Stransact Blog

Category: Tax

  • One Law, Two Scripts: Navigating the Material Discrepancies in the Nigeria Tax Act 2025 – Eben Joels

    One Law, Two Scripts: Navigating the Material Discrepancies in the Nigeria Tax Act 2025 – Eben Joels

    Nigeria’s fiscal landscape has officially shifted with the commencement of the Nigeria Tax Act, 2025 on January 1, 2026. However, a quiet storm is brewing in the boardrooms of tax consultants and corporate legal departments. Two versions of the same Act are currently in circulation: one released previously by the Federal Inland Revenue Service (FIRS) as the gazette tax laws, bearing a reference number “FGP 29/72025/5OO” and the “Final Approved Copy”; the version bearing the weight of the law, signed by both the Clerk of the National Assembly and President Bola Ahmed Tinubu, which was recently made public by the National Assembly. Incidentally, both copies claim to be published by the official gazette of the Federal government Press. While the former “FGP 29/72025/5OO” lists the page range as A385-A597, the copy released by the National Assembly bearing the stamp “Final Approved Copy” lists the page range as A387-A596.

    While the differences may seem subtle at a glance, a deep dive reveals material discrepancies that could redefine tax liabilities for millions of businesses, particularly Small and Medium Enterprises (SMEs).

    Perhaps the most jarring difference lies in the very definition of a “Small Company.” Under the FIRS version of the Act, a small company which enjoys a 0% Companies Income Tax (CIT) rate, is defined as a business with an annual gross turnover of N50,000,000 or less. In a significant departure, the Presidentially-signed Final Approved Copy raises this ceiling to N100,000,000. This N50 million gap is not merely semantic; it represents a vast segment of the Nigerian business community that would be exempt from income tax under the official law but potentially pursued for payment under the FIRS version.

    Read more: Why Nigeria Cannot and Will Not Tax Your Bank Account – Eben Joels

    Another subtle but material difference lies in the taxation of “Digital” vs. “Virtual Assets”. As Nigeria seeks to formalize its burgeoning digital economy, the terminology used to describe what is to be taxed is not so straightforward. In the FIRS version, Section 4(1)(j) explicitly brings “profits or gains from transactions in digital or virtual assets” into the tax net. The Final Approved Copy, however, opts for the more concise “digital assets”. While “digital” is often used as a catch-all, the inclusion of “virtual” in the FIRS version appears to cast a wider, more aggressive net over the crypto and blockchain space.

    The list of repealed laws is the bedrock of any new tax regime. Here, the FIRS version includes a critical addition: it lists the “Taxes and Levies (Approved List for Collection) Act” as being repealed. The version released by the National Assembly and signed by the President does not include this Act in its list of repeals. This creates a legal grey area regarding which agency; Federal, State, or Local has the authority to collect specific levies. If the Taxes and Levies Act remain in force (as the President’s signature suggests), many of the collection mandates assumed by the new Act could face constitutional challenges in court.

    The energy sector is not exempt from the confusion. In Section 86, which governs decommissioning and abandonment funds for petroleum operations, the FIRS version demands that licensees deposit a minimum of 30% of the fund with a Nigerian bank. The national assembly version sets the threshold at 15%.

    Furthermore, the FIRS document contains an expanded Section 13 that provides detailed definitions for “financial technology” (fintech), “shared services”, and “labelled startups”. These technical definitions, intended to clarify the tax status of tech-driven services, are notably absent from the same section in the version signed into law by the President.
    In the eyes of the Nigerian judiciary, the rule of thumb is clear: the version signed by the Clerk of the National Assembly and given Presidential Assent is the law of the land. The “Final Approved Copy,” which lists the Official Gazette range as A387-A596, remains the only legitimate reference for taxpayers.

    Read more: The Limits of Regulatory Authority and the Imperative of Legislative Clarity

    The instances mentioned above do not reflect all the material instances we have cited. For example, the scope of “employment income” appears broader in the unsigned version distributed earlier, before the recent version released by the National Assembly. There are also differences in what constitutes “Gas Production Credits”. Hidden somewhere in the previous version is a mandate for the Nigerian Upstream Petroleum Regulatory Commission to account for all royalties due within the ten years immediately preceding the Act’s commencement. This material mandate is missing from the version released by the National Assembly.

    As the FIRS begins implementation, discrepancies such as referring to the “Nigeria Revenue Service” instead of the “Nigerian Revenue Service” cited in the signed copy and several other subtle differences may lead to avoidable litigation. For now, Nigerian businesses are advised to comply with the signed Gazette issued by the National Assembly.

  • The Limits of Regulatory Authority and the Imperative of Legislative Clarity

    The Limits of Regulatory Authority and the Imperative of Legislative Clarity

    Nigeria’s ongoing tax reform process, including the enactment of omnibus tax statutes intended to replace and consolidate several existing tax laws, represents one of the most far-reaching fiscal restructurings in recent history. Given the breadth and systemic impact of these reforms, strict adherence to constitutional procedure, legislative authority and settled principles of administrative law is indispensable. These are just not matters of form; they go to the legitimacy of the law itself.

    Recent public statements attributed to the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, suggesting that perceived defects or inconsistencies in the clear provisions of a gazetted Act may be addressed through regulations, had already raised concern within the legal and tax community. Those concerns have now assumed greater significance in light of both Mr. Oyedele’s further explanation and the emergence of an ongoing investigation by the National Assembly into post-passage alterations of the tax legislation.

    Mr. Oyedele’s Clarification and the Problem It Reveals

    In his most recent public explanation, Mr. Taiwo stated that he does not have access to the harmonised version of the tax legislation as passed by the National Assembly. He further indicated that this lack of access makes it difficult to ascertain whether the version currently gazetted accurately reflects what was approved by the legislature.

    This clarification is legally consequential. If a key factor in the reform process is unable to independently verify the harmonized legislative text, then questions about discrepancies cannot be resolved by assumption, explanation or administrative interpretation. At that point, the issue ceases to be one of implementation detail and becomes a question of legislative authenticity.

    Read more: Why Nigeria Cannot and Will Not Tax Your Bank Account – Eben Joels

    Legislative Authority and the Role of the National Assembly

    Under sections 4(1) and (2) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), legislative power for the Federation is vested exclusively in the National Assembly. That authority is neither shared with committees nor exercisable by administrative bodies through proxy. The Supreme Court has consistently affirmed that substantive law-making power is exclusive and non-delegable.

    Once a bill has been passed by the National Assembly, assented to by the President and published in the Official Gazette, the legislative process is complete. The text so gazetted constitutes the law and is the only version recognized by the Constitution. However, this constitutional finality necessarily presupposes that the gazetted text is an authentic reproduction of the harmonised bill passed by Parliament.

    Gazetting, Authenticity and the Current Uncertainty

    Publication in the Official Gazette is the act that confers legal force and public notice on legislation. Nigerian courts have consistently treated the Gazette as conclusive evidence of statutory law. However, the authority of the Gazette depends on authenticity. Where credible questions arise as to whether the gazetted text corresponds with the harmonised version approved by the National Assembly, that uncertainty strikes at the root of legality.

    This concern is no longer speculative. The House of Representatives has formally constituted a Select Committee to investigate allegations of post-passage alterations to the tax legislation. The Committee’s interim findings suggest that certain provisions may have been inserted, modified or removed after legislative passage, raising serious constitutional questions as to validity.

    In such circumstances, neither drafts, explanatory notes nor post-enactment assurances can cure the uncertainty. Only the legislature itself can conclusively determine what it passed.

    Read more: How the Nigeria Tax Act 2025 Empowers Individual Taxpayers

    Why Regulations Cannot Resolve Legislative Defects

    It is in this context that suggestions about using regulations to “correct” perceived defects become particularly problematic. Regulations are a form of delegated or subsidiary legislation. Their validity depends entirely on the enabling Act, and Nigerian case law is settled that they cannot amend, override or contradict the clear provisions of an Act of the National Assembly.

    More fundamentally, regulations cannot be used to resolve doubts about whether the primary legislation itself accurately reflects legislative intent. Delegated legislation presupposes a valid and settled principal statute. It cannot be deployed to stabilise, legitimise or repair uncertainty at the level of primary legislation.

    Institutional Risk of Proceeding Amid Legislative Uncertainty

    Proceeding with implementation while the National Assembly is actively investigating the legality and provenance of the gazetted Acts carries significant institutional risk. It risks creating multiple competing “versions” of the law: one allegedly passed, another gazetted, and a third administratively interpreted. In tax law, where certainty is foundational, such fragmentation is untenable.

    It also exposes taxpayers, administrators and the government itself to avoidable litigation, compliance disputes and enforcement challenges. Once implementation begins, unwinding actions taken under a statute later found to be defective becomes legally and practically complex.

    The Case for Deferring Implementation

    In light of Mr. Oyedele’s clarification and the ongoing legislative investigation, constitutional prudence points in one direction. Implementation of the new tax legislation should be deferred until the National Assembly concludes its inquiry and either confirms the authenticity of the gazetted text or takes corrective legislative action.

    Deferring implementation is not an indictment of reform. Rather, it is a safeguard for the reform. It protects taxpayers from uncertainty, preserves institutional credibility and ensures that when implementation begins, it rests on an unimpeachable legal foundation.

    Conclusion

    Nigeria’s tax reform agenda can only succeed if it is anchored firmly in constitutional legality. Where uncertainty exists as to whether a gazetted Act faithfully reflects what the legislature passed, that uncertainty must be resolved by the legislature, not managed by regulation or administrative explanation.

    No committee, however well intentioned, can substitute regulatory assurance for legislative certainty. The supremacy of the Constitution, the primacy of the National Assembly and the authority of an authentic Official Gazette are not obstacles to reform. They are the conditions that make reform lawful, credible and enduring.

     

  • Why Nigeria Cannot and Will Not Tax Your Bank Account – Eben Joels

    Why Nigeria Cannot and Will Not Tax Your Bank Account – Eben Joels

    There is a pervasive fear among Nigerians often fueled by aggressive headlines that the government is on the verge of peering into your bank account and arbitrarily debiting “unpaid taxes” based on your daily transaction alerts.

    The fear is understandable. The government is desperate for revenue. The recent passage of the Income Tax Act (ITA) 2025, a product of the current administration’s tax reform committee, was meant to modernize our archaic tax laws. Despite the fanfare, the new Act has failed to address the fundamental structural flaws in the old Personal Income Tax Act (PITA).

    Here is the cold, hard reality: The Nigerian government cannot and will not tax your bank account directly anytime soon. Here is why.

    The Wrong Taxman has the Data (Federal vs. State)

    The primary safeguard preventing Nigeria from taxing your personal bank account is Nigeria’s federal structure.

    Under the Nigerian constitution and retained by the ITA 2025, the Federal Government (via the FIRS or the newly proposed Nigeria Revenue Service) collects taxes from companies. The State Governments (via their State Internal Revenue Services) collect taxes from individuals.

    This creates a massive disconnect. The Federal Government has the data. Through the NIBSS and BVN frameworks, the Federal Government can theoretically track money flows.  However, the Federal Government cannot legally collect Personal Income Tax (PIT) from you unless you are a police officer, military personnel, or a diplomat. For the remaining 99% of the population, that right belongs to the state where you reside.

    The FIRS cannot simply hand over your banking data to 36 states because of complex data privacy and banking secrecy laws that remain largely unaddressed by the new Act. A simple fix such as enacting a nominal federal income tax (say 1%) would have significantly enabled the sharing of data between Federal and State Tax agencies. It could also be used as tool to transfer funds to the vulnerable rather than the current opaque method done via the Ministry of Humanitarian Affairs.

    The 35 Weak Links (State Internal Revenue Services)

    If you live in Lagos, you might have reason to be slightly worried. The Lagos State Internal Revenue Service (LIRS) is an outlier, technologically advanced and aggressive. But for the rest of the country? The system is broken.

    Aside from Lagos and perhaps the FCT, most State Internal Revenue Services (SIRS) are hollow institutions. They are often headed by political appointees; friends of the Governor with zero depth in tax administration or forensic accounting.

    These agencies lack the software to analyze bank statements even if they had them. They lack the political will to compel their wealthy residents to pay the right amount of tax because these wealthy individuals may very well be the sponsors of those holding the highest political positions.

    The State IRS rely almost exclusively on Pay-As-You-Earn (PAYE), where companies do the work for them by deducting taxes at the source. They lack the capacity to audit the millions of personal bank accounts within their domain. They are too weak to enforce collection on individuals who do not earn a salary.

    The “Secondee” Loophole

    The most glaring weakness of the ITA 2025 is that it was touted as a reform to capture the wealthy, yet it arguably makes it easier for the ultra-rich to slip away.

    A major flaw exists in the definition of taxable income regarding “Secondees”, expatriates or Nigerians seconded from foreign firms to work in Nigeria. The Act appears to completely exempt the income of a secondee if they can prove they are paying taxes in their “home country.”

    This is a massive oversight. It means a high-earning executive earning $20,000 a month in Nigeria can avoid paying any tax to the Nigerian state by presenting a tax receipt from a low-tax jurisdiction or their home country. While the average Nigerian employee has their tax deducted at source, the high-net-worth individual with complex global income sources is given a legal exit route. If the law cannot even capture the clearly defined income of a corporate executive, it certainly lacks the sophistication to scrutinize the murky inflows of a personal savings account.

    Bank Turnover ≠ Taxable Income

    Finally, there is a legal hurdle that the tax authorities have not cleared. A credit alert in your bank account is not proof of income. If your spouse transfers money to you for school fees, that is not income. If you sell a used car and the buyer transfers cash, that is a return of capital, not necessarily profit. If you receive a refund for a failed transaction, that is not income.

    For a tax authority to tax your bank account, it must first distinguish between revenue and income. This requires a level of forensic auditing that simply does not exist at the state level. They cannot simply apply a flat tax rate to your total credit alerts without facing lawsuits they would almost certainly lose in a working judiciary.

    Conclusion

    While ITA 2025 has rearranged the furniture, the house remains the same. As long as the collection of personal income tax is left to 36 disparate, under-resourced, and politically compromised State Boards, your bank account remains relatively safe.  And as long as every Nigerian does not pay personal income tax to the center, the current tax reforms from a personal income perspective are inchoate.

    The taxman may bark, but until the constitution is amended to centralize personal tax collection or until the States wake up and employ technocrats rather than politicians, he has no teeth to bite your savings.

    Eben Joels is the Managing Partner of Stransact Chartered Accountants, an audit, tax, and consulting firm in Nigeria. He is also a subject-matter expert in International Tax and Financial Reporting Standards and a licensed attorney.

  • Why Nigeria Cannot and Will Not Tax Your Bank Account

    Why Nigeria Cannot and Will Not Tax Your Bank Account

    There is a pervasive fear among Nigerians—often fueled by aggressive headlines—that the government is on the verge of peering into your bank account and arbitrarily debiting “unpaid taxes” based on your daily transaction alerts.

    The fear is understandable. The government is desperate for revenue. The recent passage of the Income Tax Act (ITA) 2025, a product of the current administration’s tax reform committee, was meant to modernize our archaic tax laws. Despite the fanfare, the new Act has failed to address the fundamental structural flaws in the old Personal Income Tax Act (PITA).

    Here is the cold, hard reality: The Nigerian government cannot—and will not—tax your bank account directly anytime soon. Here is why.

    The Wrong Taxman has the Data (Federal vs. State)

    The primary safeguard preventing Nigeria from taxing your personal bank account is Nigeria’s federal structure.

    Under the Nigerian constitution and retained by the ITA 2025, the Federal Government (via the FIRS or the newly proposed Nigeria Revenue Service) collects taxes from companies. The State Governments (via their State Internal Revenue Services) collect taxes from individuals.

    This creates a massive disconnect. The Federal Government has the data. Through the NIBSS and BVN frameworks, the Federal Government can theoretically track money flows.  However, the Federal Government cannot legally collect Personal Income Tax (PIT) from you unless you are a police officer, military personnel, or a diplomat. For the remaining 99% of the population, that right belongs to the state where you reside.

    The FIRS cannot simply hand over your banking data to 36 states because of complex data privacy and banking secrecy laws that remain largely unaddressed by the new Act. A simple fix such as enacting a nominal federal income tax (say 1%) would have significantly enabled the sharing of data between Federal and State Tax agencies. It could also be used as tool to transfer funds to the vulnerable rather than the current opaque method done via the Ministry of Humanitarian Affairs.

    The 35 Weak Links (State Internal Revenue Services)

    If you live in Lagos, you might have reason to be slightly worried. The Lagos State Internal Revenue Service (LIRS) is an outlier—technologically advanced and aggressive. But for the rest of the country? The system is broken.

    Aside from Lagos and perhaps the FCT, most State Internal Revenue Services (SIRS) are hollow institutions. They are often headed by political appointees—friends of the Governor with zero depth in tax administration or forensic accounting.

    These agencies lack the software to analyze bank statements even if they had them. They lack the political will to compel their wealthy residents to pay the right amount of tax because these wealthy individuals may very well be the sponsors of those holding the highest political positions.

    The State IRS rely almost exclusively on Pay-As-You-Earn (PAYE), where companies do the work for them by deducting taxes at the source. They lack the capacity to audit the millions of personal bank accounts within their domain. They are too weak to enforce collection on individuals who do not earn a salary.

    The “Secondee” Loophole

    The most glaring weakness of the ITA 2025 is that it was touted as a reform to capture the wealthy, yet it arguably makes it easier for the ultra-rich to slip away.

    A major flaw exists in the definition of taxable income regarding “Secondees”—expatriates or Nigerians seconded from foreign firms to work in Nigeria. The Act appears to completely exempt the income of a secondee if they can prove they are paying taxes in their “home country.”

    This is a massive oversight. It means a high-earning executive earning $20,000 a month in Nigeria can avoid paying any tax to the Nigerian state by presenting a tax receipt from a low-tax jurisdiction or their home country. While the average Nigerian employee has their tax deducted at source, the high-net-worth individual with complex global income sources is given a legal exit route. If the law cannot even capture the clearly defined income of a corporate executive, it certainly lacks the sophistication to scrutinize the murky inflows of a personal savings account.

    Bank Turnover ≠ Taxable Income

    Finally, there is a legal hurdle that the tax authorities have not cleared. A credit alert in your bank account is not proof of income. If your spouse transfers money to you for school fees, that is not income. If you sell a used car and the buyer transfers cash, that is a return of capital, not necessarily profit. If you receive a refund for a failed transaction, that is not income.

    For a tax authority to tax your bank account, it must first distinguish between revenue and income. This requires a level of forensic auditing that simply does not exist at the state level. They cannot simply apply a flat tax rate to your total credit alerts without facing lawsuits they would almost certainly lose in a working judiciary.

    Conclusion

    While ITA 2025 has rearranged the furniture, the house remains the same. As long as the collection of personal income tax is left to 36 disparate, under-resourced, and politically compromised State Boards, your bank account remains relatively safe.  And as long as every Nigerian does not pay personal income tax to the center, the current tax reforms from a personal income perspective are inchoate.

    The taxman may bark, but until the constitution is amended to centralize personal tax collection—or until the States wake up and employ technocrats rather than politicians—he has no teeth to bite your savings.

    Eben Joels is the Managing Partner of Stransact Chartered Accountants, an audit, tax, and consulting firm in Nigeria. He is also a subject-matter expert in International Tax and Financial Reporting Standards and a licensed attorney.

  • How the Nigeria Tax Act 2025 Empowers Individual Taxpayers

    How the Nigeria Tax Act 2025 Empowers Individual Taxpayers

    The Nigeria Tax Act (NTA) 2025 represents a landmark reform in the country’s fiscal landscape, particularly for individual taxpayers. Enacted to modernize and harmonize Nigeria’s tax framework, the Act introduces a suite of progressive measures aimed at enhancing equity, simplifying compliance, and delivering tangible reliefs to low and middle-income earners.

    This article explores the key provisions of the NTA 2025 that affect individuals, highlighting the opportunities, reliefs, and incentives embedded in the new law and what they mean for taxpayers, employers, and the broader economy.

    Read more: Stransact makes World Tax list of Tier-1 firms in tax services

    A New Era for Personal Taxation

    The NTA 2025 repeals and replaces the Personal Income Tax Act (PITA) 2011, addressing long-standing ambiguities and introducing a more transparent, inclusive, and equitable tax regime. The reforms are designed to align Nigeria’s tax system with global best practices while ensuring that taxation supports, rather than stifles, economic growth.

    Read more: Nigeria Tax Reform Act: What Businesses Need to Know

    Key Provisions of the NTA 2025 and their Implications

    1. Expanded Definition of Chargeable Income: The Act now explicitly lists items such as: Prizes, winnings, and honoraria, grants, awards, laurels, etc.; profits or gains from transactions in digital or virtual assets; disposal of money or money instruments; profits or gains from the disposal of property or fixed assets; and securities; discounts or rebates, etc., under the scope of taxable income.This eliminates previous ambiguities surrounding the tax treatment of income from emerging sectors and informal sources, thereby widening the tax net and enhancing government revenue without increasing tax rates for compliant taxpayers. It reflects the government’s policy objective of modernizing the tax base to capture new forms of wealth and align Nigeria’s tax framework with global best practices [NTA 2025, Section 4].
    1. Introduction of Rent Relief Deduction: Individual taxpayers can now claim 20% of their annual rent (up to a maximum of ₦500,000) as an Eligible Deduction, provided valid tenancy documentation is provided. This provision is particularly beneficial for salaried workers and urban dwellers, offering meaningful relief from housing-related expenses [NTA 2025, Section 30 (2) (vi)].
    1. Abolition of the Consolidated Relief Allowance (CRA): The CRA, previously a blanket deduction for all taxpayers, has been repealed. In its place, the Act introduces a more itemized and transparent system of deductions, encouraging accurate reporting and aligning tax reliefs with actual expenses incurred.
    1. Enhanced Compensation for Loss of Office: The tax-exempt threshold for compensation due to loss of office has now been increased from ₦10 million to ₦50 million (only the excess above this new threshold will constitute chargeable gains). This change provides greater financial protection for individuals facing job termination or workplace-related injuries [NTA 2025, Section 50 (1)].
    1. Revised Progressive Tax Bands: The Act introduces a new progressive tax structure, adjusting rates from the previous 7%–24% under PITA to 0%–25% under the NTA. This ensures that:
    • Low-income earners (earning the minimum wage and below /month) are exempt from income tax
    • Middle-income earners benefit from reduced tax burdens
    • High-income earners contribute a fairer share of their income towards national development
      [NTA Fourth schedule).
    1. Clarified Definitions for Key Tax Terms: To eliminate ambiguity and reduce disputes, the Act provides precise definitions for terms such as:
    • Non-Resident Individual (NRI); Interest; Dividend; Royalty
    • This clarity enhances legal certainty and simplifies compliance for both taxpayers and tax administrators [NTA 2025, Sections 7-8, 202].

    Other Notable Provisions and Compliance Implications

    Beyond the major reforms highlighted above, the Nigeria Tax Act 2025 introduces several additional measures that shape how individuals earn, report, and manage their tax obligations.

    • Taxation of Capital and Chargeable Gains: The Act consolidates the taxation of chargeable gains, bringing profits from the disposal of property, securities, or other assets directly within the personal income tax framework. This integration simplifies administration but also means that individuals must now evaluate the tax impact of every asset sale or transfer. Certain exemptions remain for personal residences and low-value personal assets.
    • Clarified Residence and Source Rules: Sections 7 – 8 establish clearer tests for determining whether an individual is resident in Nigeria and whether income is derived from Nigerian sources. These provisions are especially relevant for Nigerians earning from remote or cross-border work, digital businesses, or offshore investments. Proper documentation of residence and income source will be critical for compliance.
    • Broader Range of Allowable Deductions: In addition to the new rent relief, the NTA 2025 retains or clarifies deductions for pension contributions, National Housing Fund (NHF), and National Health Insurance Scheme (NHIS) contributions, as well as verified donations to approved charitable causes. These provisions reward documented savings and social contributions, encouraging a more structured financial culture.
    • Presumptive Taxation for Informal Income Earners: To improve inclusion and widen the tax net, the Act empowers the tax authorities to apply presumptive assessment frameworks for individuals or micro-enterprises with incomplete records. This ensures that self-employed and gig-economy earners contribute fairly, while still providing mechanisms for appeal and voluntary disclosure.
    • Digitalization and Enhanced Compliance Obligations: Complementing the NTA are reforms under the Nigeria Tax Administration Act 2025, which mandate electronic filing, use of Tax Identification Numbers (TINs), and stricter record-keeping for individuals. Taxpayers are therefore encouraged to adopt digital compliance tools and maintain proper documentation to avoid penalties.
    • Effective Date and Transition Arrangements: Most provisions of the NTA 2025 relating to individuals take effect from 1 January 2026, giving taxpayers time to understand the new framework and adjust their financial and payroll systems accordingly. Transitional guidelines are expected from the Federal Inland Revenue Service (FIRS) and relevant State Tax Authorities to aid smooth implementation.

    Read more: Why IFRS 18 Should Be a Strategic Priority for CFOs and Financial Leaders

    Beyond Compliance: A Pathway to Financial Empowerment

    The NTA 2025 is not merely a legislative update, it is a strategic tool for financial empowerment. By offering targeted reliefs and incentives, the Act encourages individuals to: Plan their finances more effectively, leverage available deductions and engage proactively with the tax system.

    For employers, the reforms necessitate a review of payroll systems, employee benefits, and vendor engagement processes to ensure full alignment with the new tax framework.

    Read more: Stransact expands horizon, unveils Deals and Advisory Services

    Looking Ahead: A More Inclusive Tax Culture

    The Nigeria Tax Act 2025 positions personal taxation as a catalyst for inclusive economic growth. By prioritizing fairness, transparency, and simplicity, it fosters a culture of voluntary compliance and trust in the tax system.

    Whether you are a salaried employee, entrepreneur, or investor, the new law offers a timely opportunity to reassess your financial strategy, maximize your tax benefits, and contribute meaningfully to national development.

  • FIRS Extends Deadline for Large Taxpayers on E-Invoicing & E-Fiscal System (EFS)

    FIRS Extends Deadline for Large Taxpayers on E-Invoicing & E-Fiscal System (EFS)

    The Federal Inland Revenue Service (FIRS) has announced a three-month extension for the mandatory onboarding and transmission of electronic invoices under the National E-Invoicing & Electronic Fiscal System (EFS) regime.

    This extension applies to Large Taxpayers (businesses with annual turnover of ₦5 billion and above) who are required to comply with the new Merchant-Buyer Solution (MBS) platform.

    While the E-Invoicing & EFS system officially went live on 1 August 2025, the deadline for full onboarding, integration, and mandatory compliance has now been shifted from 1 August 2025 to 1 November 2025. According to the FIRS, this adjustment recognizes the operational challenges faced by many taxpayers in meeting the initial timeline, despite the successful go-live of the platform.

    Presentation Slide: Merchant Buyer Solution e-Invoicing System

    What is the E-Invoicing & EFS System?

    The National E-Invoicing & Electronic Fiscal System (EFS) is a digital solution introduced by FIRS to modernize and streamline Nigeria’s tax compliance framework.

    Through the Merchant-Buyer Solution (MBS) platform, businesses will:

    • Issue invoices electronically in real-time.
    • Ensure transparency in transactions between buyers and sellers.
    • Enable automatic transmission of invoice data directly to FIRS.
    • Reduce risks of tax evasion, manipulation, or under-reporting.

    The system will also provide FIRS with more accurate transaction data, strengthening Nigeria’s tax administration and fostering a fairer business environment.

    Why the Extension Matters

    The extension offers taxpayers additional time to finalise their onboarding, integration, and compliance procedures. More importantly, it reflects FIRS’ commitment to encouraging voluntary compliance rather than penalizing businesses struggling with technical or operational bottlenecks.

    In its statement, the agency emphasized that the move is intended to create a smoother and more inclusive transition into the e-invoicing regime, allowing businesses to adapt without disruption to their operations.

    Read more: Navigating the Future of Tax Compliance: FIRS to Roll Out E-Invoicing in Nigeria

    FIRS’s Commitment to Support

    FIRS has pledged to continue working closely with stakeholders through engagements, technical support, and ongoing training programs. Businesses are encouraged to take advantage of this window to complete the necessary integrations and avoid last-minute compliance challenges.

    FIRS Executive Chairman, Zacch Adedeji, Ph.D., reaffirmed that the introduction of the e-invoicing platform is part of FIRS’ broader reforms aimed at modernizing Nigeria’s tax system, improving efficiency, and ensuring fairness in tax administration.

    Next Steps for Taxpayers

    With the new compliance deadline of 1st November 2025, large taxpayers are advised to:

    • Complete onboarding and system integration as soon as possible.
    • Train their accounting and finance teams on the use of the MBS platform.
    • Test invoice submissions to ensure smooth real-time reporting.

    Read more: Stransact, NRS upskill corporates on how to navigate Nigeria’s new tax landscape

    As businesses prepare for this transition, it is crucial to review existing invoicing and reporting processes to ensure full compliance with the new system. While the e-invoicing regime may present initial challenges, it also offers an opportunity to enhance transparency, strengthen controls, and improve efficiency.

    At Stransact Chartered Accountants, we are well-positioned to assist businesses in understanding the requirements, implementing compliant processes, and navigating any uncertainties. We encourage stakeholders to reach out to us for tailored guidance and support in adapting seamlessly to this reform.

  • Nigeria Tax Reform Act: What Businesses Need to Know

    Nigeria Tax Reform Act: What Businesses Need to Know

    On 26 June 2025, Nigeria entered a new era of taxation. With the signing of the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Establishment Act (NRSEA), and the Joint Revenue Board Establishment Act (JRBEA), the Federal Government has initiated a structural overhaul that redefines tax compliance, administration, and taxpayers’ obligations across board.

    Unlike previous reforms, these Acts are far-reaching in both scope and substance targeting digital transformation, widening the tax net, creating a more business friendly environment and rebalancing fiscal responsibilities across federal, state, and local authorities.

    The Nigeria Tax Act consolidates four major legislative instruments:

    • Nigeria Tax Act 2025

    The new Nigeria Tax Act 2025 introduces significant reforms to the country’s tax system, aiming to simplify tax administration, enhance compliance, and promote economic growth. The Act unifies the legal tax framework in Nigeria by creating a single statute for the taxation of all income, transactions and instruments. The NTA (effective 1 January 2026) shall repeal existing tax legislations such as the Companies Income Tax Act, Personal Income Tax Act, Capital Gains Tax, Value Added Tax, Petroleum Profits Tax Act, Stamp Duties Act, Industrial Development (Income Tax Relief) Act, among others.

    • Nigeria Tax Administration Act 2025

    The Nigeria Tax Administration Act as defined in its own Act is “an act to provide for the assessment, collection of, and accounting for revenue accruing to the federation, federal, states and local governments; prescribe the powers and functions of tax authorities, and for related matters”. The Act provides the operational backbone for the new tax regime by focusing on how taxes are to be administered and enforced. It sets out the rules, processes and powers for tax enforcement while also providing the clarity and structure for implementing the Nigeria Tax Act.

    • Nigeria Revenue Service (Establishment) Act 2025

    The Act repeals the Federal Inland Revenue Service (Establishment) Act of 2007 and enacts the Nigeria Revenue Service (Establishment) Act 2025 to establish the Nigeria Revenue Service (NRS) as the central tax authority tasked with the assessment, collection and accounting for tax revenue accruable to the Federal government. In simpler terms, the FIRS has now been replaced with the NRS with expanded mandates.

    • Joint Revenue Board of Nigeria (Establishment) Act 2025

    The newly passed Act establishes the Joint Revenue Board (JRB), replacing the Joint Tax Board as a more autonomous and inclusive body designed to harmonize tax administration across the country. It also creates the Office of the Tax Ombud and a restructured Tax Appeal Tribunal with increased scope to coordinate and settle disputes among tax stakeholders in matters of tax administration as well as promote the rights of taxpayers.

    Download the PDF version of this article

    Key highlights of the Nigeria Tax Act are as follows:

    Maintained VAT Rate and Expanded the scope of Input VAT Recovery
    • The VAT rate remains unchanged at 7.5%
    • VAT paid on all purchases including services and fixed assets will now be recoverable as input tax (within a period of 5 years) only to the extent it was incurred for the purpose of consumption, use or supply in the course of making taxable supplies.

    Rate of Tax for Companies to remain at 30%

    • Rate of tax for small companies is now 0%, while all other companies’ rate of tax shall be 30%.
    • A small company has now been defined as a company that earns a gross turnover of N100,000,000.00 or less per annum with total fixed assets not exceeding N250,000,000.00.
    • The rate of tax for large companies can be reduced to 25% effective from a date as may be determined in an Order issued by the President on the advice of the National Economic Council
    • The classification of medium sized companies has been expunged.
    • The rate of tax on chargeable gains from disposal of chargeable assets has been increased from 10% to 30% for corporate entities, except for small companies, which will be taxed at 0%. For individuals, such gains will now be subject to tax under the graduated tax rate for individuals rather than a flat rate. It is important to note that chargeable gains will now be included in computing the total profits of a company and the total income of an individual.

    Global Minimum Tax Implementation

    • The Minimum tax rate of 0.5% of gross turnover would no longer apply to companies with no taxable profit in Nigeria.
    • Members of an MNE group and companies with gross turnover of £750,000,000 and above or N50,000,000,000 and above will have to pay a minimum tax if their effective tax rate (i.e. covered taxes as a percentage of net income) is less than 15%. The Act requires such companies to recompute and pay an additional tax that brings its effective tax rate equal to 15%.
    • The effective tax rate has been defined to mean the rate produced by dividing the aggregate covered tax paid by a company for a year of assessment by the net income of the company. For this purpose, the net income is defined as the profit before tax as reported in the audited financial statements, excluding franked investment income and unrealistic gains or losses.

    4% Development Levy Replaces Multiple Levies

    • A 4% Development Levy on assessable profits of all companies except small companies and non-resident companies replaces the Tertiary Education Tax (TETFUND) and other levies.
    • The revenue accruing from the levy will be distributed as follows:
      • 50% to the Tertiary Education Trust Fund,
      • 15% to the Nigerian Education Loan,
      • 8% to the National Information Technology Development Fund,
      • 8% to the National Agency for Science and Engineering Infrastructure,
      • 4% to the National Board for Technological Incubation
      • 10% to the Defense and Security Infrastructure Fund and
      • 5% to the National Cybersecurity Fund.

    Revised Revenue and VAT Sharing Framework

    The Value Added Tax (VAT) revenue formula has been revised to be shared as follows among the Federal, State, and Local Government:

      • 10% to the Federal Government.
      • 55% to the State Governments and the Federal Capital Territory; and
      • 35% to the Local Governments.

    The revenue sharing formula among the State and Local Governments has also been adjusted as follows:

      • For States: 50% based on equality, 30% based on consumption, 20% based on population.
      • For Local Governments: 70% based on equality, 30% based on population.

    These formulae are designed to promote equitable revenue distribution and incentivize consumption-based development.

    Removal of Reasonability and Necessity Tests on Deductions

    • The longstanding subjective “reasonably” and “necessarily” tests for deducting business expenses have been abolished.
    • Deductibility will now rely solely on objective compliance with tax laws and actual business use, removing ambiguity and reducing disputes.

    Income Tax for Individuals

    The Act also introduces new tax rates for individuals ranging from 0% to 25% as follows:

    • First N800,000 at 0%;
    • Next N2,200,000 at 15%.
    • Next N9,000,000 at 18%.
    • Next N13,000,000 at 21%.
    • Next N25,000,000 at 23%; and
    • Above N50,000,000 at 25%.

    Individuals earning minimum wage in line with the Minimum Wage Act are exempted from income tax.

    Compensation or damages up to ₦50,000,000 for personal injury, professional injury, loss of office, libel, slander, or enticement are not taxable as chargeable gains. Only amounts exceeding ₦50,000,000 would be treated as a chargeable gain and subject to tax.

    Economic Development Incentive

    • The NTA repeals the Industrial Development Act and replaces the Pioneer Status Incentive (PSI) with the Economic Development Incentive (EDI). The EDI aims to stimulate capital investments in defined priority sectors, focusing on actual performance rather than blanket tax holidays.

    The EDI introduces key features such as

      • The implementation of 5% Economic Development Tax Credit (EDTC) on QCE per annum for 5 years (priority period), offsetting CIT payable
      • Unused EDIC can be carried forward for up to 5 years.
      • Possibility of a one-time 5-year extension if 100% of profits are reinvested, though clarity is needed on whether the 5% EDTC applies during the extension.

    Capital Allowance

    • Capital allowance on qualifying capital expenditure is no longer split into initial and annual Instead, a straight- line allowance is now applicable on assets categorized into either of the three classes: Class 1, 2 & 3 of Table 1 of the First Schedule of the NTA.
    • Intangible assets expenditure and software expenditure can now claim capital allowance under rates specified for Class 1 & 3 of Table 1 of the NTA respectively.

    Digital Compliance & E-invoicing

    • The Acts mandate VAT focalization, requiring taxpayers to adopt e-invoicing systems linked to the NRS for real-time transaction monitoring.
    • Profits or gains arising from transactions in digital or virtual assets are now classified as chargeable gains and will be subject to tax under the rules applicable to chargeable assets.
    • A National Single Window platform will integrate tax filings and payments, facilitating ease of doing business and reducing tax gaps.

    Tax Dispute Resolution Enhancements

    • The Office of the Tax Ombud will serve as an independent and impartial arbiter for review and resolution of disputes between taxpayers and tax authorities, improving fairness and reduced protracted litigation.
    • The Tax Appeal Tribunal is reconstituted with jurisdiction over all federal and state tax disputes, promising faster and more effective resolution.

    New Compliance Obligations for Virtual Asset Service Providers (VASPs)

    • Businesses involved in virtual asset exchanges, custody, or management are required file detailed returns on virtual asset transactions, even without formal notification from tax authorities.

    Additional Assessments

    • The NTA provides that the relevant tax authority may continue a tax audit and raise additional assessments beyond the six-year limitation period, provided that the audit commenced before the expiration of that period. This ensures that ongoing audits can be concluded properly, and any further tax liabilities discovered during the process can still be assessed.
    • The NTA also provides that the relevant tax authority is now required to respond to a tax payer’s objection notice within 90 days. Where no response is provided within this period, the objection shall be deemed upheld in favor of the taxpayer.

    Mandatory Disclosure of Tax Planning Arrangements

    • The new framework introduces a proactive disclosure requirement for taxpayers engaging in tax planning arrangements aimed at securing a tax advantage. Any person who enters or intends to enter into a transaction or agreement primarily designed to confer a tax benefit must, without notice or request, disclose relevant details to the appropriate tax authority.

    The tax authority is empowered to issue regulations detailing:

    • The type of information to be disclosed,
    • The format and method of submission,
    • The timeline for disclosure, and
    • Applicable penalties for non-disclosure, false disclosure, or late/incomplete submissions.

    “Tax advantage” is broadly defined to include the reduction, deferral, or avoidance of tax liabilities or obligations, and applies to any transaction, scheme, or arrangement undertaken to achieve such benefits.

    Stricter Penalties and Offenses

    The reform enhances the penalty regime for tax non-compliance with higher fines and clearer offenses.

    Penalties applicable to companies (excluding those engaged in petroleum operations):
    S/N Offence Penalty
    1 Failure to register for tax ₦50,000 for first month + ₦25,000 for each subsequent month
    2 Awarding contract to unregistered person ₦5,000,000
    3 Failure to file returns / incomplete or inaccurate returns ₦100,000 for first month + ₦50,000 for each subsequent month
    4 Failure to keep books and records ₦10,000 (individual); ₦50,000 (company)
    5 Failure to grant access for deployment of technology ₦1,000,000 first day + ₦10,000 each subsequent day
    6 Failure to use focalization system ₦200,000 + 100% of tax due + interest at CBN MPR
    7 Failure to deduct tax 40% of amount not deducted
    8 Failure to make attribution / notify ₦1,000,000
    9 Failure to remit tax deducted or self-account Amount not remitted + 10% per annum penalty + interest at CBN MPR: also imprisonment up to 3 years or fine up to 50% of sum
    10 Failure to respond to notices / demands ₦100,000 first day + ₦10,000 each subsequent day
    11 Failure to supply info / records ₦200,000 first day + ₦10,000 each subsequent day
    12 Failure to comply with info obligations (legal arrangements) ₦1,000,000 first day + ₦10,000 each subsequent day
    13 VASP non-compliance ₦10,000,000 first month + ₦1,000,000 each subsequent month or license suspension/revocation
    14 Failure to stamp dutiable instruments 10% of unpaid duty + interest at CBN MPR
    15 Failure to disclose facts in dutiable instrument ₦100,000 admin penalty or ₦50,000 fine + 3 years jail or both
    16 Failure to notify change of address ₦100,000 first month + ₦5,000 each subsequent month
    17 Fraud in relation to stamps ₦2,000,000 fine or up to 3 years jail or both
    18 Offence by authorized/unauthorized persons (e.g. fraud, embezzlement) 200% of sum or up to 3 years jail or both
    19 Inducement of authorized officer ₦500,000 (individual); ₦2,000,000 (body corporate) + up to 3 years jail or both
    20 Use of weapon in offence Up to 5 years jail; injury: up to 10 years jail
    21 Impersonation of authorized officer ₦1,000,000 fine or up to 3 years jail or both
    22 Aiding and abetting ₦1,000,000 fine or up to 3 years jail or both
    23 Obstruction ₦1,000,000 admin penalty + ₦1,000,000 fine or up to 3 years jail or both
    24 Unauthorized disclosures of taxpayer info ₦1,000,000 fine or up to 3 years jail or both
    25 False claims of tax refund 50% of refund + interest + recovery of refund
    26 False/fictitious VAT refund claim 100% of refund + interest + recovery of refund
    27 Default in payment of mineral royalties 10% penalty + interest (SOFR + 10% for FX, CBN MPR for Naira)
    28 False declaration ₦1,000,000 admin penalty + tax undercharged or ₦1,000,000 fine + up to 3 years jail
    29 Counterfeiting documents ₦1,000,000 admin penalty + ₦1,000,000 fine or up to 3 years jail
    30 Offence by body corporate (responsible officers) Same penalty as individual unless no knowledge/consent
    31 General contravention without specific penalty ₦1,000,000 admin penalty or up to 3 years jail or both
    Penalties applicable to companies engaged in petroleum operations include:
    S/N Offence Penalty
    1 Failure to file estimated or actual returns on due 10,000,000 on first day + either 2,000,000 for each subsequent day of failure or another sum prescribed by Minister

    Interest at SOFR + 10% on differential of revised tax over estimated tax (if further return is not made)
    2 Late payments of tax, royalty or remittance 10% of unpaid sum + interest (SOFR +10% for FX or CBN MPR+ 2% for Naira

    10,000,000 or USD equivalent first day + either 2,000,000

    Possible distraint, cancellation, seizure, disposal or revocation of licenses or assets of the holder
    3 Failure to comply with notice / appear in response to notice or summons/ submit returns 10,000,000 on first day +2,000,000 for each day default continues

    10,000,000 fines on conviction for an offence + either 2,000,000 each day default continues or 6 months
    4 Incorrect accounts, schedules, statements or false information 15,000,000 + 1% of either of the correct or incorrect account undercharged tax (whichever is higher) + appropriate tax payable

    On conviction of an offence: Same penalty + possible imprisonment
    5 False statements / forged documents / prepares or aids false returns Either fine of 15,000,000 or 1% of tax amount (whichever is higher) or 6 months imprisonment or both fine & imprisonment
    6 Offence by authorized or unauthorized person (e.g. embezzlement, fraud Either 200% of sum in question or 3 years imprisonment or both
    7 Default in petroleum royalty payment (after 30 days) Same penalties as late tax payment: 10% of unpaid sum +

    interest +10,000,000 first day +2,000,000 per day thereafter
    8 General non-compliance where no specific penalty provided 10,000,000 +2,000,000 for each day of continued default
    9 Where no penalty is specifically provided Either 20,000,000 fine or another sum prescribed by Minister or 6 months imprisonment or both fine and imprisonment

    Conclusion

    The Nigerian Tax Reform Acts are more than an administrative update; they are a blueprint for a modernized tax ecosystem. While the scale of the instituted changes may appear daunting, it presents forward-thinking businesses with a timely opportunity to streamline operations, reinforce transparency, and rethink tax governance in a way that adds long-term value.

    Delaying tax readiness could expose your organization to compliance risks, revenue leakage, and reputational concerns especially with the rise of fiscal digitalization, mandatory disclosures, and enhanced regulatory scrutiny.

    At Stransact Chartered Accountants, we are committed to helping clients transition confidently into the post-reform environment. Whether through impact assessments, compliance restructuring, or executive workshops, we offer the insight and support necessary to align your tax strategy with evolving national and global expectations.

    To better understand how these reforms impact your specific industry, structure, or compliance obligations, reach out to our experts at [email protected] to schedule a tailored tax impact assessment or executive strategy session.

  • Navigating the Future of Tax Compliance: FIRS to Roll Out E-Invoicing in Nigeria

    Navigating the Future of Tax Compliance: FIRS to Roll Out E-Invoicing in Nigeria

    As part of its broader effort to modernize tax administration and close revenue gaps, the Federal Inland Revenue Service (FIRS) has announced the phased implementation of an electronic invoicing (e-Invoicing) system in Nigeria, known as the FIRS Merchant Buyers’ Service Solution (FIRSMBS). The rollout, beginning July 2025, will initially target large taxpayers (i.e., companies with annual turnover of N5 Billion and above), with plan to expand to other taxpayer categories in subsequent phases.

    This regulatory development aligns with Nigeria’s National Digital Economy Policy and Strategy (2020–2030) which aims to enhance tax transparency, improve efficiency in VAT collection and reduce revenue leakages through digital transformation and automation.

    What Is FIRSMBS?

    The FIRSMBS platform is designed to bridge taxpayers’ internal invoicing systems with the FIRS infrastructure. This integration is intended to give the tax authority real-time access to transaction data, reduce tax leakages, and simplify VAT monitoring. The solution offers businesses a secure, real-time mechanism for creating, validating, and transmitting invoices electronically. It also aims to standardize invoice formats, ensuring consistency and reliability in tax submissions.

    Key Highlights of the E-Invoicing Framework

    • The e-Invoicing mandate will apply to Business-to-Business (B2B), Business-to-Government (B2G) and Business-to-Consumer (B2C) transactions, integrating with enterprise systems through Application Programming Interface (APIs) or National Information Technology Development Agency (NITDA) approved Access Point Providers (APPs).
    • The B2B/B2G invoices must be pre-cleared with FIRS and must carry a unique Invoice Reference Number (IRN) and Cryptographic Stamp Identifier (CSID). The B2C invoices must be reported within 24-hours and include a QR code for validation.
    • Taxpayers will access the FIRSMBS platform using their Taxpayer Identification Number (TIN) to create a digital profile. Once onboarded, businesses can generate invoices through the portal. Each invoice will contain standardized information such as supplier and buyer details, item descriptions, quantities, pricing, tax breakdowns, and total amount.
    • Invoices must be transmitted to the FIRS for validation in real time or shortly before being shared with the customer. To be accepted, the e-invoice must include essential fields such as transaction type, parties’ names and VAT registration numbers, tax amounts, and the total value. All validated invoices must be submitted within 21 days of generation.
    • Implementation begins from July 2025 for large taxpayers while that of the medium and small businesses will be in subsequent phases and based on the feedback from the initial roll out.

    Read more: National Repository Portal and Financial Reporting Compliance: A Guide for Nigerian PIEs

    Why E-Invoicing?

    The shift to e-invoicing is not just a technological update; it represents a transformation in how businesses transact, comply with tax laws, and engage in cross-border trade. Key advantages include:

    • Faster Tax Reporting: Accelerates the invoicing process, resulting in timely and accurate VAT filings.
    • Reduced Costs and Errors: Automation eliminates manual processes and minimizes invoicing errors, improving data integrity.
    • Streamlined Operations: Electronic systems reduce paperwork and facilitate easier reconciliation and recordkeeping.
    • Regulatory Compliance: Ensures adherence to uniform invoice standards, aiding in audits and reducing disputes.
    • Sustainable Practice: Reduces paper usage and aligns with environmental best practices.
    • System Interoperability: Enables seamless communication between businesses’ ERP systems and the FIRS platform, fostering digital integration.

    How can we support you?

    We understand that compliance transformations require more than just systems upgrades; they require strategic alignment. Our team is equipped to support your business through:

    • E-invoicing readiness assessments
    • System integration support
    • Policy and process design
    • Staff training and compliance advisory

    The implementation of E-invoicing by the FIRS signals a clear direction toward a data-driven, digitally enabled tax system in Nigeria. While the changes may appear daunting at first, businesses that prepare early will be better positioned to realize operational efficiencies and maintain compliance.

    We encourage you to reach out to us at [email protected] as you begin navigating this transition.

     

  • Renewed Hope Nigeria First Policy: A Strategic Shift Towards Local Content and Economic Sovereignty

    Renewed Hope Nigeria First Policy: A Strategic Shift Towards Local Content and Economic Sovereignty

    In a landmark decision aimed at strengthening Nigeria’s domestic economy and promoting local content, the Federal Executive Council (FEC), presided over by President Bola Tinubu, on Monday 5th of May 2025 approved a sweeping new policy framework tagged the “Renewed Hope Nigeria First Policy”. This policy aims at making government investment directly benefit our people and industries by changing how we spend, how we procure, and how we build our economy.

    Understanding the Nigeria First Policy

    The Nigeria First policy is expected to become the cornerstone of the administration’s economic strategy, especially as the government pushes forward with its industrialization agenda and import-substitution goals.

    The policy comes at a critical time as the International Monetary Fund, IMF, forecasts a gradual slowdown in Nigeria’s economic growth from 3.4% in 2024 to 3.0% in 2025 and further declining to 2.7% in 2026. This downward trajectory underscores the urgent need for structural economic reforms to sustain growth momentum. The Nigeria First policy aims to counteract these declining growth projections by stimulating domestic production and reducing import dependency.

    Read More: Why Nigeria Is Not Classified as a Hyperinflationary Economy

    Key Resolutions and Implementation Strategies

    • Revision and Enforcement of Procurement Guidelines: The Bureau of Public Procurement (BPP) is to revise and enforce procurement rules that prioritize Nigerian-made goods and homegrown solutions across all Ministries, Departments, and Agencies (MDAs).
    • Mandatory Waivers for Foreign Procurements: MDAs are prohibited from procuring foreign goods or services that are available locally without obtaining a written waiver from the BPP. This measure is intended to curb unnecessary foreign expenditures and stimulate domestic production.
    • Inclusion of Technology Transfer Provisions: Where foreign contracts are unavoidable, they must include provisions for technology transfer, local production, or capacity development in Nigeria.

    Implications for Stakeholders

    • For Government Agencies: MDAs must audit existing procurement plans and submit revised versions aligned with the new policy directives. This requires a thorough assessment of current procurement practices and a shift towards sourcing from local suppliers.
    • For Local Industries: The policy presents an opportunity for Nigerian manufacturers and service providers to increase their participation in government contracts. By meeting quality and capacity standards, local businesses can position themselves as preferred suppliers.
    • For Foreign Contractors: International firms seeking government contracts in Nigeria must now incorporate strategies for technology transfer and local capacity development into their proposals. This approach ensures that foreign engagements contribute to the growth of Nigeria’s domestic industries.

    Read More: The New Reality for Nigerian Manufacturers—And How to Compete in It

    Conclusion

    The Nigeria First policy comes amid economic reforms being pushed by the Tinubu administration, including subsidy removals, a new foreign exchange regime, and efforts to restore investor confidence. By making local content central to government spending, the administration hopes to drive job creation, industrial growth, and sustainable economic development.

    While the policy will likely face implementation challenges and resistance from entrenched procurement interests, officials say the administration is determined to enforce compliance at all levels.

    At Stransact Chartered Accountants, we specialize in guiding businesses through complex regulatory landscapes. Our team of experts can help you understand the implications of the Nigeria First Policy and develop strategies to align with its requirements.

     

    📩 Contact us at [email protected] for personalized support.

     

  • Are You Being Over-Taxed? How to Spot Errors in Your PAYE Deductions

    Are You Being Over-Taxed? How to Spot Errors in Your PAYE Deductions

    As an employee, your paycheck is your livelihood. But what if you’re paying more taxes than you should? Pay-As-You-Earn (PAYE) is the system used in Nigeria to deduct income tax from employees’ salaries. While it’s designed to simplify tax compliance, errors can occur, leading to over-taxation.

    In this article, we’ll teach you how to spot common PAYE deduction errors, steps to resolve them, and how Stransact’s PAYE calculator can help ensure accuracy.

    Understanding PAYE in Nigeria

    PAYE is a method of collecting income tax from employees directly through their employers. The tax is deducted monthly based on the employee’s earnings and remitted to the relevant tax authority (usually the State Internal Revenue Service).

    The PAYE system is governed by the Personal Income Tax Act (PITA), 2011 (as amended), which outlines the rules for calculating and deducting taxes.

    Key components of PAYE

    • Taxable Income: This includes your basic salary, allowances, bonuses, and other benefits.
    • Tax Reliefs and Allowances: Certain allowances, like consolidated relief allowances (CRA), are tax-free. Also, certain contributions/expenses are considered tax-free.
    • Tax Bands: Nigeria uses a progressive tax system, meaning the more you earn, the higher your tax rate.

    Common PAYE Deduction Errors

    Here are some common mistakes that could lead to over-taxation:

    • Incorrect Taxable Income Calculation
      Employers may include non-taxable income (e.g., reimbursement made due to company’s expenses made from personal account) in your taxable income, leading to higher PAYE tax deductions
    • Miscalculation of Consolidated Relief Allowance (CRA)
      The CRA is a tax-free allowance granted to all employees. It includes:

      • 20% of gross income plus
      • N200,000 or 1% of gross income (whichever is higher).
        If your employer fails to apply this correctly, your taxable income will be overstated.
    • Exclusion of Tax-Deductible Expenses
      Certain contributions/expenses are deductible for tax purposes. They include:

      • Pension contribution
      • Contribution to the National Housing Fund
      • Interest on mortgage loan
      • Life assurance premium
    • Wrong Application of Tax Bands
      Nigeria’s tax bands are progressive, with rates ranging from 7% to 24%. If your employer applies the wrong band, your tax deductions could be higher than necessary.

    How to Spot PAYE Errors

    • Review Your Payslip
      Check your gross income, taxable income, and net pay. Ensure that non-taxable allowances and tax-deductible expenses are excluded and that the CRA is applied correctly.
    • Verify Your Tax Bands
      Use the current tax bands to confirm that your employer is applying the correct rate.
      The bands are calculated as follows on an annual basis:

      • First N300,000: 7%
      • Next N300,000: 11%
      • Next N500,000: 15%
      • Next N500,000: 19%
      • Next N1,600,000: 21%
      • Above N3,200,000: 24%
    • Compare with Previous Payslips
      Look for sudden increases in tax deductions without a corresponding increase in income.
    • Confirm Pension and NHF Deductions
      Ensure that your pension (8% of basic, housing, and transport) and NHF (2.5% of monthly income) contributions are correctly deducted before tax calculation.

      NOTE:
      The NHF contribution is required but not obligatory for private sector employees but compulsory for public sector workers.

    Steps to Resolve PAYE Discrepancies

    • Discuss with Your Employer
      Politely bring the issue to your employer’s attention. Provide evidence (e.g., payslips, tax calculations) to support your claim.
    • Contact Your State Internal Revenue Service (SIRS)
      If your employer doesn’t resolve the issue, reach out to your State Internal Revenue Service. They can investigate and ensure compliance with tax laws.
    • Seek Professional Help
      Tax consultants, like Stransact, can help you review your payslips, identify errors, and liaise with your employer or tax authorities on your behalf.

    How Stransact’s PAYE Calculator Can Help

    At Stransact, we understand how complex PAYE calculations can be. We developed a PAYE calculator to help employees and employers ensure accuracy.

    Here’s how it can help you:

    • Quick Calculations: Instantly compute your net pay based on your gross income, allowances, and deductions.
    • Error Detection: Identify discrepancies in your tax deductions by comparing your payslip with the calculator’s results.
    • Compliance Assurance: Ensure your employer is applying the correct tax bands and reliefs.

    Conclusion

    PAYE errors can cost you thousands of naira yearly if left unchecked. By taking proactive steps to verify deductions, leveraging available tax reliefs, and seeking expert assistance when needed, you can ensure your salary reflects what you truly deserve.

    Stay tax-smart! Double-check your deductions with Stransact’s PAYE calculator today.