*NIGERIAN TAX LAW QUESTION & ANSWER (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.