20/12/2025
*ATTENTION PLEASE GOOD EVENING ALL.*
*I WAS PRIVILEGED TO ATTEND THE NEW TAX REFORM CONFERENCE RECENTLY.*
*I BELIEVE THE INFORMATION MAY BE USEFUL TO SOMEONE.*
*TO WHOM IT MAY CONCERN ; JUST TO KEEP YOU INFORMED**
*QUESTIONS & ANSWERS ON THE NEW NIGERIAN TAX LAW*
* *(SPECIFIC FOCUS ON INDIVIDUALS AND SMALL BUSINESSES)*
🟢 *Q1*:
* *When will the new Nigeria Tax Act take effect?*
*A1:*
* _The new Nigeria Tax Act takes effect from *1st January 2026.*_
🟢 *Q2*:
* *Which specific individuals does the Nigerian Tax Law apply to?*
*A2*:
* _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_
🟢 *Q3*:
* *Will transfers and deposits into my bank account be taxed?*
*A3*:
* _NO. Moving money around (via POS, transfers, deposits, or withdrawals) is not a taxable event. What is taxed is income earned._
🟢 *Q4*:
* *Will the money I KEEP in my bank account be taxed from 2026?*
*A4*
* _NO._
* _Just having money in your account is not taxable._
* _Only the income you earn (like salary, business profits, or interest) is what can be taxed._
🟢 *Q5* :
* *I’m a student with no job. Will I pay tax in 2026?*
*A5*:
* _NO._
* _If you have no taxable income, you won't pay tax._
🟢 *Q6*:
* *Will tax authorities now monitor bank accounts of businesses more closely?*
*A6*:
* _YES,_
* _It will be easier for authorities to track compliance._
_However,_
* _Your bank balances will not be taxed; profits and income are._
🟢 *Q7* :
* *Will I pay tax on the loan I borrow from Fairmoney or any lender?*
*A7*:
* _NO._
* _Loans are not taxable given that they are not income._
* _However, the interest income earned by Fairmoney will be taxed in their own hands._
🟢 *Q8*:
* *I run a one-man business.*
* *Do I pay personal income tax or company income tax?*
*A8*:
* _If registered as an enterprise (business name), you pay Personal Income Tax._
* _If registered as a limited liability company then you pay Company Income Tax._
🟢 *Q9*:
* *If I sell shares and make a profit, will I pay tax in 2026?*
*A9*:
* _NO,_
* _as long as the shares you sold are not more than ₦150 million in value, and the gain is not above ₦10 million._
* _However, if it is higher than this threshold, the gain becomes taxable._
🟢 *Q10*:
* *I am a pensioner.*
* *Will my pension income be taxed in 2026?*
*A10*:
* _NO._
* _Approved pension and retirement benefits are exempt from tax._
🟢 *Q11*:
* *Are military salaries taxable?*
*A11*:
* _NO._
* _The salaries of military officers are now tax-exempt._
🟢 *Q12*:
* *Do creatives (authors, musicians, sportsmen) still enjoy tax exemptions on foreign income?*
*A12*:
* _NO._
* _They must now pay Nigerian tax on their income earned within Nigeria and outside._
🟢 *Q13*:
* *Are crypto gains taxable?*
*A13*:
* _YES._
* _Profits from crypto, NFTs, and other digital assets are now taxed._
🟢 *Q14*:
* *Who is exempt from personal income tax?*
*A14*:
* _Individuals earning the national minimum wage or less, and those earning below ₦800,000 annually, are exempt._
🟢 *Q15*:
* *What are the new progressive tax bands?*
*A15*:
👉_First ₦800,000 @ 0%_
👉 _Next ₦2.2m @ 15%_
👉 _Next ₦9m @ 18%_
👉 _Next ₦13m @ 21%_
👉 _Next ₦25m @ 23%_
👉 _Above ₦50m @ 25%_
🟢 *Q16*:
* *If I get a big severance package when leaving my job, will I pay tax on it?*
*A16*:
* _You won't pay tax if it is ₦50 million or less,_
* _BUT if it is more than the extra amount, it will be taxed using the progressive tax band in no 15 above._
🟢 *Q17* :
* *If I earn dividends or rent from abroad,*
* *Will Nigeria tax it?*
*A17*:
* _Dividends, interests, rent, royalties earned from outside Nigeria are EXEMPT from tax provided they are brought into Nigeria through approved channels (banks)._
🟢 *Q18*:
* *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?*
*A18*:
* _NO._
* _The disability pensions earned by the soldier or anyone in the armed forces will be completely tax-exempt.'
🟢 *Q19*:
* *My uncle wants to start an agricultural company next year.*
* *Will his company be taxed in Nigeria?*
*A19*:
* _NO._
* _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._
🟢 *Q20*:
* *Is income from Federal or State Government bonds taxable?*
*A20*:
* _NO,_
* _All government bonds are exempt from tax._
🟢 *Q21*:
* *What does rent relief entail under the new tax law?*
*A21*:
* _YES._
* _From 2026, individuals can claim rent relief of 20% of the annual rent paid, but capped at ₦500,000._
_For instance,_
* _If your yearly rent is ₦5 million, 20% would be ₦1 million, but the law caps it at ₦500,000._
* _To enjoy this relief, you must declare your actual rent and provide the details to the relevant tax authority._
🟢 *Q22*:
* *I earn 6m yearly, will I be better off under the new tax law?*
*A22*:
* _Old law:_
👉 _CRA = 20% of ₦6m (₦1.2m) + ₦200k = ₦1.4m._
👉 _Taxable income = ₦6m − ₦1.4m = ₦4.6m._
👉 _Applying old tax bands gives a total tax of ₦896,000._
👉 _New law (NTA 2025):_
* _Rent relief = ₦500k (must declare actual rent)._
👉 _'Taxable income = ₦6m − ₦500k = ₦5.5m._
👉 _Applying new bands:_
* 👉 _First ₦800k @0% = 0_
* 👉 _Next ₦2.2m @15% = ₦330k_
* _Remaining ₦2.5m @18% = ₦450k_
* _Under the new law, tax reduces from ₦896k to ₦780k, saving ₦116k._
* _This will increase your net pay (take-home pay)._
🟢 *Q23*:
* *If my company's turnover is below ₦50 million, will I pay tax?*
*A23*:
* _NO._
* _Small companies with a turnover of less than ₦50m are exempt from taxes._
🟢 *Q24*:
* *As a remote worker in Nigeria for an international organisation, will I pay tax?*
*A24*:
* _YES,_
* _You will pay tax in Nigeria if the country where the international organisation is based exempts your salary under a treaty or diplomatic arrangement._
🟢 *Q25*:
* *Will a foreigner earning a salary in Nigeria be taxed?*
*A25*:
* _NO,_
* _if their employer is a start-up,_
* _or operates in tech or creative arts, and their income is already taxed in their country of residence._
_I Hope This Will Help Someone._
*PROF. OKECHUKWU Z. IWEGBU*
*_Copied_*
