September 2026, Edition 5
Nigeria’s 2025 tax reforms have materially changed the tax economics of private equity transactions. The Nigeria Tax Act 2025, together with the Nigeria Tax Administration Act 2025 and the Nigeria Revenue Service (Establishment) Act 2025, replaced several major federal tax statutes and introduced a more integrated framework for company taxation, capital gains, VAT, withholding taxes, stamp duties and tax administration. The reforms took effect from January 1st, 2026.
The tax analysis should begin before the investment is made. Transaction documents should be reviewed for applicable stamp-duty obligations, while legal, financial, consulting and other advisory services should be tested for their VAT and withholding-tax implications. An investor should also determine whether a proposed acquisition creates any immediate or deferred capital-gains exposure.
Where foreign capital is being introduced, the investor should ensure that the capital inflow is properly documented through the authorised-dealer banking system and that the eCCI is obtained and preserved. Proper documentation is particularly important because evidence of capital importation may be required for subsequent foreign-exchange repatriation and divestment.
The Nigerian portfolio company should be modelled for Companies Income Tax (CIT), applicable withholding taxes, VAT, transfer-pricing obligations, and the new Development Levy. The Nigeria Tax Act 2025 generally taxes companies other than qualifying small companies at 30%, while imposing a 4% Development Levy on assessable profits of companies within the statutory charging provisions, subject to specified exclusions.
Tax diligence should therefore extend beyond historical CIT compliance. Sponsors should examine related-party financing, management fees, technical services, intellectual-property arrangements, guarantees and other intra-group transactions for transfer-pricing, deductibility and withholding-tax consequences.
The tax status of any incentives enjoyed by the target should also be confirmed, together with the conditions for retaining those incentives after the acquisition.
The tax treatment of an exit must be modelled separately for direct and indirect disposals. Under the Nigeria Tax Act 2025, chargeable gains of companies are generally taxed at the applicable corporate tax rate, currently 30% for companies other than small companies. However, the Act contains specific exemptions and thresholds for certain disposals of shares in Nigerian companies. Accordingly, a sponsor should not simply assume that every corporate share disposal will produce a 30% tax liability.
The reforms are particularly significant for offshore structures. Nigeria’s taxing rights can extend to specified indirect disposals where shares or comparable interests in a foreign entity derive more than the statutory proportion of their value from Nigerian entities, immovable property or other Nigerian chargeable assets, or where an indirect transaction results in the relevant change in ownership structure. Consequently, selling shares in an offshore holding company can, in appropriate circumstances, generate Nigerian tax consequences even though the Nigerian operating company’s shares are not directly transferred.
The exit analysis should therefore consider the identity and tax residence of the seller, the direct and indirect ownership chain, the source and composition of the asset’s value, the relevant statutory look-back period, available exemptions, treaty provisions, beneficial ownership and substance, and the documentation required for foreign-exchange repatriation.
For private equity sponsors, the practical lesson is clear: tax planning can no longer be confined to the Nigerian operating company or postponed until the sale process begins. The tax consequences of the eventual exit should be modelled when the investment is first structured.
The principal exit routes include trade sales, secondary buyouts, public listings and shareholder or company-led liquidity transactions, subject to the legal and regulatory constraints applicable to each structure.
Regardless of the chosen route, exit planning should begin at the entry. Change-of-control provisions, merger-control requirements, sector approvals, tax consequences, shareholder transfer restrictions and foreign-exchange repatriation should be identified well before the sale process begins.
Nigeria continues to offer significant opportunities for private equity, but the rules governing those investments are changing, particularly in the areas of securities regulation, dispute resolution and taxation. The Nigeria Tax Act 2025 has made tax considerations especially important, with corporate chargeable gains generally subject to the applicable corporate tax rate and specified indirect disposals capable of creating Nigerian tax exposure. Together with the Development Levy, VAT and withholding-tax changes, these developments mean that the legal and tax consequences of an investment must be considered from the outset, rather than addressed only when an exit is approaching.
Ultimately, successful private equity investing in Nigeria is not simply about finding the right company or negotiating the right price. It is about building an investment structure that can withstand legal, regulatory, tax, and commercial challenges throughout its life. For sponsors, the best form of de-risking is therefore to identify potential problems early, address them through careful structuring and due diligence, document the agreed protections properly, and plan the exit from inception. Where properly executed, this turns legal and regulatory compliance from a box-ticking exercise into a genuine part of investment strategy and value protection.
