SALE AND TRANSFER OF ASSETS AMONG RELEVANT PARTIES IN BUSINESS REORGANIZATIONS AND RESTRUCTURING UNDER NIGERIA’S 2025 TAX LAWS
Restructuring is a common strategic tool deployed by businesses globally to improve operational efficiency, enhance competitiveness, or respond to financial, market, and regulatory developments. Such restructuring, whether involving mergers, spin-offs, carve-outs, or share transfers, enables companies to adapt to changing business environments and realign with long-term strategic goals .
In Nigeria, restructuring activities are often driven by factors such as evolving market dynamics, efforts to align group structures with core operations, and regulatory reforms. However, while restructuring may serve commercial and operational objectives, such restructuring often triggers a range of tax considerations including tax treatment of asset transfers and share transfers .
The Nigeria Tax Act 2025 (NTA 2025), effective from 1 January 2026, introduces amendments that directly affect the tax treatment of business restructuring transactions in Nigeria . This article highlights the erstwhile tax framework applicable to restructuring in Nigeria, the key changes introduced by the NTA 2025, the implications for businesses, and practical steps for compliance.
The Erstwhile Tax Regime
Under the erstwhile tax regime, businesses undertaking restructuring in Nigeria typically evaluated the provisions of the Companies Income Tax (CIT) Act, Petroleum Profits Tax (PPT) Act, Capital Gains Tax (CGT) Act, Value Added Tax (VAT) Act, and Stamp Duty (SD) Act, as amended, to understand the tax consequences for such restructuring transactions .
Transfer of Assets Employed in the Business
Under the CIT Act as amended, Section 29(9) stipulated that where a trade or business carried on by a company is sold or transferred to a Nigerian company for the purposes of better organisation of that trade or business or the transfer of its management to Nigeria, and any asset employed in such trade or business is sold or transferred, tax waivers/concessions to reorganizations were available .
Key conditions under the erstwhile regime:
Related party requirement: One of the companies must have control over the other, or both companies are controlled by some other person or are members of a recognized group of companies, for a continuous period of at least 365 days prior to the date of the reorganisation .
Transfer value: Any asset employed in such trade or business and transferred would be deemed to have been transferred at a value equal to the residue of the qualifying expenditure—the Tax Written Down Value (TWDV) .
Available tax waivers included:
Exemption from the application of cessation and commencement rules in respect of the trade or business being sold or transferred and the new business, respectively
Transfer of assets at a value equal to the TWDV meant no balancing charge or allowance would arise on the disposal of the relevant assets
Clawback provision: If the acquiring trade or business disposed of the assets so transferred within 365 days of the transaction date, the tax concessions previously granted would be withdrawn .
Sector-Specific Provisions
Petroleum Operations: Section 17 of the PPT Act also envisaged business restructuring between companies engaged in petroleum operations. The provision was similar to that contained in Section 29(9) of the CIT Act. However, this section did not impose the minimum holding period of 365 days and clawback provision like under CITA .
VAT and CGT Waivers: Sections 42 and 32 of the VAT Act and CGT Act as amended also provided for VAT and CGT waivers where certain conditions were met. The relevant conditions outlined in the VATA and CGTA were similar to those in the CITA .
Stamp Duty: Section 105(1) of the Stamp Duty Act also provided an exemption from stamp duty on qualifying restructuring transactions .
What Has Changed Under the NTA 2025
The NTA 2025 introduces updates and clarifications that directly impact how business restructuring transactions are treated for tax purposes in Nigeria. Specifically, the Act has provided clearer guidance on tax waivers in restructuring transactions where the businesses or trades involved continue as going concerns .
Section 190: Business Restructuring Relief
From 1 January 2026, Section 190 of the Nigeria Tax Act 2025 provides tax-neutral treatment for qualifying business restructurings—allowing companies to adapt efficiently without immediate tax liability on internal transfers .
Qualifying Restructurings:
Section 190 applies to genuine commercial reorganisations, including:
Mergers of companies within the same group
Transfers of assets between group entities
Demergers or spin-offs creating viable independent businesses
Share-for-share exchanges in takeovers
Tax-Neutral Treatment:
Qualifying transfers are treated as occurring at book value:
No capital gains tax on asset disposal
No balancing charges or allowances triggered
Stamp duties and VAT relief where applicable (cross-reference to incentive exemptions)
Carry-forward of losses and allowances to successor entity
Conditions for Relief:
Restructuring must be for commercial reasons, not principally tax avoidance
Continuity of ultimate ownership (typically 75% or more)
Business continues in Nigeria
Approval or notification to Nigeria Revenue Service may be required
Anti-Abuse Safeguards:
Relief denied if principal purpose is tax avoidance (principal purpose test)
Claw-back possible if conditions breached post-restructuring
Section 189: Three Scenarios for Restructuring Transactions
Section 189 of the NTA outlines three scenarios relating to the restructuring of trades or businesses, each with different tax implications and waivers .
Scenario 1: Merger of Two or More Trades or Businesses
This covers instances where two or more existing trades or businesses are combined to form a single, continuing/surviving trade .
Tax Treatment:
| Aspect | Treatment |
|---|---|
| Commencement/Cessation Rules | Do not apply to the new/surviving business or the business that ceased as a result of the merger |
| Chargeable Gains | On assets transferred to the new/surviving trade or business—not taxed |
| Asset Valuation | Assets deemed transferred at the residue of qualifying capital expenditure on the day following the merger |
| Capital Allowances | Apply on the remaining useful life of the assets transferred |
| Unutilised Capital Allowances | Available for use of the new or surviving trade or business |
| Unrelieved Losses | Available to the surviving trade or business |
| Withholding Tax Credits | Available to the surviving trade or business |
Scenario 2: Sale or Transfer of a Trade or Business Resulting in Cessation
This covers instances where a trade or business is sold or transferred, and this leads to the cessation of such business or trade .
Tax Treatment:
| Aspect | Treatment |
|---|---|
| Cessation Rules | Apply to the trade or business sold or transferred |
| Chargeable Gains | Accruing on assets transferred will be taxed |
| Asset Valuation | Recognised at actual transfer or sale value |
| Unutilised Capital Allowances | Not available in the new/surviving trade or business |
| Unrelieved Losses | Not transferred to the acquiring business |
| Withholding Tax Credits | Not transferred to the acquiring business |
Implications for M&A Transactions: A buyer acquiring a business under this structure will not have access to the seller’s tax assets. Where the commercial value of the business is tied to its tax attributes, a straight business transfer may not achieve the intended outcome. This should be addressed early in the transaction process, particularly where the buyer’s financial model assumes the use of existing tax assets .
Scenario 3: Sale or Transfer of a Business Asset Without Cessation of Business
This refers to where a specific asset is sold or transferred without the cessation of the trade or business, and where the parties agree to transfer the asset at a value not exceeding the sum of its residue of the qualifying capital expenditure and any unutilised capital allowance of the asset .
Tax Treatment:
| Aspect | Treatment |
|---|---|
| Capital Allowances | Apply only to the residue of the asset in the hands of the acquiring business |
| Unutilised Capital Allowance | Available to the acquiring entity |
| Transferor’s Entitlement | Cannot claim any part of the unutilised capital allowance on transferred asset after the transaction |
| Chargeable Gains | On the transferred asset—not taxed |
Practical Application: This provision is relevant for intra-group transfers, restructuring, carve-outs, and pre-completion reorganisations where parties can control the transfer value. It allows specific assets to be moved without triggering immediate tax costs, but only where the transfer value is aligned with the tax value. Transaction documents should clearly set out the basis of valuation and the allocation of capital allowance entitlements post-transfer .
Key Improvements Under the NTA 2025
Elimination of 365-Day Holding Requirement:
The NTA 2025 has eliminated the provisions that restricted tax waivers to restructuring transactions between related parties with a 365-day minimum holding requirement. The clawback provisions found in the CITA, VATA, and CGTA have also been removed. This is a welcome development that aligns the law more closely with commercial realities .
VAT Exemption:
Section 189 expressly provides that VAT would not apply to any restructuring transactions conducted in accordance with the provisions of the NTA .
Clear Framework for Tax Attributes:
The NTA 2025 provides a clear framework for the treatment of tax assets in restructuring transactions. The transferability of tax assets—such as unrelieved losses, unutilised capital allowances, and withholding tax credits—is now expressly tied to whether the relevant trade or business continues as a going concern .
Key Changes to Capital Gains Tax (CGT)
Integration of CGT into Income Tax System
Under the NTA 2025, capital gains are fully integrated into the income tax system. Gains from asset disposals between 1 January and 31 December 2025 are assessed under the repealed Capital Gains Tax Act, while the new integrated regime fully commenced on 1 January 2026 .
New CGT Rates:
| Taxpayer | Rate |
|---|---|
| Companies | Prevailing company income tax rate (often 30%) |
| Individuals | Folded into personal income tax bands (up to 25%) |
Previously, capital gains were taxed at a flat 10% .
Expanded Scope of Chargeable Assets
The NTA 2025 broadens the definition of chargeable assets to include:
Land and buildings
Shares
Digital assets, cryptocurrencies, tokens
Various forms of property
Rules on indirect transfers—especially offshore deals involving Nigerian assets—have been tightened
Offshore Share Transfers
The NTA has introduced sweeping reforms that close long-standing offshore tax loopholes. The new provisions now capture indirect transfers of Nigerian assets made through offshore share sales—a move that compels international investors to urgently reassess their holding company (HoldCo) structures and cross-border tax exposure .
Key Provision: Shares or interests in a foreign entity will now be deemed to be situated in Nigeria for tax purposes if more than 50% of their value is derived from Nigerian assets .
Impact: The disposal of an offshore company that owns Nigerian assets may now trigger CGT in Nigeria, effectively ending the practice of avoiding Nigerian CGT by structuring transactions as offshore share transfers .
Rollover Relief
Where a person disposes of a business asset and acquires a replacement business asset within 12 months before or after the disposal, the gain on the old asset may be deferred (rolled over) into the base cost of the new asset .
Qualifying classes of business assets include:
Land and buildings occupied and used for the trade
Fixed plant and machinery
Ships, aircraft, hovercraft
Goodwill
The classes must match—e.g., land replaced with land, plant with plant. Mixed-class rollover requires FIRS confirmation .
Exemptions and Reliefs
Despite expanding the tax net, the reforms include several reliefs :
Exemptions apply to:
Qualifying principal private residences
Low-value personal effects
Corporate reorganisations, mergers, and restructuring
Pension funds and other institutional investors
Gains where annual proceeds do not exceed ₦150 million and the gain is below ₦10 million
Reinvestment of proceeds into shares of Nigerian companies
Notification and Compliance Requirements
Pre-Restructuring Notification
The NTA requires that the relevant tax authority be notified prior to the restructuring of any trade, business, profession, or vocation. From a transaction perspective, this should be treated as a pre-completion process. Where the parties intend to rely on the restructuring provisions, notification should be factored into the transaction timetable. This may also need to be aligned with other regulatory approvals and filings .
Post-Transaction Updates
The NTAA imposes a general obligation on taxable persons to notify the relevant tax authority of any changes in their particulars within 30 days of such change. This includes changes arising from M&A transactions, such as :
Sale, acquisition, takeover, or merger of a business
Changes in ownership (including persons holding 5% or more of the share capital or beneficial owners)
Business address changes
Other key identifying information
Practical Implication: M&A transactions may trigger both a pre-restructuring notification and a post-transaction update requirement, depending on the nature of such a transaction. Failure to comply may create uncertainty as to the entitlement to benefit from the reliefs provided under the NTA .
Changes in Company Particulars
A company that undergoes a restructuring must notify the relevant tax authority of changes in its particulars within 30 days. Key changes requiring notification include :
Changes in ownership (including persons holding 5% or more of share capital or beneficial owners)
Changes in business address
Changes in nature of business
Changes in company name
Changes in directors or trustees
Special Considerations
Upstream Oil and Gas Restructurings
For companies engaged in upstream petroleum operations, the NTA introduces a specific rule on the commencement of accounting periods following a restructuring. Where a restructuring results in the formation of a new company and the cessation of the old business, the acquiring company’s accounting period will commence on the date of the transfer or such date within the calendar month in which the sale or transfer takes place, as may be agreed with the Nigeria Revenue Service .
Small Business Considerations
The NTA defines a small company as a business that earns a gross turnover of ₦100,000,000 or less per annum with a total fixed asset not exceeding ₦250,000,000. Companies that do not qualify as small companies are considered large companies .
Real Estate Investment Companies
Rental or dividend income due to real estate investment companies (duly registered with the Securities and Exchange Commission) are exempt from company income tax where at least 75% of the income is to be distributed to its shareholders within 12 months following the financial year end .
Practical Implications for Businesses
1. Re-Price and Reassess Pending Disposals
Companies face materially higher CGT exposures, so M&A pricing, sale agreements, and post-deal structures should be revisited .
2. Review Offshore Structures
Companies with offshore structures tied to Nigerian operations must urgently review their arrangements to assess exposure and compliance risk. Many existing offshore setups may no longer be defensible under the new framework .
3. Consider SPV Structures
Investors should consider setting up Special Purpose Vehicles (SPVs) dedicated solely to holding Nigerian assets, rather than embedding them within larger offshore holding structures. This could simplify compliance and minimise CGT exposure .
4. Use Documented Rollover/Reorganisation Reliefs
These remain valuable for tax-efficient restructurings. Qualifying restructurings provide tax-neutral treatment with no immediate tax liability on internal transfers .
5. Factor Notification Requirements into Transaction Timelines
The requirement to notify the tax authority prior to restructuring should be treated as a pre-completion process. This should be factored into the transaction timetable and aligned with other regulatory approvals .
6. Maintain Proper Documentation
Thorough review of pending disposals, meticulous record-keeping of costs, proper documentation for relief claims, and careful treatment of digital assets are essential .
Frequently Asked Questions
Q: What is Section 189 of the NTA 2025?
A: Section 189 of the Nigeria Tax Act 2025 provides the framework for tax treatment of business restructuring transactions. It outlines three scenarios: merger of trades or businesses, sale or transfer resulting in cessation, and asset transfer without cessation .
Q: What are the key conditions for tax-neutral restructuring relief?
A: Qualifying restructurings must be for genuine commercial reasons, not tax avoidance. There is continuity of ultimate ownership (typically 75% or more), the business continues in Nigeria, and approval or notification to the Nigeria Revenue Service may be required .
Q: Does VAT apply to business restructuring transactions?
A: Section 189 expressly provides that VAT would not apply to restructuring transactions conducted in accordance with the provisions of the NTA .
Q: What happens to unrelieved losses and tax attributes in a restructuring?
A: In a merger scenario, unutilised capital allowances, unrelieved losses, and withholding tax credits of the merging trades or businesses are available to the surviving trade or business. However, in a sale or transfer resulting in cessation, these tax attributes do not transfer .
Q: What is the notification requirement for restructuring transactions?
A: The NTA requires that the relevant tax authority be notified prior to the restructuring of any trade, business, profession, or vocation. This should be treated as a pre-completion process and factored into the transaction timetable .
Q: What is the CGT rate under the NTA 2025?
A: Under the NTA 2025, capital gains are integrated into the income tax system. Companies face tax at the prevailing company income tax rate (often 30%), while individuals have gains folded into their personal income tax bands (up to 25%). Previously, CGT was a flat 10% .
The Bottom Line
The NTA 2025 represents a fundamental overhaul of Nigeria’s tax framework for business restructuring and asset transfers. For businesses contemplating reorganizations, the reforms bring both opportunities and new compliance obligations:
Key Opportunities:
| Opportunity | Benefit |
|---|---|
| Section 190 Tax-Neutral Relief | No CGT on internal transfers, no balancing charges, carry-forward of losses |
| Elimination of 365-Day Rule | No minimum holding period requirement for related parties |
| VAT Exemption | VAT does not apply to qualifying restructuring transactions |
| Clear Tax Attribute Framework | Clear rules on transferability of losses, allowances, and credits |
| Rollover Relief | Defer gains by reinvesting in qualifying replacement assets |
Key Compliance Obligations:
| Obligation | Requirement |
|---|---|
| Pre-Restructuring Notification | Notify tax authority prior to restructuring |
| Post-Transaction Updates | Notify changes within 30 days |
| Commercial Purpose Test | Must be for genuine commercial reasons, not tax avoidance |
| Ownership Continuity | Maintain 75%+ continuity of ultimate ownership |
| Documentation | Properly document valuation basis and tax attribute allocation |
The reforms make the tax regime more predictable and aligned with commercial realities. Businesses that treat compliance as architecture—built in from the foundation, not bolted on later—will be stronger, more fundable, and harder to disrupt.
Your job is to be prepared. Understand the new rules. Classify your restructuring correctly (merger, cessation, or asset transfer without cessation). Claim the available reliefs. Maintain proper documentation. Comply with notification requirements. Seek professional guidance.
With the right approach and the right partner, you can turn restructuring from a tax headache into a strategic advantage.
Suggested Reading from Our Blog
Regulatory Compliance In Nigeria – Comprehensive overview of tax compliance requirements
Tax Strategies and Planning – Structure your business to optimize your tax position
Business Restructuring Verses Reorganization – Further insights on restructuring strategies
Reference Links / Sources
Vlex – Business Restructuring: The Tax Angle – Comprehensive analysis of erstwhile and new tax framework for restructuring in Nigeria
Mondaq – Business Restructuring: The Tax Angle – Detailed breakdown of Section 189 scenarios and tax implications
LinkedIn – Section 190 Business Restructuring Relief – Summary of tax-neutral treatment for qualifying restructurings
BusinessDay – New tax act targets offshore share transfers – Analysis of indirect transfer provisions and HoldCo structures
Reanda International – Key Changes to CGT under NTA 2025 – Overview of CGT rate changes, expanded scope, and reliefs
UUBO – The Changing Tax Landscape – Detailed analysis of Section 189 provisions, notification requirements, and practical implications
Tribune Online – 2025 Filing Season: Tax experts warn – Transitional arrangements, CGT rates, and common filing pitfalls
Open Accountants – Nigeria CGT Overview – Rollover relief provisions and qualifying asset classes
How Qeeva Advisory Helps with Business Restructuring
At Qeeva Advisory, we understand that navigating the tax implications of business restructuring and asset transfers can be complex. Our team of experienced professionals specializes in helping Nigerian businesses structure their reorganizations efficiently while ensuring full compliance with the NTA 2025.
Our Core Services
Advisory Services Nigeria – Our advisory professionals help you understand the tax implications of your restructuring, classify your transaction correctly under Section 189, and develop strategies to maximize available reliefs.
Tax Strategies and Planning – We help you structure your business to optimize tax outcomes in restructuring, identify qualifying reliefs, and ensure you do not trigger unnecessary tax liabilities.
Regulatory Compliance – We ensure your business meets all notification and filing requirements, including pre-restructuring notifications and post-transaction updates.
Risk Management – We help you identify and manage risks associated with restructuring, including CGT exposure, tax attribute transferability, and compliance with anti-abuse provisions.
Business Restructuring Verses Reorganization – Further insights on restructuring strategies and implications.
Let’s Talk About Your Restructuring Needs
Navigating business restructuring under the NTA 2025 can feel complex. At Qeeva Advisory, we understand the challenges businesses face in structuring reorganizations efficiently while ensuring full compliance with the new tax laws.
Whether you need help with merger structuring, asset transfer planning, or compliance support, we are here to help.
📞 Call us: (+234) 802 320 0801, (+234) 807 576 5799
📧 Email: info@qeeva.com
📍 Visit us: 5, Ishola Bello Close, Off Iyalla Street, Alausa, Ikeja, Lagos, Nigeria
Contact us today to schedule a consultation. Let us help you navigate your restructuring with confidence.
Your journey to tax-efficient restructuring starts with a conversation. Let’s talk.
