Nigeria's Tax Reforms Risk Deterring Investments if Grey Areas Remain Unclarified

Strategic Insights -

Business leaders have warned that Nigeria's tax reforms may deter investments and compliance if authorities don't intensify efforts in clarifying grey areas and ensuring investors get dividends in the form of social infrastructure for levies being paid. The Lagos Chamber of Commerce and Industry-Federal Inland Revenue Service (FIRS) Stakeholders' Forum on Tax Matters highlighted concerns over unclear rules, rising borrowing costs, and multiple levies threatening investor confidence in Africa's top crude producer.

Key Takeaways:

  • Unclear rules and multiple levies are major concerns for businesses, particularly small and medium enterprises, which are uncertain about their obligations under the new regime set to take effect in January 2026.
  • The removal of foreign loan interest exemptions could significantly dampen long-term foreign investment, raising the overall cost of borrowing and deterring inflows into capital-intensive sectors like energy, infrastructure, and manufacturing.
  • Uncertainty around the treatment of chargeable gains on indirect share transfers is raising concerns for cross-border investors.
  • Multiple taxation remains a significant drag on business, particularly in logistics, where operators face repeated levies from different agencies on the same delivery routes.
  • The Nigerian British Chamber of Commerce (NBCC) urged the government to establish a centralized digital tax registry to streamline collections and reduce duplication.
  • Compliance burdens created by the short transition period are a concern, particularly for small and medium enterprises, which may be forced to spend more on software, staff, and compliance systems.
  • The Chamber called for reforms that expand the tax net without overburdening compliant firms, protect SMEs, and offer predictable policies.
  • Revenue generation and economic growth should be complementary objectives, not opposing goals, according to the NBCC.

Statistics:

  • The tax reforms are set to take effect in January 2026, with businesses already uncertain about their obligations.
  • The removal of foreign loan interest exemptions could deter inflows into capital-intensive sectors, such as energy, infrastructure, and manufacturing.
  • Multiple taxation remains a significant issue in logistics, with operators facing repeated levies from different agencies on the same delivery routes.
  • The short transition period has created compliance burdens for small and medium enterprises, which may have to spend more on software, staff, and compliance systems.
  • The Chamber called for the establishment of a centralized digital tax registry to streamline collections and reduce duplication.

Sources:

  • Lagos Chamber of Commerce and Industry-Federal Inland Revenue Service (FIRS) Stakeholders' Forum on Tax Matters
  • Abimbola Olashore, president of the Nigeria British Chamber of Commerce (NBCC)
  • Gabriel Idahosa, president of LCCI, represented by Leye Kupoluyi, deputy vice president of the Chamber
  • Zach Adedeji, executive chairman of FIRS, represented by Stella Okahbuzor, director, Oil and Gas