TAXATION OF SPECIALISED BUSINESSES UNDER THE NIGERIA TAX ACT (2025)

Introduction

The Nigeria Tax Act (NTA) 2025, which took effect on 1 January 2026, represents one of the most significant fiscal reforms in Nigeria’s history. The Act consolidates multiple tax statutes—including the Companies Income Tax Act, Personal Income Tax Act, and Petroleum Profits Tax Act—into a single, unified legislative framework.

For specialised businesses—insurance companies, oil and gas operators, shipping companies, and professional service firms—the Act introduces sector-specific tax rules that depart from general corporate tax treatment. Tomi Akinwale, a tax expert, explained the logic behind specialised tax treatment: “Insurance is not taxed like other businesses because premiums are policyholders’ funds, not distributable profit”.

This comprehensive guide examines the taxation of specialised businesses under the NTA 2025, covering insurance, oil and gas, shipping, professional services, and the fiscal incentives available to each sector.

The Pain Points: Why Specialised Businesses Face Unique Tax Challenges

The One-Size-Fits-All Trap

General corporate tax rules often fail to account for the unique operational and income structures of specialised businesses. Insurance companies, for example, hold policyholder funds that do not constitute distributable profit. Oil and gas operators face capital-intensive operations with long investment horizons. Shipping companies operate across international borders with complex revenue streams.

The NTA 2025 addresses these realities by introducing sector-specific tax treatment, but this also creates compliance complexity for businesses accustomed to general corporate tax rules.

The Classification Conflict

Under the new regime, businesses providing professional services are explicitly excluded from the small company classification, regardless of turnover or asset size. This means that consulting firms, law practices, accounting firms, and similar businesses cannot benefit from the 0% CIT rate available to small companies, even if their turnover is below the ₦100 million threshold.

The Reporting Burden

Specialised businesses face expanded reporting and compliance obligations under the Nigeria Tax Administration framework. Insurance companies, shipping firms, and oil and gas operators are now required to file monthly returns, maintain detailed transaction records, and report significant customer transactions.

The Tax-Reporting Mismatch

The NTA 2025’s tax treatment of specialised businesses may not always align with accounting treatment. For example, the introduction of a 15% minimum effective tax rate for multinational enterprises means that tax incentives and deductions may not reduce effective tax liability below this threshold.

Small Business Classification and the Professional Services Exclusion

The General Classification

The NTA 2025 classifies companies into two categories:

The Professional Services Exclusion

The Act explicitly excludes professional services firms from the small company classification. The Act defines professional services as “services provided by an individual or a firm having specialised knowledge, skills, and qualifications in specific fields, including consulting, planning, or support services, excluding artisans or vocational services”.

Practical Implications:

Consulting firms, law practices, accounting firms, and similar businesses must pay 30% CIT regardless of turnover

Artisans and vocational service providers are not captured by this exclusion

Professional service firms must carefully assess their classification and ensure compliance with the higher CIT rate

The Minimum Effective Tax Rate

The Act introduces a 15% minimum effective tax rate for:

• Companies that are constituent entities of a multinational enterprise group

• Any other company with an aggregate turnover of ₦20 billion or more in the relevant year of assessment

Where a company’s effective tax rate falls below 15%, it must “recompute and pay an additional tax” to reach the benchmark.

Insurance Companies

Sector-Specific Tax Treatment

The NTA 2025 embeds corporate tax rules for insurance businesses into a consolidated statute, with explicit provisions recognising the unique operational and income structures of general and life insurance companies.

Section 61 of the Act represents one of the most consequential provisions for the industry, as it clearly defines how insurance businesses are to be taxed. Under this section, insurance companies are explicitly classified as either general insurance or life insurance for tax computation purposes.

Tax Treatment by Segment

General Insurance Companies:

• Taxable profit is derived from premiums and other income after deducting reinsurance costs and reserves for future claims

• Profits for taxation are calculated as if the entire premium income and investment income were derived in Nigeria, regardless of their actual source

Life Insurance Companies:

• Taxed mainly on investment income rather than premiums

• Investment and other income are treated as received in Nigeria, while expenses are deemed to have been incurred domestically

Deductibility of Reserves

The Act introduces industry-specific deductions aimed at reflecting the capital-intensive nature of insurance operations:

Life Insurance Companies:

• Permitted to deduct actuarial reserves and special reserve funds

• Special reserve funds: up to 1% of gross premium earned or 10% of net profits, whichever is higher

• Reserves must be maintained until statutory paid-up capital requirements are met

Reinsurance Companies:

• Allowed to deduct a portion of gross profits allocated to general reserve funds

• Subject to compliance with statutory minimum capital thresholds

Restrictions on Loss Offsetting

The law restricts insurers from offsetting losses across different lines of business, stating that “loss from one class shall not be allowed against the income from another class of insurance business”. This effectively limits how companies manage their tax exposure and could increase effective tax liabilities for some firms.

Tightened Reserve Treatment

The Act tightens the treatment of reserves by mandating that any excess provision not used to settle claims be added back to taxable profit in later periods. This prevents businesses from postponing taxes indefinitely.

Interaction with Other Regulatory Reforms

The insurance sector’s tax reforms are unfolding alongside other major regulatory changes, notably the Nigeria Insurance Industry Reform Act (NIIRA) 2025, which significantly raised minimum capital requirements across the industry:

Minimum Effective Tax Rate and Development Levy

Industry stakeholders have raised concerns about the cumulative fiscal impact of the reforms:

15% Minimum Effective Tax Rate: Limits the use of tax incentives to subsidise low-margin products, particularly for insurers with turnover above ₦50 billion

4% Development Levy: Consolidates previous sectoral charges including the Tertiary Education Tax, NITDA Levy, NASENI Levy, and Police Trust Fund Levy, adding a direct expense that must be recovered

Strategic Implications:

• Smaller and mid-tier insurers may face disproportionate financial strain, potentially accelerating consolidation in the sector

• Clearer tax provisions can improve predictability and long-term planning

• Enhanced compliance and alignment with global tax standards could improve credibility among foreign investors

Oil and Gas Companies

Consolidated Fiscal Structure

The NTA 2025 consolidates multiple tax statutes into a single legislative framework, creating a more unified and coherent fiscal system for the energy sector. The various taxes previously scattered across different statutes—Petroleum Profits Tax Act, Companies Income Tax Act, and related laws—are now unified under the NTA.

Hydrocarbon Tax (HCT)

The NTA maintains the dual-tax structure introduced by the Petroleum Industry Act 2021 (PIA), under which upstream petroleum companies remain liable to both Hydrocarbon Tax and Companies Income Tax.

Key Points:

• Hydrocarbon tax remains between 15% and 30%, depending on licence type

• Petroleum companies cannot deduct HCT for the purpose of computing CIT

• The NTA extends HCT to deep offshore operations, which were previously exempt under the PIA

• The applicable HCT rate for deep offshore operations is not clearly specified, introducing a degree of fiscal uncertainty

VAT on Energy Sector Supplies

The NTA maintained the standard VAT rate of 7.5% while introducing targeted exemptions and zero-rated supplies relevant to the energy sector:

Exempt Supplies:

• Oil and gas exports

• Crude oil

• Feed gas used for gas processing

Zero-Rated Supplies:

• Electricity supplied into the national grid by generation companies (GENCOs)

Gas Production Tax Credit (PTC)

The NTA formally incorporates the Gas Production Tax Credit as a primary legislation incentive. The PTC applies to the sale of non-associated gas from Greenfield Non-Associated Gas developments in onshore and shallow water terrains that achieve first commercial gas production between the commencement of the NTA and 1 January 2029.

Key Features:

• Direct reduction of tax liability (not merely reducing taxable income)

• Period: 10 years from first gas production

• Upon expiry, converts to a gas production allowance at the same rates

Production Allowance

The NTA substantially retains the production allowance framework from the PIA:

Gas Pipeline Investment Tax-Free Period

The NTA grants investors in gas pipelines a five-year tax-free period commencing after the expiration of their economic development incentive certificate. The tax-free period does not exempt natural gas transferred between streams, or natural gas liquids and LPG derived from gas—these remain subject to applicable taxes.

Economic Development Tax Credit

The NTA replaces the pioneer status incentive with the Economic Development Tax Credit (EDT Credit), a performance-linked incentive applicable to priority sectors listed in the Tenth Schedule, which includes crude oil and gas refining, electricity and gas supply, gas production and utilisation, and transportation and distribution of gas.

Key Features:

• 5% annual tax credit on qualifying capital expenditure for five years

• Credit applied directly against tax payable

• Unutilised credit may be carried forward for a further five years

• Qualifying capital expenditure thresholds range from ₦250 million to ₦200 billion depending on the sector

15% Minimum Effective Tax Rate

The introduction of a 15% minimum effective tax rate (ETR) is one of the most consequential changes for International Oil Companies and large indigenous firms:

• Aligns Nigeria with the OECD’s “Pillar Two” framework

• Where a company’s effective tax rate falls below 15% due to incentives or deductions, a top-up tax will apply to meet the threshold

• Effectively blocks tax leakage and guarantees a minimum contribution from multinational groups

4% Development Levy

The NTA introduces a consolidated 4% Development Levy on assessable profits, replacing several smaller levies including:

• Tertiary Education Tax

• NITDA Levy

• NASENI Levy

• Police Trust Fund Levy

Key Feature: The 4% levy applies only to profits subject to CIT, not to profits calculated for Hydrocarbon Tax purposes, offering some relief for core upstream operations.

Shipping and Air Transport Companies

Taxation of Non-Resident Shipping Companies

The NTA 2025 carries forward the freight tax provisions almost word-for-word from the former Companies Income Tax Act, but with stricter compliance requirements and expanded enforcement powers.

Section 18(1)-(2) of the NTA provides that “where a non-resident person carries on the business of transport by sea or air, and any ship or aircraft owned, leased or chartered by it calls at any port in Nigeria, the non-resident person is chargeable to tax on the profits arising from the carriage of passengers, mails, livestock or goods shipped from, or loaded into an aircraft or ship, in Nigeria”.

Freight Tax Rate

The minimum rate remains unchanged at 2% of gross revenue from Nigerian carriage. This applies to:

• Carriage of passengers

• Carriage of mail

• Carriage of livestock

• Carriage of goods loaded in Nigeria

Monthly Filing Requirement

A crucial revision is that the tax must now be computed, assessed, and paid on a monthly basis. This is a shift from the previous annual filing regime under CITA.

Practical Concerns:

• The shipping industry is ill-suited to such frequent assessments

• Vessels that load in Nigeria only occasionally may find monthly filing unrealistic

• The FIRS has indicated that guidance circulars will be issued to address implementation challenges

Documentation Requirements

Section 18(7) of the NTA outlines two possible approaches to documentary compliance:

Enforcement Powers

The new framework gives the Nigeria Revenue Service unprecedented powers:

Distraining Ships Without Court Approval:

• Section 61 of the NTAA arguably allows the NRS to detain vessels where the owner remains in default following an assessment

Regulatory Cooperation:

• Section 18(9) of the NTA requires agencies such as NPA and NIMASA to demand tax evidence as a condition for issuing permits or approvals

• This may be an easier enforcement tool to deploy, as delay in obtaining requisite licences could cause serious operational disruption for non-compliant companies

Time-Chartered Vessels

The treatment of time-chartered vessels remains unresolved. The NTA’s freight tax, like its predecessor, clearly targets voyage-chartered vessels whose owners are paid to carry cargo. However, hire received from time-chartered vessels may well be taxable under other provisions of the NTA.

Professional Services Companies

Exclusion from Small Company Classification

The NTA 2025 explicitly excludes businesses providing professional services from the small company classification, regardless of turnover or asset size.

Definition: Professional services refers to services provided by an individual or a firm having specialised knowledge, skills, and qualifications in specific fields, “including consulting, planning, or support services, excluding artisans or vocational services”.

Significant Economic Presence (SEP) Rules

The NTA has narrowed the circumstances under which remote services create a taxable presence in Nigeria.

Key Change: Under Paragraph 2 of the Significant Economic Presence Order 2020, remote TPMC services (Technical, Professional, Management, and Consultancy) provided to Nigerian clients automatically created SEP exposure. This provision was deleted under Section 197(d) of the NTA 2025.

Implication: Sulaiman Ishaq Olamide, a tax consultant, explained that “mere provision of TPMC services may no longer create SEP exposure for non-resident persons in Nigeria”. Foreign companies providing such services may now only be subject to withholding tax as final tax unless they create a separate SEP or Permanent Establishment in Nigeria.

Tax Filing Requirements

Non-resident companies providing services in Nigeria are still required to:

• Register for tax and obtain a Tax Identification Number under the NTAA

• Failure to comply attracts penalties of ₦50,000 in the first month and ₦25,000 for every subsequent month of default

• Nigerian companies that award contracts to unregistered foreign service providers may face penalties of up to ₦5 million

Fiscal Incentives for Specialised Businesses

Economic Development Tax Credit (EDT Credit)

The EDT Credit applies to priority sectors listed in the Tenth Schedule of the NTA:

Key Features:

• 5% annual tax credit on qualifying capital expenditure for 5 years

• Credit applied directly against tax payable

• Unutilised credit may be carried forward for a further 5 years

Road Infrastructure Tax Credit Scheme

Under Executive Order 007 of 2019, the Road Infrastructure Tax Credit Scheme incentivises private sector involvement in transport infrastructure. The NTAA reinforces this through Section 78, which grants the President discretionary power to exempt certain companies from income tax where it is deemed just and equitable.

Tax Incentives for Transportation

The NTAA now mandates priority companies to file tax returns in a structured manner, distinguishing between priority and non-priority services. This suggests that transportation firms contributing to critical infrastructure projects may be recognised for preferential tax treatment.

How Qeeva Advisory Helps with Specialised Business Tax Compliance

At Qeeva Advisory, we understand that navigating the tax rules for specialised businesses under the NTA 2025 can be complex. Our team of experienced professionals helps insurance companies, oil and gas operators, shipping firms, and professional service providers understand their tax obligations and maximise available incentives.

Our Core Services

Advisory Services Nigeria – Our advisory professionals help you understand your tax obligations under the NTA 2025, identify sector-specific rules, and develop compliance strategies.

Tax Strategies and Planning – We help you structure your specialised business to optimise tax outcomes, claim available incentives, and navigate the 15% minimum effective tax rate.

Regulatory Compliance – We ensure your business meets all filing requirements and stays in good standing with the Nigeria Revenue Service.

Bookkeeping Services – Accurate records are essential for specialised business tax compliance. Our bookkeeping services ensure your financial records are accurate and complete.

Risk Management – We help you identify and manage risks associated with specialised business taxation, including compliance risks and tax exposure.

Frequently Asked Questions

Q: What is the CIT rate for professional service firms under the NTA 2025?
A: Professional service firms are excluded from the small company classification and must pay 30% CIT, regardless of turnover or asset size.

Q: Are losses across different classes of insurance business offsettable?
A: No. The law restricts insurers from offsetting losses across different lines of business. “Loss from one class shall not be allowed against the income from another class of insurance business”.

Q: What is the freight tax rate for non-resident shipping companies?
A: The minimum rate remains 2% of gross revenue from Nigerian carriage.

Q: What is the filing frequency for freight tax?
A: The tax must be computed, assessed, and paid on a monthly basis, a shift from the previous annual filing regime.

Q: What is the Gas Production Tax Credit?
A: The PTC is a direct tax credit applying to the sale of non-associated gas from Greenfield developments, reducing tax liability directly rather than merely reducing taxable income.

Q: What is the Economic Development Tax Credit?
A: The EDT Credit replaces the pioneer status incentive, providing a 5% annual tax credit on qualifying capital expenditure for five years to companies in priority sectors.

Q: What is the 15% minimum effective tax rate?
A: Companies that are part of a multinational group or have turnover of ₦20 billion or more must recompute and pay additional tax if their effective tax rate falls below 15%.

Q: What is the 4% Development Levy?
A: A consolidated levy replacing multiple sectoral charges (TET, NITDA Levy, NASENI Levy, Police Trust Fund Levy) applicable to the assessable profits of all companies except small companies and non-resident companies.

The Bottom Line

The Nigeria Tax Act 2025 has fundamentally reshaped the taxation of specialised businesses. The reforms bring both opportunities and new compliance obligations:

Key Takeaways:

Insurance Companies: Subject to sector-specific tax treatment with restrictions on loss offsetting, tightened reserve treatment, and interaction with the Nigeria Insurance Industry Reform Act 2025.

Oil and Gas Companies: Maintain dual-tax structure (HCT + CIT), benefit from new incentives including Gas Production Tax Credit and Economic Development Tax Credit, and face 15% minimum effective tax rate.

Shipping Companies: Monthly filing requirement, expanded enforcement powers, and potential detention of vessels without court approval for non-compliance.

Professional Services: Excluded from small company classification, but TPMC services are no longer an automatic SEP trigger.

Your job is to be prepared. Understand the sector-specific tax rules. Claim available incentives. Maintain proper documentation. File on time. Seek professional guidance.

With the right approach and the right partner, you can turn specialised business tax compliance from a potential burden into a strategic advantage.

Suggested Reading from Our Blog

Tax Administration in Nigeria: Roles, Functions, Composition and Powers of JTB, NRS, SBIR, JSRC, LGRC, Tax Appeal Tribunal and the Taxes and Levies Act – Comprehensive guide to Nigeria’s tax administration landscape.

VAT & Nigeria 2025 Tax Reforms: Key Changes for Businesses – Understand VAT reforms under NTA 2025.

Tax Implications of Tangible Asset Disposals in Nigeria – Understand CGT on asset disposals under NTA 2025.

Tax Strategies and Planning – Structure your business to optimise your tax position.

Reference Links / Sources

The Guardian – FG scraps capital gains tax, keeps 30% corporate tax – Small company definition, professional services exclusion, and 15% minimum effective tax rate

BusinessDay – Nigeria’s tax overhaul tightens profit rules for insurers – Insurance sector tax treatment, loss offsetting restrictions, and reserve treatment

Mondaq – Review of fiscal incentives under NTA 2025 – Gas Production Tax Credit, production allowance, pipeline tax-free period, and EDT Credit

Andersen Nigeria – Tax reforms and non-resident shipping – Section 18 provisions on shipping and air transport taxation

China Tax – Nigeria tax law summary – EDT Credit details and qualifying capital expenditure thresholds

Independent – Insurers worry over profit erosion – Section 61 insurance taxation, reserve deductibility, compliance burden, and minimum ETR

BusinessDay – Energy sector restructuring under NTA 2025 – Hydrocarbon Tax extension to deep offshore, VAT exemptions, and dual-tax structure

BusinessDay – New tax law for ship owners and charterers – Freight tax retention, monthly filing, documentation requirements, and enforcement powers

China Tax – NTA 2025 summary – EDT Credit details and priority sector listings

TheCable – Professional services excluded from small company classification – Professional services definition and 15% minimum effective tax rate

LinkedIn – Tax reform impacts on insurance sector – 15% minimum ETR, 4% development levy, and cost pass-through effects

Independent – Oil and gas sector tax leakages – Hydrocarbon Tax rates, dual-tax structure, 15% minimum ETR, and 4% development levy

BusinessDay – Transportation sector tax provisions – Non-resident shipping taxation, monthly filing, WHT obligations, and tax incentives

Mondaq – Practical guidance for NTA 2025 implementation – Business classification, development levy, minimum effective tax rate, and EDT Credit

BusinessDay – SEP changes for foreign firms – Removal of TPMC services as SEP trigger, WHT as final tax, and registration requirements

Let’s Talk About Your Specialised Business Tax Needs

Navigating the taxation of specialised businesses under the NTA 2025 can be complex. At Qeeva Advisory, we understand the challenges faced by insurance companies, oil and gas operators, shipping firms, and professional service providers in understanding their tax obligations and maximising available incentives.

Whether you need help with sector-specific tax compliance, incentive claims, or regulatory compliance, we are here to support you.

📞 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 specialised business taxation with confidence.

Your journey to tax compliance starts with a conversation. Let’s talk.