Post by Matthew Fashoyin

The Nigerian Tax Act (NTA) repaels certain existing tax laws and has approved and established a new legal framework governing taxation in the country into a single legislation for simplicity and improved tax administration system with the aim of mordenizing its fiscal framework, enhancing the mode of revenue collection and equity promotion. In this article, i have curated both general and sector-specific insights to help you understand the implications of the new tax reform, which explore the Nigerian Tax Act (TAX). The following are the analysis of the new tax reforms 1. Clarity in transactions liable to income tax: NTA states that prizes, winnings, honoraria, grants, awards, profits, or gains from transactions in digital or virtual assets are chargeable to tax. But losses from transactions in digital formats would be deducted from the profits made from the digital assets. 2. Broadening of the definition of interest: Interest is now defined to include penal interest, foreign exchange differences arising in relation to securities, payments in relation to derivatives or similar payment. 3. Expansion on the definition of Dividend: The definition for dividend for liquidating company has been expanded to include distribution of a capital nature, which were excluded under the erstwhile companies income Tax Act (CIA). 4. Definition of Royalty: Royalty now enco.mpasses any payment received or receivable, paid or payable as a consideration for the use of the right to use or exploit any property. 5. Taxation of the Nigerian Company: The Nigerian Tax Act introduces two standards here, which include i. Introduction of controlled foreign corporation [CfC] roles: Under NTA 2025, a Nigerian company is taxed on the profits made outside Nigeria, where the laws believe those profits truly belong to the Nigerian company. ii. Anti-base erosion in through minimum effective tax rate: The NTA also adopts a top-up-tax mechanism aligned with OECD's,BEPS pilla 2 framework if a Nigerian company outside Nigeria pays less than the required Effective Tax Rate of 15%. The Nigerian percentage company will have tonpay the shortfall. 6. Taxation of non-resident persons(NRPs): Under NTA 2025, NRP ate taxed only on profits attributable to their Nigerian permanent Establishment. Only the expenses incurred in producing Nigerian income are deductible. Royalties and similar payments are disallowed. Where the tax is/cannot be determined, the NRS applies the industry profits marjin to Nigerian income. NTA 2025 introduces that a minimum tax rule essurithat tax payable is not less than withholding a minimum tax rule, ensuring that tax payaakle is not less than 4%of withholding tax. to be continued