Lagos, Nigeria — Nigerian companies benefiting from tax incentives are facing stricter compliance requirements under new tax administration rules, raising fears of losing reliefs and increasing operational costs.
Okay News reports that the reforms, contained in Sections 26 and 27 of Nigeria‘s tax framework, require companies in priority sectors to file annual tax incentive returns separate from regular income tax filings. “This is no longer business as usual, where you just enjoy incentives,” said Adeyemi Michael, tax partner at Andersen. “Once you benefit from specialised tax incentives, you are now required to file additional returns beyond your annual income tax filings.”
Michael explained that the new provisions introduce a structured reporting system that allows authorities to track how firms utilise tax incentives in real time. The stricter rules come as concerns grow over how much tax incentives cost Nigeria. Toluwalogo Odutayo, a tax partner at Deloitte Tax & Regulatory Services, said Nigeria loses about N6 trillion ($3.7 billion) annually to tax incentives, raising questions about whether these reliefs deliver commensurate economic value.
Under the new framework, companies must submit incentive returns to relevant state tax authorities, which must then transmit the data to federal authorities, creating a centralised repository. Michael noted this replaces the previous system, where companies were often invited years later to justify their use of incentives during investigative reviews. “Instead of waiting for periodic probes, the expectation now is that this information is already available to the authorities as part of routine filings,” he said.
The government is replacing the Pioneer Status Incentive with a new Economic Development Tax Incentive, designed to better align tax reliefs with sectors of national priority. A PwC report said the transition signals a move away from broad-based exemptions toward more targeted and performance-driven incentives. Marvis Oduogu, Lead, Taxation at Stren & Blan Partners, said companies have already begun adjusting operations in response, restructuring, merging with complementary businesses, and reorganising record-keeping to meet eligibility requirements.
Failure to meet the new reporting standards could result in companies losing access to tax benefits, effectively increasing their tax liabilities and weakening margins. The changes are adding to operational complexity at a time when firms are already contending with inflation, currency volatility, and high financing costs.
