50 issues that will not be taxed underneath Nigeria’s new tax regulation

If you happen to’ve been following the dialog round Nigeria’s new tax reform legal guidelines and fearful about what they could imply to your revenue, there’s some excellent news. On Monday, the Presidential Fiscal Coverage & Tax Reforms Committee launched an inventory of fifty tax exemptions and reliefs that can take impact from January 1, 2026. 

The reforms are structured to supply important monetary reduction to low-income earners, common taxpayers, and the nation’s small enterprise sector to maintain extra of their hard-earned cash. The brand new framework introduces focused reduction throughout sure areas of the tax system, together with Private Revenue Tax (PAYE), Firms Revenue Tax (CIT), Worth Added Tax (VAT), and Capital Good points Tax (CGT).

Listed here are 50 tax reliefs and exemptions that might favour you:

Worth-added tax (VAT) on items and companies

Below the brand new tax reforms, VAT is now faraway from a variety of necessities, together with fundamental meals objects, child merchandise, sanitary pads and tampons, pharmaceutical merchandise, medical and hospital companies, and training companies and studying supplies. Hire (residential lodging), public/shared street transport, incapacity aids (like listening to aids, braille instruments, and wheelchairs), and land and constructing transactions are additionally VAT-exempt.

To assist affordability and manufacturing, agricultural inputs similar to fertilisers, seeds, feeds, and reside animals, and the acquisition or lease of kit for farming, are VAT-free. Diesel, petrol, and solar energy gear even have VAT suspended or eliminated, and producers can declare VAT refunds on gear and overheads used to make merchandise which can be themselves VAT-exempt. 

Electrical autos and their elements, in addition to humanitarian reduction provides, are additionally exempt, which lowers acquisition and logistics prices for transport and emergency response techniques.

Small firms incomes ₦100 million or much less per 12 months not have to cost VAT in any respect, which might forestall hidden worth will increase for shoppers. This VAT exemption construction is designed to make sure that important dwelling doesn’t grow to be dearer.

Private Revenue Tax or PAYE reduction for wage earners

1. Minimal wage earners are exempt from PAYE; when you earn ₦70,000 per 30 days or much less, there can be no PAYE deduction.
2. Annual gross revenue as much as ₦1,200,000 is exempt; In case your revenue on the finish of the 12 months is as much as ₦1,200,000, it means you will have about ₦800,000 of taxable revenue. As such, your revenue is tax-free.
3. Scale back PAYE for revenue as much as ₦20 million; if that is your revenue bracket, your tax deduction is much less.
4. Presents will not be taxed.

Allowable deductions

These are particular bills you may subtract out of your revenue earlier than your tax is calculated, which reduces your taxable revenue. These bills embody:

5. Pension submitted to the Pension Fund Administrator. 
6. Nationwide Well being Insurance coverage Scheme.
7. Nationwide Housing Fund contributions.
8. Curiosity on a mortgage to your own residence is deducted.
9. Your premiums for all times insurance coverage or an annuity.
10. You’ll be able to deduct 20% of your annual lease out of your revenue, which may be as much as ₦500,000.

Pensions and job loss funds

11. All pension funds and their belongings, together with gratuity or any retirement advantages underneath the Pension Reform Act (PRA), won’t be taxed.
12. Compensation for shedding your job is tax-free as much as ₦50 million.

Capital Good points Tax (CGT)

This tax is on the revenue you make from promoting an asset. The brand new legal guidelines exempt a lot of your commonest private belongings from this tax.

13. The cash gotten from promoting the home you reside in isn’t taxed.
14. Private belongings price as much as ₦5 million are tax-free when offered.
15. You’ll be able to promote as much as two private automobiles per 12 months with out paying CGT on the funds.
16. Good points on shares as much as ₦150 million per 12 months or ₦10 million for small buyers are tax-exempt.
17. If you happen to reinvest income above the exemption threshold into Nigerian firms, CGT won’t apply.
18. Pension funds, charities, and spiritual our bodies don’t pay CGT on their non-commercial belongings.

Firms Revenue Tax (CIT) reduction for small companies

The reforms intention to assist small companies thrive by slicing their revenue tax and rewarding them for creating jobs.

19. If a small firm’s turnover is lower than ₦100 million, and its belongings are lower than ₦250 million, it pays 0% firm revenue tax.
20. Startups which have been formally labelled as eligible for the tax reduction are exempt from paying firm revenue tax.
21. Firms that enhance salaries or present wage assist, together with a wage award or transport subsidy, to low-income workers are liable to a 50% further tax deduction.
22. Firms get a 50% tax deduction for salaries of recent staff they rent and hold for a minimum of 3 years. 
23. Companies within the agriculture sector get a 5-year tax vacation, that means that taxes are suspended throughout that interval.
24. Good points made by buyers, enterprise capitalists, personal fairness funds, accelerators or incubators who put cash into labelled startups will not be taxed.
25. Small firms don’t pay the 4% improvement levy on their income, which consolidates the Tertiary Schooling Tax (TET), Info Know-how Levy (IT), the Nationwide Company for Science and Engineering Infrastructure (NASENI) levy and the Police Belief Fund (PTF) levy.
26. Small firms wouldn’t have withholding tax deducted from their revenue. Withholding tax is an advance tax fee.
27. Small firms wouldn’t have to deduct withholding tax when paying suppliers.

Stamp duties

This tax normally applies to authorized paperwork and sure financial institution transfers. These transactions won’t be charged underneath the brand new reforms: 

28. Transfers under ₦10,000 will not be charged stamp obligation.
29. Wage funds will not be charged stamp obligation.
30. Sending cash to a person from the identical financial institution isn’t charged stamp obligation.
31. Transfers of presidency bonds and securities are stamp-duty exempt.
32. Paperwork used to switch shares and shares are totally exempt.

The purpose of those new tax reforms is to cut back stress on low-income residents and small companies, all whereas encouraging funding and job creation. On paper, these adjustments supply significant reduction for staff and SMEs. The actual affect of those exemptions will depend upon their implementation. Until you’re a distant employee incomes greater than the minimal wage, from 2026, extra of your revenue would stick with you and never the taxman.