Businesses seeking long-term growth and continuity typically adopt a corporate form, most commonly the private limited liability company (ltd). An ltd may be incorporated with a single shareholder but must not have more than 50 shareholders, and is required to restrict the transfer of its shares.

Another widely used corporate structure is the public limited liability company (plc), which must have at least two shareholders and may have an unlimited number. A plc is the prescribed form for companies listed on the stock exchange.

Other corporate forms recognised under Nigerian law include the unlimited liability company, under which shareholders bear unlimited liability, although this structure is rarely utilised. There is also the company limited by guarantee, which is a non-profit structure used for charitable or similar objects.

In addition, limited liability partnerships (LLPs) are recognised as having a separate legal personality distinct from their partners. However, LLPs are not tax-transparent in Nigeria, and, like corporate structures, are subject to taxation at the corporate level.

The following transparent entities are recognised by Nigerian law:

• general partnerships;
• limited partnerships; and
• sole proprietorships.

Many small and medium-sized enterprises, as well as petty traders, carry on business as partnerships or sole proprietorships.

Tax Residence for Incorporated Businesses

A company is resident for tax purposes in Nigeria if:

• it is formed, registered or incorporated under Nigerian law;
• its central place of management and control is in Nigeria; or
• its effective place of management and control is in Nigeria.

Resident companies are subject to income tax on their worldwide profits. Therefore, the profits of a Nigerian company are deemed to accrue in Nigeria, regardless of where they actually arise.

There are three instances where a non-resident company (NRC) would be liable to tax in Nigeria.

The first instance is where it has a permanent establishment (PE) in Nigeria. An NRC would be deemed to have a PE in Nigeria where it:

• has a place, in Nigeria, through which its business is wholly or partly carried on or at its disposal for the purposes of its business;
• carries on business in Nigeria through an authorised agent acting on its behalf or on behalf of related or controlled entities;
• maintains a stock of goods or merchandise in Nigeria from which deliveries are made by a person on its behalf;
• undertakes, alone or with others, a project in Nigeria involving activities such as surveys, design, delivery, construction, assembly, installation, commissioning, decommissioning, or any supervisory activity in connection with those activities, regardless of how the project is divided or where parts are performed; or
• furnishes any service in Nigeria through employees, agents, subcontractors or other persons engaged by it for such purpose.

The second instance is where the NRC has a significant economic presence (SEP) in Nigeria. An NRC shall be deemed to have SEP in Nigeria where the person transmits, emits or sends by itself or through other person, signals, sounds, messages, images or data of any kind by cable, radio, electromagnetic systems or any other electronic or wireless apparatus to Nigeria in respect of any activity, including electronic commerce, application store, high-frequency trading, electronic data storage, online adverts, participative network platforms, online payments, supply of user data, search engines, digital content services, online gaming, cloud computing and online teaching services, and profit can be attributable to such activity.

The NRC would be subject to tax on the income attributable to its PE and SEP.

The third instance is where the NRC receives payment from a Nigerian resident or a Nigerian PE of an NRC:

• for services provided from outside Nigeria, except where the payment is made by a foreign PE of a Nigerian resident and the expense is borne by that foreign PE; or
• in respect of insurance premiums or risks insured within Nigeria.

Tax Residence for Transparent Entities

The income of transparent entities (general partnership, sole proprietorship and limited partnership) is taxed in the hands of their owners, where the owners are deemed to be tax-resident in Nigeria.

An individual is deemed to be tax-resident in Nigeria if the person:

• is domiciled in Nigeria;
• has a permanent place available for their domestic use in Nigeria;
• has a place of habitual abode in Nigeria;
• has substantial economic and immediate family ties in Nigeria;
• sojourns in Nigeria for a period or periods amounting to an aggregate of not less than 183 days in a 12-month period inclusive of annual leave or temporary period of absence; or
• serves as a diplomat or diplomatic agent of Nigeria in another country.

The income, gains or profits of a Nigerian resident are treated as accruing in Nigeria and are taxable regardless of where they arise or whether they are brought into or received in Nigeria.

Companies pay corporate income tax (CIT) at the rate of 30%. The Nigeria Tax Act (NTA) empowers the President to reduce the CIT rate to 25% on the advice of the National Economic Council. However, “small” companies (ie, those with a turnover of less than NGN100 million with total fixed assets not exceeding NGN250 million) are subject to CIT at 0%.

In addition to CIT, companies that have converted from the Petroleum Act (PA) regime to the Petroleum Industry Act (PIA) regime pay a hydrocarbon tax (HT) of 15% for operations in onshore and shallow waters pursuant to a Petroleum Prospecting Licence (PPL) and 30% in respect of operations in onshore and shallow waters pursuant to a Petroleum Mining Lease (PML).

Companies that opt not to convert to the PIA regime will continue to pay petroleum profits tax (PPT) at rates that vary between 50% and 85%, depending on the nature of the company’s operations. Also, a company that has not commenced the sale of crude oil under a programme of continuous production will enjoy a reduced PPT rate of 65.75% until all pre-production capitalised costs have been fully amortised.

Individuals are allowed a rent relief of 20% of annual rent paid, subject to a maximum of NGN500,000, whichever is lower. The balance of the income after the relief will be taxed in accordance with the graduated tax rates set out below:

• NGN800,000 at 0%;
• next NGN2.2 million at 15%;
• next NGN9 million at 18%;
• next NGN13 million at 21%;
• next NGN25 million at 23%; and
• above NGN50 million at 25%.

Taxable profits are arrived at by aggregating all income and gains and then deducting exempt income, allowable expenses, capital allowance and carried-forward losses.

Under the former CIT Act regime, capital allowances comprised both initial and annual allowances, each applying at different rates. The NTA abolishes the initial allowance, leaving only annual allowances, and also introduces several new categories of qualifying expenditure, including intangible assets, heavy transportation infrastructure (such as pipelines and cables) and software expenditure. These changes will slow capital cost recovery and result in higher tax liabilities in the year of asset acquisition.

Allowable expenses must be “wholly and exclusively” incurred in making profits. Profits are taxed on an accrual basis, and tax is paid on a preceding-year basis, except for tax on profits from petroleum operations, which is paid, on a current year basis, in monthly instalments based on projected profits, with a reconciliation made at the end of the tax year to reflect actual profits.

There is an exemption on gains arising from the disposal of the shares of a start-up licensed by the National Information Technology Development Agency (labelled start-up), provided that the shares have been held for a minimum of 24 months.

There is also a reduced withholding tax rate of 5% on payments to foreign companies that provide technical, consulting, professional or management services to a labelled start-up, which is the final tax. Investors in a labelled start-up also enjoy a 30% investment tax credit. There are no special incentives for a patent box.

The NTA repeals the Industrial Development (Income Tax Relief) Act (IDITRA) and replaces the Pioneer Status Incentive (PSI) with the Economic Development Tax Credit (EDTC). The EDTC is a 5% annual tax credit on qualifying capital expenditure, which applies to the tax payable on the profits of a priority product or service. Any unused EDTC can be carried forward for a maximum of an additional five years, after which it will lapse. The EDTC is available to companies whose capital investment in a priority sector or product meets the threshold specified in the NTA.

Oil and Gas Companies

The following incentives apply to companies that have converted to the PIA regime.

• A gas production tax credit on non-associated gas (NAG) greenfield developments in onshore and shallow waters reaching first commercial gas production between 1 January 2026 and 1 January 2029. The rate of the credit depends on the hydrocarbon liquid content. The gas production tax credit applies for ten years from the first production.
• A gas production allowance at the rate of USD0.50 per thousand cubic feet or 30% of the fiscal gas price, provided hydrocarbon liquids do not exceed 100 barrels per million standard cubic feet for all other NAG greenfield projects achieving first commercial gas production after 1 January 2029. Upon expiry of the ten-year period of the gas production tax credit, the gas production allowance may apply at the same rates, provided that the tax credit and allowance are not applied to the same period of production.
• Investors in gas pipelines are entitled to a five-year tax-free period commencing after the expiry of any EDTC.

Additionally, companies that have converted to the PIA regime can also offset the costs of producing associated gas upstream of the measurement point from their crude oil production profits.

Companies that have yet to convert from the PA regime to the PIA regime and have executed a production sharing contract (prior to 1998) with the Nigerian National Petroleum Corporation enjoy an investment tax credit (ITC) or an investment tax allowance (ITA) of 50% of their qualifying expenditure. The ITA is deductible from revenue in arriving at taxable profits. The ITC operates as a full tax credit and does not reduce qualifying capital expenditure for the purposes of calculating capital allowances. Upon conversion to the PIA regime, the ITA and ITC no longer apply.

Companies that have yet to convert to the PIA regime can also offset their gas-related capital allowance against their oil production profits.

Free Trade Zones

Approved enterprises operating within a free trade zone are exempt from all federal, state and local government taxes, levies and rates where:

• their total sales arise from the exportation of goods or services, or serve as inputs into goods or services exclusively for exportation;
• their goods and services are sold to persons engaged in upstream, midstream or downstream petroleum or gas operations; and
• not more than 25% of sales arise from the sale of goods or services to the customs territory in Nigeria – the 25% threshold will expire on 1 January 2028, after which tax will apply to all sales to the customs territory in Nigeria.

Such approved enterprises are required to file annual tax returns with the Nigeria Revenue Service (NRS) regardless of tax liability.

Loss carry back is not permitted, but all companies can carry operating losses forward indefinitely.

There are thin capitalisation rules under which the tax-deductibility of interest expense on any related-party loan is limited to 30% of EBITDA in any given tax year. Deductible interest expense not fully utilised can be carried forward for a maximum of five years.

In addition, existing anti-avoidance provisions allow the tax authority to disallow/reduce the interest charged between related parties where such interest is not reflective of the arm’s length principle.

Nigerian law does not permit tax grouping; each company within a group is individually taxable in Nigeria. Consequently, losses suffered by one member of a group of companies cannot be utilised to reduce the tax liability of another company within the group but can be carried forward and set off against the future profits of the company that incurred them.

Chargeable gains are now computed alongside income tax and taxed at the same rate. Chargeable gains are computed by deducting from the disposal proceeds any incidental costs wholly and exclusively incurred in selling the asset, and, where capital allowance has been claimed, the residue of the asset.

All forms of property are chargeable assets under Nigerian law, regardless of where they are located, including foreign currency, securities, digital assets, debts and incorporeal property generally. Gains arising from the disposal of the following are exempt from tax:

• private motor vehicles, subject to a maximum of two vehicles per individual in any year of assessment;
• disposal of shares worth less than NGN150 million with chargeable gain not exceeding NGN10 million in a year;
• decorations awarded for valour or gallant conduct;
• life assurance policies;
• chattels sold for NGN5 million or less or up to three times the annual national minimum wage, whichever is higher;
• assets acquired by way of a gift which are subsequently disposed of by way of gift;
• investment in statutory provident funds and retirement benefit schemes;
• compensation for loss of office up to NGN50 million;
• gains arising from a merger or transfer of business assets for a consideration lower than the remaining tax value of the assets plus any unutilised capital allowance;
• gains accruing to federal, state or local government in Nigeria, their ministries, departments and agencies and other public institutions, provided that such gains do not arise from the disposal of assets acquired in connection with any trade or business; and
• gains accruing from the disposal of chargeable assets by religious, charitable or educational institutions of a public character, statutory or registered friendly societies and registered co-operative societies and trade unions, provided that such gains do not arise from the disposal of assets acquired in connection with any trade or business.

Capital gains tax (CGT) is not payable where the proceeds from the disposal of the shares in a Nigerian company are utilised to acquire shares in the same or other Nigerian companies in the year of the disposal of the shares.

VAT is levied on the supply of all goods and services, with a few exceptions, at the rate of 7.5%, and is collected by the supplier and remitted to the tax authority. However, oil and gas companies – including oil service companies, ministries, departments and agencies of governments, deposit money banks, and select telecommunications companies – must withhold the VAT on the invoices from their suppliers and remit it to the NRS.

A non-resident company supplying taxable services to a resident is required to charge, collect and remit VAT to the NRS. Where the non-resident company fails to do so, the NRS will demand the VAT from the resident.

An importer of goods purchased online from a non-resident supplier is required to provide proof of the registration of the non-resident supplier to the NRS in order to avoid paying VAT at the port. Pursuant to the NTA, all input VAT is now recoverable, provided that such supplies are consumed, utilised or supplied while making taxable supplies. Lagos State levies a 5% consumption tax on services by hotels, restaurants and event centres.

Stamp duty is paid on most instruments, including electronic instruments. The rates differ for various instruments and can be as high as 3% of the value of the underlying transaction.        

The following taxes or levies are notable.

• An oil and gas company is required to pay 3% of its annual budget to the Niger Delta Development Commission for tackling ecological problems in the Niger Delta, where most of Nigeria’s oil is produced.
• An oil and gas company is required to pay 3% of its annual operating expenditure for the preceding financial year to the Host Community Trust Fund established for the benefit of the community hosting the company’s operations.
• Public interest entities (PIEs) are required to pay an annual levy (FRCN levy) into a fund to be maintained by the Financial Reporting Council of Nigeria (FRCN). PIEs include:
1. regulated entities;
2. public companies;
3. private companies that are holding companies of public or regulated entities;
4. companies with government concession/licences;
5. private companies in which government retains an interest;
6. companies engaged and paid by any tier of government for public works with an annual contract sum of over NGN1 billion; and
7. any company with an annual turnover of NGN30 billion.

The annual levy for PIEs listed on any recognised exchange in Nigeria ranges from 0.002% to 0.10% of market capitalisation, capped at NGN25 million. For PIEs other than listed entities, the annual levy ranges from 0.02% to 0.05% based on turnover. In June 2025, the Minister of Industry, Trade and Investment announced that the President formally approved the suspension of the implementation of the FRCN levy applicable to unlisted PIEs. The Minister further stated that the FRCN has been directed to impose an interim cap of NGN25 million on annual dues payable by such entities, aligning with the existing cap applicable to listed PIEs.

The NTA imposes a Development levy of 4% on the assessable profits of companies (excluding small companies and non-resident companies). This levy consolidates and replaces the Tertiary Education Tax, the Nigeria Police Trust Fund levy, the National Information Technology Development Agency levy, and the National Agency for Science and Engineering Infrastructure levy.

Payroll Taxes

An employer is required to:

• contribute 10% of employees’ monthly basic salary to be paid into a retirement savings account with an approved Pension Fund Administrator pursuant to the Pension Reform Act, while employees are required to make a corresponding contribution of 8%;
• make a minimum monthly contribution of 1% of its monthly payroll under the Employees’ Compensation Act;
• deduct 2.5% of employees’ monthly basic salary for remittance to the Federal Mortgage Bank of Nigeria as National Housing Fund contribution within one month after the deduction; and
• contribute 1% of its annual payroll cost to the Industrial Training Fund in compliance with the Industrial Training Fund Act.

Closely held local businesses commonly adopt the structure of a private company limited by shares.

See 1.4 Applicable Corporate and Individual Tax Rates.

Where it appears to the NRS that a Nigerian company controlled by not more than five persons has not distributed profits to its shareholders with a view to reducing the aggregate of the tax chargeable in Nigeria, the NRS may direct the undistributed profits to be treated as distributed and taxable in the hands of the shareholders in proportion to their shares.

There are no special rules on the taxation of gains on the sale of shares in closely held corporations.

There are no special rules on the taxation of dividends from, or gains on, the sale of shares in publicly traded corporations.

Withholding tax (WHT) of 10% applies to interest, dividends and rents. For royalty payments, the WHT rate is 10% for corporate recipients and 5% for non-corporate recipients. This WHT is treated as the final tax when the payment is due to a non-Nigerian company.

Relief in the form of WHT exemptions is available on outbound payments where:

• the payment of dividends is satisfied by an issue of shares of the company paying the dividends; or
• dividends are paid by an enterprise operating within a free zone.

Nigeria has double tax treaties (DTTs) with Belgium, Canada, China, the Czech Republic, France, Italy, the Netherlands, Pakistan, the Philippines, Romania, Singapore, Slovakia, South Africa, Spain, Sweden and the United Kingdom. Many investors use vehicles set up in the Netherlands and South Africa. Mauritius is increasingly becoming an attractive jurisdiction even though the DTT between Nigeria and Mauritius is yet to come into force.

There is also a double tax agreement (DTA) between the Economic Community of West African States (ECOWAS) countries, which Nigeria has ratified.

The NRS is empowered to challenge the use of treaty country entities by non-treaty country residents if it is of the view that the use of the treaty country entity was designed to take advantage of the treaty or abuse its provisions.

The availability of local comparables is one of the biggest transfer pricing challenges for inbound investors operating through a local corporation; transfer pricing compliance requirements are another. This is because there is a minimum penalty of NGN10 million for each failure to declare relevant group information, to disclose related-party transaction(s) or to maintain contemporaneous transfer pricing documentation, where required.

The local tax authorities challenge the use of related-party limited risk distribution arrangements for the sale of goods or the provision of services locally if they determine that the arrangement provides a tax advantage and has not been made on arm’s length terms.

The transfer pricing standards of the Organisation for Economic Co-operation and Development (OECD) and those of the UN apply in Nigeria unless they conflict with the local standards. The local transfer pricing standards conflict with the OECD standards in two major regards.

• In addition to requiring the arm’s length test in respect of royalty payments, the Income Tax (Transfer Pricing) Regulations 2018 (the “TP Regulations”) provide that, for the transfer of rights in an intangible among connected parties, any amount that exceeds 5% of the EBITDA derived from the commercial activity conducted using the intangible is not tax-deductible.
• The TP Regulations also provide that, for exports, the related-party price will be the sale price for tax purposes if it is higher than the quoted price. For imports, the quoted price will be the sale price for tax purposes if the related-party price is higher than the quoted price.

There is no published data regarding the use of the mutual agreement procedure (MAP) by Nigeria’s competent authorities to resolve international transfer pricing disputes.

The NRS is open to resolving tax disputes through the MAP process. In 2018, the NRS (then the Federal Inland Revenue Service) issued the Guidelines on MAP in Nigeria to guide Nigerian residents seeking to initiate the MAP process regarding tax disputes, including transfer pricing disputes involving a treaty partner. By the combined provision of these guidelines and the TP Regulations, where a Nigerian resident initiates a MAP in respect of a transfer pricing adjustment made by the tax authorities of a treaty partner, the NRS will allow a corresponding adjustment where it agrees that the adjustment done by the tax authorities of the treaty partner is consistent with the arm’s length principle. If the NRS does not agree that the adjustment by the tax authorities of the treaty partner is consistent with the arm’s length principle, Nigeria’s competent authority will initiate the MAP.

However, it is unlikely that Nigeria’s competent authority would resolve international transfer pricing disputes via MAPs initiated by Nigerian residents, given Nigeria’s status as an import-dependent nation and its low-tax treaty network.

The TP Regulations do not make provisions for compensating adjustments. Therefore, the OECD and UN standards would apply.

Unless granted a special exemption, branch operations by non-local corporations are not permitted in Nigeria. As such, non-local corporations seeking to carry on business in Nigeria must set up a subsidiary for that purpose. There are separate rules for the taxation of local branches of non-local corporations that carry on the business of transport by sea or air.

Capital gains of non-residents from the sale of shares of a local entity are subject to tax. Also, gains from any indirect transfer of shares in a Nigerian company are subject to tax if the transfer results in a change in the ownership or control of the Nigerian company, and more than 50% of the value of the disposed shares is derived from the Nigerian company.

The gains from a direct or indirect disposal would be exempt if:

• the total disposal proceeds are less than NGN150 million, and the chargeable gain does not exceed NGN10 million within any 12-month period; or
• the proceeds are reinvested in shares of Nigerian companies in the year of disposal of the shares.

The treatment of gains arising from the direct or indirect transfer of shares under a DTA depends on the precise wording of the particular DTA. In practice, however, Nigeria’s DTAs generally do not eliminate taxation on such gains.

See 5.3 Capital Gains of Non-Residents.

There are no special formulas for determining the taxable income of foreign-owned local affiliates. However, formulas are used to determine the taxable income of NRCs derived from Nigeria, where an NRC:

• has a PE in Nigeria;
• has an SEP in Nigeria; and
• carries on the business of transport (by sea or air).

Profits attributable to a PE/SEP are primarily computed based on Nigerian-sourced income less only expenses wholly and exclusively incurred in generating the PE/SEP’s profits, with deductions disallowed for royalties, fees or similar payments to the non-resident head office or connected persons, except as reimbursement of actual costs. Where profits cannot be reliably determined on this basis, the tax authority may apply the NRC’s global profit margin to Nigerian-sourced income. Where profits are determinable under the primary rule, the taxable profit will be the higher of that amount and the margin-based amount. Nonetheless, the tax payable cannot be less than tax withheld at source or, where withholding does not apply, 4% of total Nigerian-sourced income.

For NRCs carrying on the business of transport by sea or air, the NRS is entitled to tax on a turnover basis. In practice, 20% of turnover is deemed as profit, which is then taxed at the income tax rate of 30%, resulting in an effective tax of 6% of turnover.

Payments by local affiliates to non-local affiliates for management and administrative expenses incurred in the production of the taxable profits are attributable to the PE and consistent with the arm’s length principle. Also, management and service agreements between local affiliates and non-local affiliates are required to be registered with the National Office for Technology Acquisition and Promotion (NOTAP). Failure to register such agreements with NOTAP hinders the local affiliates’ ability to remit payments pursuant to the agreements through licensed banks.

Related-party borrowing must comply with the arm’s length principle. The thin capitalisation rules discussed under 2.5 Deduction of Interest will also apply.

The foreign income of a local corporation is not exempt from corporate tax, as a Nigerian company is taxed on its worldwide income. However, dividends, interest, rents and royalties earned abroad and brought into Nigeria through the commercial banks are exempt from tax.

Expenses that are attributable to foreign income would be deductible to the extent that they were incurred wholly and exclusively for the purposes of making a company’s profits.

Dividends earned from foreign subsidiaries of local corporations would be subject to income tax unless they were brought into Nigeria through any of the commercial banks. Such dividends would enjoy any relief in an applicable DTT where the dividends are not brought into Nigeria through any commercial banks.

Intangibles developed by local corporations in Nigeria cannot be freely transferred or licensed to foreign subsidiaries without Nigerian tax consequences. Outright transfers may trigger CGT, while licensing arrangements attract WHT on royalties.

Also, the NRS can rely on the general anti-avoidance provisions in the law to attribute a profit to the local corporation if it considers that the terms of the transfer of the intangibles do not reflect the arm’s length principle.

The NTA provides that where a foreign company, which is controlled by a Nigerian company, has not distributed its profits in a given year, the portion of those profits attributable to the Nigerian company (which could have been distributed without harming the business) will be deemed distributed and taxed in Nigeria. This introduces a Controlled Foreign Corporation (CFC) regime, effectively subjecting Nigerian companies to tax on retained foreign earnings of their subsidiaries.

Rules related to the substance of non-local affiliates do not apply in Nigeria.

Local corporations are taxed on gains on the sale of shares of non-local affiliates, whether or not the gains are received in, or brought into, Nigeria.

There is a general anti-avoidance provision in the NTA, which empowers the tax authorities to make necessary adjustments to counteract any tax reduction that would result from transactions that are considered artificial. The tax authorities may deem any transaction artificial if they find that its terms have not been effected or, if it is a transaction between related parties, that its terms do not reflect the arm’s length principle.

There is no fixed audit cycle; however, large corporates are typically audited annually.

In response to BEPS, Nigeria did not adopt the Two-Pillar solution introduced by the OECD. However, Nigeria has signed the following instruments:

• the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent BEPS;
• the Multilateral Competent Authority Agreement for the Common Reporting Standard; and
• the Multilateral Competent Authority Agreement for the Automatic Exchange of Country-by-Country Reports.

Despite Nigeria not adopting the Two-Pillar Solution, the NTA introduces similar concepts through a minimum effective tax regime applicable to resident and non-resident companies that are either part of a multinational group with aggregate group turnover of at least EUR750 million (or its equivalent) or annual turnover of at least NGN50 billion. Under the NTA, where a company’s effective tax rate in Nigeria falls below 15%, additional tax is payable to bring the tax up to the prescribed minimum threshold.

Also, where an NRC is a subsidiary of a Nigerian company or a member of a multinational group of a Nigerian company, and the income tax paid in its home country in any year is below the minimum effective tax rate of 15%, the Nigerian parent company is required to pay a top-up amount to bring the subsidiary’s tax up to the prescribed minimum effective tax rate.

Nigeria has also put the following guidelines in place to give effect to the above instruments:

• the Income Tax (Common Reporting Standard) Regulations, 2019;
• the Income Tax (Country-by-Country Reporting) Regulations, 2018;
• the Guidelines on Country-by-Country Reporting in Nigeria, 2018;
• the Guidelines on the Appropriate Use of Country-by-Country Reports, 2018; and
• the Guidelines on the Mutual Agreement Procedure (MAP) in Nigeria.

In May 2025, the Federal High Court held that the Income Tax (Country-by-Country Reporting) Regulations, 2018 (the “CbCR Regulations”) were ultra vires and of no legal effect, as they were issued by the then Federal Inland Revenue Service when a board was not properly constituted. Until this decision is overturned, the CbCR Regulations remain invalid and unenforceable.

The Nigerian government is keen on eliminating BEPS, as shown by its signing, domestication and active enforcement of anti-BEPs instruments, as well as its introduction of the CFC rule and a minimum effective tax rate. The tax-to-GDP ratio of Nigeria is among the lowest in the world, and the government expects that the BEPS plans will increase revenue from taxation.

International tax does not have a high public profile in Nigeria.

Despite its low tax-to-GDP ratio, Nigeria has competitive tax policies aimed at increasing foreign and local participation in the economy, including:

• the exemption from all taxes granted to entities operating in the tax-free zones;
• the EDTC granted to entities with high investment in priority industries and products;
• the investment tax credit available to investors in labelled start-ups; and
• the tax exemption of all foreign-earned passive income brought into Nigeria through any of the commercial banks.

Nigeria does not have state aid constraints but applies domestic anti-abuse rules aggressively. See the incentives discussed under 2.3 Special Incentives.

Nigeria does not have domestic legislation to deal with hybrid instruments. However, once Nigeria ratifies the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent BEPS, Article 3 thereof will apply to transparent entities resident in tax treaty countries.

Nigerian companies are taxed on their worldwide income. However, a Nigerian company’s foreign-earned dividend, interest, rent and royalty income are exempt from tax if brought into Nigeria through a commercial bank. Also, see the thin capitalisation rules discussed under 2.5 Deduction of Interest.

See the discussion under 6.5 Controlled Foreign Corporation-Type Rules.       

Nigeria has anti-avoidance rules in some of its tax treaties, and has indicated its intention to adopt the “principal purpose test” and the competent authority tiebreaker provisions of the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent BEPS.

The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and the UN Practical Manual on Transfer Pricing for Developing Countries, and all future updates, apply in Nigeria unless they conflict with the TP Regulations, in which case the latter will prevail.

Nigeria favours the OECD proposals for transparency and country-by-country reporting and, among others, has signed the Convention on Mutual Administrative Assistance in Tax Matters, the Country-by-Country Multilateral Competent Authority Agreement, and the Common Reporting Standards Multilateral Competent Authority Agreement.

Foreign companies with a digital presence in Nigeria are subject to CIT; see 1.3 Tests for Determining Tax Residence.

Payments to NRCs who remotely provide services to Nigerian residents attract a final WHT. The WHT rate can either be 10% or 5%. Technical, management, professional and consultancy services are subject to WHT at 10%, while all other payments attract WHT at 5%.

See 9.12 Digital Economy Businesses.

WHT of 10% (which is the final tax) applies to all offshore royalty payments. There are no special rules for IP owners in a tax haven.