Financial Q&A: Your Questions Answered
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How does the Mandatory E-Invoicing, introduced in the new law works?
Based on the Nigeria Tax Administration Act 2025 and the rollout by the Nigeria Revenue Service (NRS) (formerly FIRS), mandatory e-invoicing is the new standard for 2026. If your business earns over ₦100 million, you are now required to move away from paper or simple PDF invoices to a "Pre-Clearance" digital model. Here is exactly how it works:
How will the new tax reforms impact small and medium enterprises in Nigeria?
Based on the Nigeria Tax Act 2025 (signed into law in June 2025 and effective January 1, 2026), the "Small" and "Medium" enterprises are now split. The new reforms create a sharp divide. Small businesses (turnover ≤ ₦100 million) are the biggest winners, effectively becoming tax-exempt. Medium businesses (turnover > ₦100 million) face a challenging tax hike as the "medium" category has been abolished, pushing them into the standard corporate tax bracket.
What are the new PAYE tax rates effective 2026?
Under the Nigeria Tax Act 2025, which officially took effect on January 1, 2026, the PAYE (Pay-As-You-Earn) system has undergone its most significant overhaul in decades. The new law introduces a more progressive structure that eliminates the old "Consolidated Relief Allowance" (CRA) and replaces it with a higher tax-free threshold and a specific Rent Relief.
What goods and services are VAT-exempt?
Under the Nigeria Tax Act 2025 (the landmark legislation active in 2026), the government has significantly expanded the list of VAT-exempt and zero-rated items to lower the cost of living and support key industries. The law distinguishes between "Exempt" (completely outside the VAT net) and "Zero-Rated" (0% tax, but allows businesses to claim refunds on their costs). For you as a consumer or small business, both effectively mean 0% VAT at the point of sale.
How do I calculate withholding tax on consultant fees?
To calculate Withholding Tax (WHT) on consultant fees in Nigeria, you must first identify if the consultant is a Resident or Non-Resident. Under the Deduction of Tax at Source (Withholding) Regulations 2024 (effective 2025/2026).