Dr. Tope Fasua, Special Adviser to President Tinubu on Economic Affairs, has dismissed claims that Nigeria’s new tax reforms will drive away investors or weaken business competitiveness. Instead, he says the 2025 tax regime — anchored on the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA) — is one of the most business-friendly and modernising updates Nigeria has introduced in decades.
Fasua explains that the reforms simplify the tax system, cut compliance costs, align Nigeria with global tax standards, and protect both businesses and individuals from outdated rules. He stresses that the changes are “progressive and pro-investment,” consistent with the President’s commitment to improving living standards.
Single Development Levy Replaces Multiple Taxes
A key change is the 4% Development Levy, widely misunderstood as a new burden. Fasua clarifies that the levy replaces several fragmented charges — including TET (3%), NITDA levy, NASENI levy, and the Police Trust Fund levy — which previously imposed a higher effective rate on many sectors.
Small businesses and non-resident companies are exempt.
According to him, the unified levy gives investors predictability, ends the era of ad-hoc agency levies, and reduces the cost of doing business.
Free Trade Zone Incentives Remain Intact
Responding to concerns about Free Trade Zones (FTZs), Fasua says the NTA preserves their core tax-exempt status but adds conditions to ensure FTZs focus on exports rather than tax-free domestic sales.
Companies selling up to 25% of output locally remain exempt until 2028. After that, only domestic sales will be taxed — a system similar to what exists in the UAE and Malaysia.
15% Minimum Tax for Large Multinationals
The new 15% minimum effective tax rate applies only to multinational groups with global turnover above €750 million, following the OECD/G20 agreement adopted by more than 140 countries. Large domestic firms (turnover above ₦50 billion) are also included to ensure fairness.
Fasua explains that Nigeria must collect the 15% rate itself; otherwise, foreign governments will. The reform protects Nigeria’s revenue without raising global tax burdens.
Modernised Capital Gains Tax
The NTA replaces the outdated 1967 law on capital gains with a flexible system that encourages reinvestment.
A major reform: gains from share sales are tax-free if reinvested in Nigerian companies within the same year — a policy aimed at boosting capital formation.
The new law also:
allows capital losses to reduce taxable income, mitigating investor risk;
exempts small-value transactions below ₦150 million in total disposals;
closes loopholes that previously allowed companies to reclassify profits as capital gains.
Conclusion
Fasua argues that Nigeria is not raising tax barriers but building a more predictable, modern, investor-friendly tax environment. The reforms streamline taxation, prevent revenue leakages, protect incentives where needed, and position Nigeria as more competitive globally.
