FIRS: Nigeria’s tax reforms laws aim to attract investments, improve fiscal stability

*The Federal Inland Revenue Service clarifies the four percent Development Levy on imported goods is not additional tax burden, but a streamlined consolidation of several existing levies in the Nigerian tax ecosystem

Isola Moses | ConsumerConnect

Contrary to certain insinuations in the public space, the Federal Inland Revenue Service (FIRS) has restated that Nigeria’s four newly enacted tax laws are designed to strengthen economic competitiveness, attract investments, and improve long-term fiscal stability in the country.

The FIRS said also clarified that the much-debated four percent Development Levy on imported goods is not a new or additional tax burden, but a streamlined consolidation of several existing levies in the tax ecosystem.

e-Governance: Nigerian Government reaffirms paperless Civil Service begins December 31

ConsumerConnect reports the new Nigeria Tax Act and Nigeria Tax Administration Act have generated much interest and widespread debate among citizens and businesses, seeking clarity on how the reforms will affect them, effective from January 2026.

The Nigerian tax administrators opined such consumers’ concerns resulted largely from misinterpretations.

The FIRS, in a statement Wednesday, December 3, 2025, also explained that the newly-reformed tax regulations are aimed at simplifying compliance, protecting incentives, and improving investment environment in the West African country.

The Service acknowledged that one of the most misunderstood elements of the new tax frameworks is the four percent Development Levy.

READ ALSO FinTech: NITDA Highlights Impact Of Innovation, Financial Inclusion On Advancing Nigeria Digital Economy In Qatar

Auto Safety: Nissan, Hyundai Recall Vehicles Over Windshield Defect, Airbag Deployment Issues

Minister To Contractors: All Your Outstanding Payments Will Be Made By December 20

According to the foremost tax authority in the country, the said Development Levy now replaces a range of fragmented charges, including the Tertiary Education Tax, NITDA Levy, NASENI Levy and Police Trust Fund Levy, which businesses previously paid separately.

The statement further explained the consolidation of these taxes into one now reduces compliance costs, eliminates unpredictability, and ends the era of multiple agency-driven levies in the economy.

It equally said the law exempted small businesses and non-resident companies.

Besides, the FIRS noted that the Development Levy offers protection to companies most vulnerable to economic shocks in regard to today’s global economic headwinds.

What analysts say about harmonised ‘Development Levy’

Commenting on the harmonised Development Levy in the tax ecosystem, industry analysts have said the new levy structure actually sends an important message to investors.

According to them, Nigeria is moving towards a more coordinated, transparent and predictable fiscal environment.

As regards the Free Trade Zones (FTZs), some stakeholders have suggested that the Federal Government is rolling back the incentives that have attracted export-oriented investors for decades.

The FIRS, in the statement, however, maintained the reforms uphold the tax-exempt status of FTZ enterprises, and introduce clearer guidelines to preserve the purpose of the zones across Nigeria.

It said under the new tax rules, FTZ companies could sell up to 25 percent of their output into the domestic market without losing tax exemptions.

It is also noted that a three-year transition period has also been provided to allow such firms to adjust smoothly. Government officials as well commented that the reforms aim to curb abuses where companies used FTZ licences to evade domestic taxes while competing within the Nigerian market.

According to FIRS, with the new tax measures, Nigeria aligns with global FTZ models in economies, such as the United Arab Emirates (UAE) and Malaysia, where the zones function primarily as export hubs for logistics, manufacturing and technology.

The introduction of a 15 percent minimum Effective Tax Rate for large multinational and domestic companies has also generated some concern in the public space.

Clarifying any possible misconception of the Effective Tax Rate, the FIRS explained this policy aligns with a global tax agreement, endorsed by over 140 countries under the Organisation of Economic Cooperation and Development (OECD)/G20 framework.

The Service noted that without this adoption, Nigeria might risk losing revenue to other countries through the “Top-Up Tax” mechanism.

This is where the home country of a multinational company collects the difference when a host country charges below 15 percent.

However, by localising the requisite rule, Nigeria ensures that tax revenue from multinational operations remains within its borders, seated the FIRS.

The Service as well said the ETR is extended to large domestic companies to ensure a level playing field and discourage profit-shifting practices that undermine the fiscal system.

The reforms also introduce sweeping changes to capital gains taxation — now termed “chargeable gains.”

The Nigerian new tax framework contains several incentives to promote investment and capital mobility, it stated.

The Service averred that one of the key innovations is the reinvestment relief, which allows investors who sell shares and reinvest in another Nigerian company within the same year to avoid tax on gains.

Experts also noted this provision would unlock capital for startups, private equity, and other emerging enterprises.

Aside from these, the new tax law modernises capital loss treatment and exempts low-value transactions to protect small investors.

In all, the tax reforms have introduced structure, clarity and competitiveness into Nigeria’s tax environment, the FIRS noted.

The Service, therefore, maintained the measures would strengthen investor confidence, support industrial expansion and secure a sustainable revenue pipeline for national development.

As the new regulations continue to generate public interest and debates, tax authorities insist the new tax regime is not punitive but strategic — balancing investor incentives with national revenue needs, and positioning Nigeria as a more predictable and attractive destination for global capital.

Kindly Share This Story