NIGERIAN TAX LAW QUESTION & ANSWER

[Facemirror]

‎*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?*
‎
‎

[Facemirror]

[Facemirror]

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.
‎

[Facemirror]