The Federal Government has introduced new tax measures to reduce double taxation and improve compliance nationwide. These reforms, outlined by the Nigeria Revenue Service, clarify key provisions within Nigeria’s updated tax framework. Notably, the new law expands the tax net while supporting investment through targeted reliefs. According to the guidelines, the law directly addresses double taxation using unilateral relief mechanisms.
It also recognises Nigeria’s double taxation agreements to prevent taxing the same income twice. These provisions apply mainly to foreign-sourced income earned by Nigerian residents. Eligible taxpayers may now claim tax relief on income already taxed abroad. However, such relief applies within approved timelines and Nigerian tax rate limits.
Importantly, these changes aim to encourage cross-border trade and investment flows. Meanwhile, collective investment schemes are now treated as companies for tax purposes. Their income is taxed at the scheme level, while distributions are treated as dividends. In addition, certain foreign incomes repatriated through approved channels remain tax-exempt.
The law also promotes innovation by allowing research and development deductions. Companies may deduct up to five percent of Nigerian turnover for qualifying research expenses. Furthermore, the framework expands taxation of the digital economy. Non-resident digital service providers with significant Nigerian presence are now taxable.
They are liable for income tax and value-added tax on Nigerian-sourced earnings. To strengthen enforcement, taxpayers must maintain accurate financial and transaction records. Failure to comply may attract penalties, interest charges, or legal action. Overall, these reforms modernise Nigeria’s tax system, boost revenue, and reduce borrowing dependence.
