How to Maximise Deductions Under the Nigeria Tax Act 2025

The tension is everywhere concerning the commencement of the Nigeria Tax Act (NTA) 2025 come January 1^st, 2026, but what if we told you that Nigeria’s new Finance Law also creates windows of opportunity for businesses and individuals?

Yes, there are new rules. Yes, the tax net is wider. But hidden within the NTA are lawful deductions, exemptions, and incentives that can help you reduce liabilities, keep more of your hard-earned money, and even grow your business.

This article explores exactly how.

Who Is a Taxable Person Under the NTA 2025?

Understanding whether you fall under the “taxable person” definition is the first step:

• Individuals: Anyone earning more than ₦800,000 annually (Section 58).
• Companies: Businesses with turnover above ₦50 million, and all companies that provide professional services, regardless of turnover (Sections 56 and 202).
• Small companies (≤ ₦50 million turnover, ≤ ₦250 million in assets, and not in professional services) are exempt from Company Income Tax.

This distinction matters because reliefs, deductions, and incentives are targeted differently at individuals and businesses.

For Businesses: Deductions and Incentives You Can Use

1. Economic Development Tax Credits (Sections 166–184)

• • Targeted at priority sectors like agriculture, pharmaceuticals, renewable energy, textiles, and more.
  • Tax credits can last 5 years, extendable to 10 years if profits are reinvested.
  • Unused credits can be carried forward up to 5 years.

2. Capital Allowances (First Schedule)

• • Deductible rates:
    • 10% on buildings, agriculture, heavy transport, intangibles.
    • 20% on plants, equipment, fittings.
    • 25% on vehicles and software.
  • Unused allowances roll over to future years.

3. Deductible Business Expenses (Section 20)

• • Wholly and exclusively incurred for generating income.
  • Includes staff costs, pensions, rent, R&D (up to 5% of turnover), approved donations (up to 10% of profits), and disability-related expenses.

4. Restructuring Reliefs (Section 190)

• • Mergers don’t reset your tax slate — losses and allowances transfer to the surviving entity.

5. Income Tax Exemptions (Section 163)

• • Agricultural profits (first 5 years).
  • Profits from export businesses.
  • Dividends from approved investment schemes.

Nigerian Tax Law 2025: Remote Workers, Creators & Oil Firms Must Pay Tax in the Currency They Earn

For Individuals: Reliefs and Deductions That Save You Money

1. Eligible Deductions (Section 30)

• • Contributions to NHF, NHIS, and pension funds.
  • Life insurance/annuity premiums.
  • Interest on owner-occupied home loans.
  • Rent relief — 20% of annual rent (capped at ₦500,000).

2. Capital Gains Exemptions

• • Share disposals under ₦150 million (or reinvested the same year).
  • Gains on your main home (once per lifetime).
  • Personal effects under ₦5 million.
  • Compensation for injury up to ₦50 million.

3. Income Tax Exemptions (Section 163)

• • Pensions, gratuities, redundancy, and disability pensions.
  • Foreign income remitted via approved channels.

4. Double Taxation Reliefs (Chapter Four)

• • For Nigerians earning abroad or receiving foreign investments.

Other Reliefs Worth Noting

• Stamp Duty Exemptions (Section 185) — for cooperative societies, small transfers, securities lending.
• VAT Reliefs (Sections 186–187) — on basic food, pharma, education materials, fertilizers, power, and exports.

Why This Matters

The NTA 2025 is not just a tax law; it’s a roadmap. Yes, compliance is non-negotiable, but it also rewards businesses and individuals who plan smartly.

Think of it this way: those who only complain about new rules will pay more. Those who study the opportunities will save more.

How FSC Professionals Can Help

At FSC, we specialise in helping businesses and individuals:

• Identify and claim all lawful deductions.
• Structure finances to benefit from exemptions.
• Plan proactively, not reactively, for the NTA 2025 rollout.

Let’s Get Started HERE