The Federal Inland Revenue Service has said that Nigeria’s newly enacted tax laws are part of a broader plan to strengthen the country’s economic competitiveness, attract more investments and ensure long-term fiscal stability. The agency also clarified that the controversial four per cent development levy on imported goods is not a fresh tax burden but a consolidation of several old charges that businesses had been paying separately.
In recent weeks, the Nigeria Tax Act and the Nigeria Tax Administration Act have sparked intense debate among citizens, business owners and policy analysts. Many Nigerians have expressed worries about whether the new laws will increase their financial obligations. But tax authorities say most of the concerns come from misinterpretation, insisting that the reforms are designed to simplify compliance, protect investment incentives and make the business environment more predictable.
In a statement on Wednesday, the FIRS explained that the four per cent development levy is one of the most misunderstood elements of the reform. The agency noted that the levy replaces several fragmented charges such as the Tertiary Education Tax, NITDA Levy, NASENI Levy and the Police Trust Fund Levy — payments that companies previously handled separately.
According to the service, merging these levies will reduce compliance costs, eliminate unpredictable charges and end the era where multiple government agencies issued separate levies. Small businesses and non-resident companies are exempted from the new levy structure, ensuring that vulnerable firms are not exposed to additional financial pressure.
Analysts say the reform sends a strong signal to investors that Nigeria is moving toward a more coordinated and transparent fiscal system.
Another controversial topic has been the treatment of Free Trade Zones (FTZs). Initial reports had suggested that the government was rolling back the incentives that have attracted investors to the zones over the years. However, the FIRS clarified that FTZ companies will continue to enjoy tax exemptions, with clearer guidelines to prevent abuses.
Under the new rules, companies operating within Free Trade Zones can now sell up to 25 per cent of their output into the Nigerian domestic market without losing their tax-exempt status. A three-year transition period has also been provided to allow them adjust to the revised structure. Government officials say the adjustment aims to curb misuse of FTZ licences by companies that operate mainly in the domestic market while avoiding taxes.
With these changes, Nigeria aligns with international models in countries such as the United Arab Emirates and Malaysia, where Free Trade Zones serve as export hubs for manufacturing, logistics and technology.
The introduction of a 15 per cent minimum Effective Tax Rate (ETR) for large multinational and domestic companies has also been a major topic of discussion. The FIRS explained that the measure follows a global tax agreement by over 140 countries under the OECD/G20 framework. Without this adoption, Nigeria risked losing revenue because other countries could impose a “Top-Up Tax” when Nigeria charges below the 15 per cent rate.
By applying the rule locally, Nigeria ensures that revenue generated by multinational companies operating in the country remains within its borders. The rule is also extended to large domestic companies to promote fairness and discourage practices that allow businesses to shift profits and reduce their tax obligations.
The reforms also introduced a new approach to capital gains taxation, now called chargeable gains. Several incentives were included to stimulate investment. One of the major provisions is the reinvestment relief, which exempts investors from paying tax on gains if they sell shares and reinvest in another Nigerian company within the same year. Experts say this will boost startups, private-equity investments and other emerging businesses.
The rules also modernise how capital losses are treated, exempt low-value transactions and close loopholes that previously allowed some companies to mask business income as capital gains.
Overall, the new tax laws aim to strengthen investor confidence, support industrial growth and build a more sustainable revenue base for national development. Government officials maintain that the reforms are not punitive, but strategic — balancing incentives for investors with the country’s long-term revenue needs and positioning Nigeria as a more competitive destination for global capital.
