Special Adviser to President Bola Ahmed Tinubu on Economic Affairs, Tope Fasua, has offered fresh insight into Nigeria’s soon-to-be-implemented Tax Administration Act, insisting that the sweeping tax reforms coming into force in January 2026 will strengthen – not weaken – the nation’s investment climate.
Fasua’s comments, released in a statement on Monday, followed growing public debate and concerns that the country’s new tax framework could deter investors, raise operational costs, and trigger capital flight.
But the presidential adviser argues the opposite. According to him, the package of reforms — particularly the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA) — represents one of the most investor-friendly tax overhauls in Nigeria’s recent history.
He describes them as modern, globally aligned, and designed to reduce administrative burdens while improving fairness in the tax system.
Why the New Reforms Matter
Fasua maintains that the 2025 reforms are structured to enhance economic efficiency by:
* Merging previously fragmented levies into a single, predictable 4% Development Levy
* Preserving Free Trade Zone incentives while preventing abuses
* Implementing the internationally supported 15% minimum tax rate for large multinational enterprises
* Updating capital gains taxation to reflect contemporary investment realities
These changes, he says, reduce uncertainty and complexity—two factors that have long discouraged investors and raised the cost of doing business in Nigeria.
Development Levy: Not a New Tax
One key clarification centers on the controversial 4% Development Levy. Fasua stresses that it is not an additional burden, but a consolidation of multiple overlapping taxes such as:
* Tertiary Education Tax
* NITDA Levy
* NASENI Levy
* Police Trust Fund Levy
Many firms, he notes, were previously paying more than 4% in combined charges.
The new single levy, he insists, offers clarity, predictability, and reduced compliance costs, especially for companies in sectors like technology, finance, and telecommunications.
He adds that small businesses earning ₦100 million or less, along with non-resident companies, are fully exempt.
Free Trade Zones: Incentives Remain Intact
Contrary to concerns that FTZ incentives are being eroded, Fasua says the NTA simply introduces guardrails to ensure that FTZs serve their intended purpose — boosting exports and generating foreign exchange.
Companies operating in FTZs can still enjoy tax exemptions, provided domestic sales do not exceed 25% of their output. A three-year transition window (2026–2028) allows companies to adjust before domestic sales become taxable.
This approach, he explains, mirrors global practices in countries like the UAE and Malaysia.
The 15% Minimum Tax: Protecting Nigeria’s Tax Base
Fasua also highlights Nigeria’s implementation of the globally agreed 15% minimum tax rate for large multinational companies with a turnover of €750 million and above.
This policy, anchored in OECD/G20 guidelines, prevents foreign governments from collecting “top-up taxes” that Nigeria could have kept.
Extending the same rule to large domestic firms (₦50 billion+ turnover) ensures fairness and prevents local companies from exploiting loopholes that multinationals cannot.
Capital Gains Modernisation: A More Flexible, Investor-Friendly System
Another major update is the transition from the outdated 1967 Capital Gains Tax Act to a more dynamic system that integrates gains with overall income.
Fasua notes that while the headline rate seems higher, new exemptions — such as tax-free reinvestment of share sale proceeds — make the system more supportive of active investors, venture capital, and startups. Additionally, losses can now offset taxable income, reducing risk for innovators and entrepreneurs.
A ₦150 million transaction threshold also exempts smaller investors and startups from chargeable gains.
A System Built for Growth
Overall, Fasua argues that Nigeria’s tax modernization agenda is geared toward simplification, fairness, and global alignment, all of which are key to attracting sustainable investment.
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He says the reforms close long-abused loopholes, protect Nigerian businesses, and send a strong signal to global investors that the country is building a predictable and transparent fiscal environment.
