Nigeria’s tax landscape changes on 1 January 2026. Four new statutes take effect together. They are the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board (Establishment) Act. President Bola Ahmed Tinubu signed all four on 26 June 2025.
These are among the most sweeping tax reforms in decades. Their effect on M&A transactions reaches negotiation, due diligence, deal structure and post-completion integration alike.
Capital gains tax: a higher rate
Section 56 of the Nigeria Tax Act raises the capital gains tax rate from 10% to 30%. The higher rate applies to a company earning more than NGN50 million a year with total fixed assets above NGN250 million.
The tax net also widens. It now covers shares, rights, debts, digital or virtual assets and incorporeal property. Investors will weigh this carefully when planning acquisitions and exits.
Offshore deals with a Nigerian effect
Section 47 introduces tax on gains from the indirect disposal of shares. It bites where the sale changes the ownership structure or group membership of a Nigerian company. It also bites where the sale changes ownership of, or interest in, assets located in Nigeria.
The reach is significant. A sale completed entirely offshore can still trigger Nigerian tax if it indirectly changes control of a Nigerian company or asset.
Section 46 explains when foreign shares count as Nigerian. Shares in a foreign company are deemed located in Nigeria if, within the 365 days before the sale, 50% of their value derived from Nigerian operations or assets.
Foreign companies managed from Nigeria face exposure too. The Act treats them as Nigerian companies, so their disposals of equity in other foreign companies can attract Nigerian capital gains tax.
This raises a practical concern. The same gain could be taxed in the seller’s country, in the target’s country and in Nigeria.
Exemptions that help M&A transactions
Mergers. Under section 190(1)(a)(ii), capital gains tax does not apply to assets transferred to the surviving or newly formed entity. The relief is unconditional. It requires no prior approval, no control test and no holding period. The Act treats a merger as a structural realignment rather than a disposal.
The contrast with the old law is sharp. Section 33 of the repealed Companies Income Tax Act granted relief only where the companies were under common control for at least 365 days. It also carried a clawback. If the acquirer disposed of transferred assets within 365 days, the concession fell away entirely.
Startups. Section 163(1)(m) exempts gains on disposals by angel investors, venture capitalists, private equity funds, accelerators and incubators to labelled startups. The assets must have been held in Nigeria for at least 24 months. A labelled startup holds a digital certificate under the Nigerian Startup Act 2022. Hold for less than 24 months and the tax applies.
Smaller share disposals. Under section 34(1)(a), no capital gains tax arises where an investor realises less than NGN150 million from share disposals and the chargeable gain stays under NGN10 million in any 12 consecutive months. Cross either threshold and the tax applies.
Reinvestment. Where proceeds go into shares of another Nigerian company within the same year of assessment, no tax arises. This holds even where the proceeds exceed both thresholds.
The reinvestment relief has moved on since the Finance Act 2021. That Act set the threshold at NGN100 million and had no NGN10 million gains test. The new rule may reshape exits. Investors might redeploy proceeds within Nigeria rather than leave, which points towards entity-focused exits rather than country-focused ones.
Reliefs that support restructuring
Tax attributes now travel with the business. Unutilised capital allowances and accumulated tax losses of merging entities pass to the surviving or new entity, provided the merged business incurred them. Taxes deducted at source also carry across.
Capital allowances change shape as well. All qualifying capital expenditure now attracts allowances on a straight-line basis, in equal instalments over the asset’s useful life. That replaces the old mix of initial and annual allowances on a reducing balance.
One removal matters greatly. The anti-avoidance rule requiring 365 days of common control for a tax-neutral group reorganisation has gone. Group restructurings therefore carry less risk of tax leakage.
VAT and stamp duty
VAT does not apply to business restructurings. That covers mergers, transfers of a business causing cessation, and transfers of business assets below the residual value of qualifying capital expenditure.
Going-concern transfers get separate treatment. Where a business, or a separable part of it, transfers as a going concern and the buyer keeps using the assets in the same activity, the transfer is not a supply of goods or services for VAT. The buyer must already be registered as a taxpayer in Nigeria, or become registerable through the transfer.
Stamp duty still applies to deal documents. The Ninth Schedule charges conveyance or transfer on sale at 1.5% ad valorem. Property valued at NGN10,000,000 or less is excluded. So is a transfer between related companies holding at least 90% in each other, directly or through a third party, where the document was stamped on the prior purchase.
What deal teams should do now
The new regime rewards preparation. Diligence on tax history needs to go deeper, particularly on historic offshore restructurings that touched Nigerian assets.
We also expect guidance to follow. The Nigeria Revenue Service is likely to issue regulations on grey areas such as indirect offshore share transfers.
In the meantime, early engagement with the tax authorities where appropriate, careful structuring and meticulous documentation remain the way to manage risk and protect deal value. Our Mergers, Acquisitions and Private Equity 2025 Wrap-Up and 2026 Outlook sets out the wider deal context.
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