On January 13, 2020, Nigeria’s President signed into Law the 2019 Finance Bill, which introduces key changes to the country’s corporate tax regime.
The new law amends the provisions of the Companies Income Tax Act to curb base erosion and profit shifting (BEPS) and broaden the triggers for domestic taxation of income earned by non-resident companies in Nigeria through dependent agents and via online market platforms.
A general exemption from corporation tax is provided for small companies earning lower than NGN 25 million turnover in any tax year. However, such companies would have to deduct withholding tax on dividends distributed.
Corporate income tax for companies with revenues between NGN 25 million and NGN 100 million is reduced from 30 percent to 20 percent.
Large companies, i.e. companies with annual turnover greater than NGN 100 million, will continue to pay the standard corporate income tax rate of 30 percent.
Finally, the law introduces thin capitalization rules aimed at preventing profit shifting and potentially increasing tax revenues by restricting interest expense deduction to 30 percent of EBITDA, with any excess interest expense to be carried forward up to five years.
See Press Release and Finance Bill, 2019