1. Resident Individuals defined: Personal Income Tax (PIT) will apply to the worldwide income of a resident individual, which is now clearly defined in the new Act (The Nigeria Tax Act). The “residence” definition is extended to individuals with substantial economic and immediate family ties in a year of assessment. Employment income will now be taxed in Nigeria only if the individual is resident in Nigeria or performs duties in Nigeria without paying tax in their country of residence.
2. Benefit-in-Kind on Premises: Where an employer provides premises or accommodation to an employee, the rental value that will be taxable in the hands of the employee has been restricted to a maximum of 20% of the employee’s annual gross income from employment, excluding the rental value itself.
3. Farewell to Consolidated Relief Allowance (CRA): The existing Consolidated Relief Allowance (CRA) of NGN 200,000 or 1% of gross income (less statutory deductions), whichever is higher plus 20% of the gross income will no longer apply, as it is not part of the eligible deductions outlined in section 30 of the Nigeria Tax Act (NTA).
   
4. Introduction of Rent Relief Allowance: The Nigeria Tax Act (NTA) introduces a rent relief allowance of 20% of the annual rent paid by the taxpayer, subject to a maximum of NGN 500,000, whichever is lower. However, this relief is not automatically granted as taxpayers must accurately declare and disclose relevant information about the rent paid.
5. Revised Income Tax Rates: Currently, personal income tax rates in Nigeria range from 7% to 24%. The Nigeria Tax Act (NTA) creates a broader tax bracket and increases the rates for high-income earners. The new rates now range from 0% to 25. Individuals with chargeable income up to NGN 800,000 are taxed at 0%. The rates are as follows:

First N800,000 - 0%

Next N2,200,000 - 15%;

Next N9,000,000 - 18%;

Next N13,000,000 - 21%;

Next N25,000,000 - 23%;

Above N50,000,000 - 25%.

1. From Capital Gains to Chargeable Gains: The Nigeria Tax Act (NTA) has repealed the word ‘Capital Gains’ and replaced it with ‘Chargeable Gains’.
2. Harmonisation of Chargeable Gains with Income Tax: Under the Capital Gains Tax (CGT) regime, gains on disposal of chargeable assets are taxed at 10%. However, the Nigeria Tax Act (NTA) has harmonised this gain with income tax. Therefore, all chargeable gains are now to be included in the income or profits of individuals or companies when computing income tax and taxed accordingly at the respective applicable tax rates.
3. Increase in the threshold of compensation for personal injury: Under CGT, compensation or damages received for any wrong or injury is not considered as chargeable gains, except for compensation for loss of office, for a sum more than NGN 10million. The Nigeria Tax Act (NTA) has increased the threshold to NGN 50million. Therefore, any compensation that is above NGN 50million will be considered as chargeable gain and only the excess amount will be taxable. This provision will apply not only to compensation received for loss of office, but also to other forms of compensation or damages, since they are above the specified threshold.

1. Introduction of the Tax Ombuds: The Nigeria Tax Administration Act introduces the tax ombuds to mediate between taxpayers and tax authorities. This office is part of a broader effort to reform Nigeria’s tax system. The office is saddled with the responsibility of mediating and resolving tax issues or complaints between taxpayers and the tax authorities or related regulatory bodies.
2. New Name of the Tax Authority: The Nigeria Revenue Service (Establishment) Act has repealed the Federal Inland Revenue Service (Establishment) Act, and renamed the Service as the Nigeria Revenue Service (NRS).
3. Consolidation of Penalties: One of the most notable changes in the Nigeria Tax Administration Act is the consolidation of penalties across different tax laws. The Act has unified these penalties, providing a more straightforward and consistent framework for addressing tax offences. This consolidation is expected to improve compliance and simplify enforcement processes.
4. Increased penalties for non-compliance: There has been a significant increase in non-compliance penalties and the introduction of new penalties. Some of the updates include increase in the penalty for failure to file returns to NGN 100,000 in the first month, and NGN 50,000 for every month the failure continues, introduction of new penalties such as penalty of NGN 5million for awarding contracts to individuals or entities that are not registered for tax, penalties for failure to grant access for deployment of technology, inducing a tax officer etc.
5. Tax Payment Flexibility: Businesses assessed in foreign currencies can now pay taxes in Naira at the official exchange rates, simplifying compliance and reducing pressures on foreign exchange.
6. Disclosure of Tax planning strategies: Companies are expected to disclose their tax planning strategies to the tax authorities. The tax authority is empowered by the Act to counter prohibited tax avoidance schemes by making necessary adjustments, such as raising assessments, modification of an assessment, or disallowing of a claim, unless the taxpayer can convincingly prove that the tax benefit aligns with the intent of the applicable tax laws.
   
7. Accreditation of Tax Agents: The Nigeria Tax Administration Act introduces a formal accreditation framework for tax agents or consultants, requiring all individuals or entities representing taxpayers before the tax authority to be registered and certified. The relevant tax authority will publish a guideline to set out the requirements for accreditation.
   
8. Advance Ruling Mechanism: The Nigeria Tax Administration Act establishes an advance ruling system that allows taxpayers to request written clarification from the tax authority on the tax implications of proposed transactions or arrangements. This provision promotes certainty, transparency, and compliance by enabling taxpayers to make informed decisions and plan their affairs with confidence, based on legally binding guidance issued prior to undertaking the transaction.