Regulatory Compliance in Nigeria
(Tax, Immigration & other Essentials for Foreign Investors in Nigeria. Updated to reflect the Nigeria Tax Act 2025 and Nigeria Tax Administration Act 2025 — Gazetted December 2025)
Establishing a Business: Regulatory Compliance in Nigeria and Opportunity
Establishing a business in Nigeria involves more than registration; it requires a deep understanding of the country’s evolving regulatory, tax, and immigration systems. For foreign investors, compliance is not just a legal requirement; it’s a strategic asset that builds credibility, enhances transparency, and safeguards long-term profitability. This guide explains the regulatory compliance in Nigeria.
1. Navigating Regulatory Compliance in Nigeria – The Framework
Nigeria’s business environment is regulated by several key agencies, each ensuring transparent and lawful operations for both domestic and foreign investors.
| Agency / Authority | Primary Function | Relevance to Foreign Investors |
|---|---|---|
| Corporate Affairs Commission (CAC) https://www.cac.gov.ng | Incorporation and registration of companies | Registers entities under CAMA 2020 and issues incorporation certificates. |
| Nigerian Investment Promotion Commission (NIPC) https://www.nipc.gov.ng | Registers foreign investments and administers incentives | Protects foreign capital and grants access to incentives under the NIPC Act and EDTI framework. |
| Nigeria Revenue Service (NRS) (formerly FIRS) | Centralized tax administration and digital filing | Issues TINs, administers corporate and indirect taxes through a unified e-filing platform. |
| Central Bank of Nigeria (CBN) https://www.cbn.gov.ng | Regulates banking and foreign exchange | Issues Capital Importation Certificates (CCI) and oversees repatriation of profits. |
| National Office for Technology Acquisition and Promotion (NOTAP) | Regulates technology transfer and IP licensing | Approves royalty, franchise, and technical service agreements to protect intellectual property. |
| Nigerian Immigration Service (NIS) | Oversees entry and employment of expatriates | Regulates visas, work permits, and expatriate quotas under the Immigration Act 2015. |
Coordinating filings across these agencies ensures seamless compliance and access to regulatory incentives. Mismatched documentation remains one of the leading causes of investment delays.
For more on entity structures, read: Choosing the Right Business Structure & Understanding Liabilities.
2. Understanding Nigeria’s Taxation Framework (2025 – 2026 Reforms)
Nigeria’s fiscal regime has been comprehensively modernized through the Nigeria Tax Act (NTA) 2025 and the Nigeria Tax Administration Act (NTAA) 2025, effective 1 January 2026. These reforms harmonize tax rates, consolidate levies, and align domestic laws with global tax standards.
Company Income Tax (CIT)
- Small Companies (≤ ₦50 million turnover & ≤ ₦250 million fixed assets): 0% CIT rate (fully exempt).
- Medium & Large Companies: 30% CIT rate for 2025, reducing to 25% from 2026 to attract sustained investment.
- Petroleum Operations: Governed separately under the Petroleum Profits Tax Act (PPTA), with rates ranging from 50% to 85% depending on activity.
The ₦50 million turnover limit is the official definition of a “Small Company” for CIT purposes. This differs from the ₦100 million VAT threshold—an important nuance for cross-border investors.
Unified Development Levy (UDL)
The UDL replaces both the Education Tax (TET) and the NASENI Levy, creating a single development contribution mechanism.
- Rate: 4% of assessable profits.
- Exemption: Companies with a turnover ≤ ₦50 million are exempt.
- Purpose: Supports national research, innovation, and infrastructure funding.
Consolidating multiple levies into one improves compliance predictability and administrative efficiency
Minimum Effective Tax Rate (ETR)
A 15% Minimum ETR now applies to:
- Any Nigerian company with annual turnover of ₦20 billion or more, and
- All constituent entities of multinational enterprise (MNE) groups, in line with OECD Pillar Two global standards.
The ₦20 billion domestic trigger ensures large Nigerian firms cannot reduce their tax burden below a fair minimum rate, even without global affiliation.
Value Added Tax (VAT)
- Standard Rate: 7.5%.
- Exemption Threshold: Businesses with annual turnover of ₦100 million or less are exempt from charging or remitting VAT under the NTAA 2025.
- Zero-Rated or Exempt Items: Basic food items, medical products, educational materials, and residential rent.
Capital Gains Tax (CGT)
- Rate: Harmonized at 30% for large companies, aligning with the standard CIT rate.
- Reinvestment Relief: CGT is waived if proceeds from the sale of shares or assets are reinvested in Nigerian securities or companies within the same fiscal year.
This reinvestment relief is a groundbreaking incentive for capital retention—encouraging investors to redeploy gains locally rather than repatriate them.
Withholding Tax (WHT)
- Royalties: 5%
- Technical / Management / Professional Fees: 5% for residents; 10% for non-residents.
- Supplies & Construction Contracts: 2% for corporate recipients.
Proper WHT deduction enables investors to claim credits under Nigeria’s Double Taxation Treaties (DTTs).
Transfer Pricing and Documentation
The Nigeria Revenue Service (NRS) enforces the Transfer Pricing Regulations (2018).
- Related-party transactions must reflect arm’s length pricing.
- Contemporaneous documentation is required for audit defence.
- Non-compliance attracts substantial penalties.
Nigeria’s strengthened TP framework aligns with international best practices, reducing exposure to transfer pricing adjustments.
Economic Development Tax Incentive (EDTI)
The EDTI replaces the former Pioneer Status Incentive (PSI), introducing performance-based tax credits for up to five years.
- Applies to sectors such as ICT, renewable energy, agribusiness, and digital infrastructure.
- Awards are tied to measurable outcomes: local job creation, export performance, and sustainability contributions.
Quick Reference Table — Key Fiscal Thresholds (2025/2026)
| Tax Type | Rate / Threshold | Legal Basis (as of Dec 2025) |
|---|---|---|
| CIT | 0% (≤ ₦50M turnover) / 30% → 25% (2026) | NTA 2025 |
| VAT | 7.5% / Exemption ≤ ₦100M turnover | NTAA 2025 |
| CGT | 30% (Reinvestment Relief applies) | NTA 2025, s.49 |
| ETR (Minimum Tax) | 15% for turnover ≥ ₦20B | NTA 2025, Part V |
| UDL | 4% of assessable profits | NTA 2025, Part VII |
| WHT | 2–10% depending on transaction type | NRS Regulations 2024 |
| EDTI | 5-year performance-based credit | NIPC & NTA 2025 Schedules |
3. Immigration and Expatriate Compliance
Foreign companies must adhere strictly to the Immigration Act 2015 and accompanying regulations.
Key Permits:
- Business Visa (BV): For short-term visits and negotiations.
- Subject to Regularization (STR) Visa: For long-term employment assignments.
- CERPAC (Combined Expatriate Residence Permit and Aliens Card): Authorizes residence and work.
- Expatriate Quota: Allocates approved foreign positions, managed by the Ministry of Interior.
Consistent immigration compliance protects business licenses and upholds corporate credibility with regulators.
4. Integrating Compliance into Your Market Entry Strategy
Compliance in Nigeria is an ongoing governance function, not a one-time formality. Companies that integrate regulatory, tax, and immigration planning early reduce long-term costs, avoid penalties, and enhance their credibility with government agencies and local partners.
Highlaw Chambers assists foreign investors with:
- Company incorporation and licensing
- Digital tax filing under the NRS
- NIPC registration and incentive applications
- Expatriate and immigration compliance management
Our team ensures seamless entry, regulatory certainty, and operational efficiency across Nigeria’s fast-evolving legal landscape.
Next in the Series:
👉 Avoiding Common Legal Risks When Entering the Nigerian Market(If you missed the first article, read: “Choosing the Right Business Structure & Understanding Liabilities.”)
