New Tax Administration Offers 50 Exemptions and Relief Measures

From January 1, 2026, Nigeria’s new tax laws will take effect, offering a wide range of exemptions and reliefs aimed at easing the burden on low-income earners, average taxpayers, and small businesses. These measures are designed to improve welfare and promote the growth of small-scale enterprises.

Personal Income Tax (PAYE)

• Individuals earning the national minimum wage or less are fully exempt.

• Annual gross income up to ₦1,200,000 (approx. ₦800,000 taxable) is exempt.

• Reduced PAYE for earners with annual gross income up to ₦20 million.

• Gifts are tax-exempt.

Allowable Deductions & Reliefs for Individuals

• Pension contributions to PFA

• National Health Insurance Scheme contributions

• National Housing Fund contributions

• Interest on loans for owner-occupied housing

• Life insurance or annuity premiums

• Rent relief: 20% of annual rent (up to ₦500,000)

Pensions & Gratuities – Exempt

• Pension funds and assets under the Pension Reform Act (PRA)

• Retirement benefits, gratuities, or compensation under the PRA

• Compensation for loss of employment up to ₦50 million

Capital Gains Tax (CGT) – Exempt

• Sale of owner-occupied homes

• Personal effects worth up to ₦5 million

• Sale of up to two private vehicles per year

• Gains on shares below ₦150 million or gains up to ₦10 million

• Gains above the exemption threshold if reinvested

• Pension funds, charities, and religious institutions (non-commercial)

Companies Income Tax (CIT) – Exemptions & Reliefs

• Small companies (turnover ≤ ₦100 million; fixed assets ≤ ₦250 million) pay 0% tax

• Eligible startups exempt

• 50% additional deduction for salary increases, wage awards, or transport subsidies for low-income employees

• 50% deduction for new employees retained for at least three years

• Five-year tax holiday for agricultural businesses (crop production, livestock, dairy, etc.)

• Gains from investment in eligible startups by venture capital, private equity, or incubators

Development Levy – Exempt

• Small companies are exempt from the 4% levy

Withholding Tax – Exempt

• Small businesses, manufacturers, and agricultural firms exempt from withholding tax on income

• Small companies exempt from deductions on supplier payments

Value Added Tax (VAT) – 0% or Exempt

• Basic food items, education services/materials, health and medical services, pharmaceuticals

• Rent

• Small companies (turnover ≤ ₦100 million) exempt from charging VAT

• Diesel, petrol, solar power equipment – VAT suspended or exempt

• Refunds on VAT for assets or overheads used to produce VATable or 0% VAT goods/services

• Agricultural inputs: fertilizers, seeds, seedlings, feeds, live animals

• Equipment for agricultural use

• Disability aids: hearing aids, wheelchairs, braille materials

• Shared passenger road transport (non-charter)

• Electric vehicles and parts

• Humanitarian supplies

• Baby products

• Sanitary products

• Land and building

Stamp Duties – Exempt

• Electronic transfers below ₦10,000

• Salary payments

• Intra-bank transfers

• Transfers of government securities or shares

• All documents, stocks, and share-related transactions