OCTOBER 2025 – NIGERIA
TAX CHANGES PUBLISHED IN THE TAX ACT, 2025
It is important that employers note the following:
Tax changes taking effect 1 January 2026
The Nigeria Tax Act, 2025, signed into law on 26 June 2025, consolidates and modernises multiple tax laws, replacing the Personal Income Tax Act (PITA) and related legislation. The Act takes effect from 1 January 2026.
Key changes relevant to employers:
- Removal of the Consolidated Relief Allowance (CRA): With effect from 1 January 2026, CRA is fully abolished and must no longer be applied in payroll tax calculations.
- NGN800,000 annual tax-exempt threshold: Individuals earning NGN800,000 or less annually will not be subject to income tax.
- Revised definition of tax residency: Tax residency now includes individuals with significant economic or family ties to Nigeria, in addition to physical presence (≥183 days).
- Taxable benefit-in-kind (BIK) for employer-provided housing: Where premises are provided free or below market value, the annual rental value is treated as a taxable benefit, capped at 20% of gross income.
- Introduction of new tax bands and rates: A revised progressive tax structure ranging from 0% to 25% replaces the old rate system.
Employers must ensure payroll systems are updated and tested for compliance by January 2026.
To view the Nigeria Tax Act, 2025, follow the link.
