NIGERIA Law and Practice Contributed by: Theophilus Emuwa, Jibrin Dasun, Perpetua Onyeukwu and Tubosiya Ibama, ǼLEX
Nigeria has also put the following guidelines in place to give effect to the above instruments: • the Income Tax (Common Reporting Standard) Regulations, 2019; • the Income Tax (Country-by-Country Reporting) Regulations, 2018; • the Guidelines on Country-by-Country Reporting in Nigeria, 2018; • the Guidelines on the Appropriate Use of Country- by-Country Reports, 2018; and • the Guidelines on the Mutual Agreement Procedure (MAP) in Nigeria. In May 2025, the Federal High Court held that the Income Tax (Country-by-Country Reporting) Regula - tions, 2018 (the “CbCR Regulations”) were ultra vires and of no legal effect, as they were issued by the then Federal Inland Revenue Service when a board was not properly constituted. Until this decision is overturned, the CbCR Regulations remain invalid and unenforce - able. 9.2 Government Policy and Objectives Approach The Nigerian government is keen on eliminating BEPS, as shown by its signing, domestication and active enforcement of anti-BEPs instruments, as well as its introduction of the CFC rule and a minimum effective tax rate. The tax-to-GDP ratio of Nigeria is among the lowest in the world, and the government expects that the BEPS plans will increase revenue from taxation. 9.3 International Tax International tax does not have a high public profile in Nigeria. 9.4 Competitive Tax Policy Objectives Despite its low tax-to-GDP ratio, Nigeria has competi - tive tax policies aimed at increasing foreign and local participation in the economy, including: • the exemption from all taxes granted to entities operating in the tax-free zones; • the EDTC granted to entities with high investment in priority industries and products; • the investment tax credit available to investors in labelled start-ups; and
• the tax exemption of all foreign-earned passive income brought into Nigeria through any of the commercial banks. 9.5 The Competitive Tax System Nigeria does not have state aid constraints but applies domestic anti-abuse rules aggressively. See the incen - tives discussed under 2.3 Special Incentives . 9.6 Hybrid Instruments and BEPS Implementation Nigeria does not have domestic legislation to deal with hybrid instruments. However, once Nigeria ratifies the Multilateral Convention to Implement Tax Treaty- Related Measures to Prevent BEPS, Article 3 thereof will apply to transparent entities resident in tax treaty countries. 9.7 Interest Deductibility and Territorial Tax Regime Nigerian companies are taxed on their worldwide income. However, a Nigerian company’s foreign- earned dividend, interest, rent and royalty income are exempt from tax if brought into Nigeria through a com - mercial bank. Also, see the thin capitalisation rules discussed under 2.5 Deduction of Interest . 9.8 Controlled Foreign Corporation Reform See the discussion under 6.5 Controlled Foreign Corporation-Type Rules . 9.9 Anti-Avoidance Rules Nigeria has anti-avoidance rules in some of its tax treaties, and has indicated its intention to adopt the “principal purpose test” and the competent authority tiebreaker provisions of the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent BEPS. 9.10 Transfer Pricing and IP Taxation The OECD Transfer Pricing Guidelines for Multina - tional Enterprises and Tax Administrations and the UN Practical Manual on Transfer Pricing for Develop - ing Countries, and all future updates, apply in Nigeria unless they conflict with the TP Regulations, in which case the latter will prevail.
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