activities. Pure NGOs do not pay tax, but once they earn business income, that segment becomes taxable. Register as Limited by Guarantee to combine both legally.
27️⃣ Are Branch Transfers Within a Company Taxed?
No. Branches and head offices are one entity. Only the company’s overall profit is taxable.
28️⃣ If I Own Three Small Companies Below ₦50 Million Each, Will I Be Taxed?
Each company is separate. As long as each one’s turnover and assets remain within the small-business threshold (₦50 million turnover and ₦250 million assets), they individually qualify for exemption.
29️⃣ What If an Agricultural Company Also Runs Another Business?
Only the agricultural segment qualifies for the 5-year tax holiday. Non-agric activities may be taxed. Maintain separate records for each operation.
30️⃣ Is the New Federal Law Separate from State Tax?
Yes. Federal government handles Company Income Tax (CIT), while states handle Personal Income Tax (PAYE).
If you have staff, you must remit PAYE to your State Internal Revenue Service every month.
31️⃣ What About Foundations?
Foundations are also tax-exempt if they only engage in charitable work. If they begin business or commercial operations, those profits can be taxed.
32️⃣ How Are Dual Citizens Taxed?
If you live in Nigeria for 183 days or more in a year, you are considered a tax resident.
If your other country has a double-tax treaty with Nigeria and you have paid tax there, you may not pay again here — or you only pay the difference.
33️⃣ Will Accounting Services Become Overwhelmed?
Probably. With full digital monitoring, every business will need accounting support. Automating your tax records with reliable tools will help you avoid errors and penalties.
34️⃣ Is There a Plan for Automated Tax Compliance?
Yes. The FIRS portal and accounting software can now calculate PAYE, VAT, WHT, and CIT automatically. All you need is accurate data entry and proper digital receipts.
35️⃣ How Can Businesses Handle Inheritance Tax and Trusts?
Inheritance tax and trust structuring are specialized issues. Work with a certified tax consultant to design legal ways (such as deeds of gift or trusts) to transfer wealth while remaining compliant.
36️⃣ Can One Limited Liability Company Own Many Businesses?
Yes. You can run multiple brands under one company by trademarking each brand.
To form a group of companies, register at least three limited liability companies with common names, shareholders, and directors (e.g., Dangote Cement, Dangote Sugar, Dangote Refinery).
37️⃣ How Much Does It Cost to Register a Limited Liability Company?
Around ₦75,000 through CAC — a better long-term choice than a simple business name, especially for larger operations.
38️⃣ Do I Need to Remit PAYE If I Have One Employee?
Yes. Any business with even one staff must remit PAYE to the relevant state tax authority.
39️⃣ What If My Assets Exceed ₦250 Million but My Turnover Is Below ₦50 Million?
You’ll be taxed. To qualify as a small company, both turnover and assets must stay below the limits.
40️⃣ Where Can I Get Accurate Information on the 2026 Tax Law?
Use official channels such as fiscalreforms.ng and their verified social media pages (Fiscal Reforms NG). Avoid misleading information from random online posts.
Why Every Business Needs Digital Records Before 2026
The new tax era means every income and expense must be traceable. Banks, EFCC, and tax authorities will cross-check your inflows and outflows.
If you cannot prove the source of each transaction, it might be treated as income — and taxed.
Paper receipts and manual bookkeeping will no longer be enough. You need a secure, easy-to-use digital tool to document every sale, expense, or transfer.
Be Tax-Ready with NairaTrack.com
Stay ahead of the 2026 tax reforms with NairaTrack.com — Nigeria’s simplest platform for creating and sending digital receipts through WhatsApp, SMS, Email, or Telegram.
With NairaTrack you can:
- Track every transaction automatically.
- Generate receipts instantly with full details.
- Record sales, payments, and customer info digitally.
- Download and share proof for tax or business reports.
- Stay compliant with Nigeria’s new digital tax era.
Whether you’re a freelancer, influencer, trader, or company owner, NairaTrack helps you stay organized, compliant, and confident before January 2026.
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