Full List: 50 Exemptions and Relief Under the New Tax Reform Law.

Taiwo Oyedele

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The Nigerian government, under recent tax reform legislation, has sought to shift the tax burden away from low-income individuals and small businesses, while broadening the tax base, simplifying administration and encouraging investment.

One of the core objectives is to “not tax poverty” by exempting very low-income earners and curtailing nuisance levies. At the same time, the law introduces new reliefs and thresholds designed to bolster entrepreneurship, boost manufacturing, export-oriented firms and small and medium enterprises (SMEs). For instance, individuals earning below a defined annual threshold are now entirely exempt from personal income tax; small businesses under a turnover threshold are exempt; and certain goods and services deemed essential are zero-rated or exempt from value added tax (VAT).

In addition, the new tax law consolidates or replaces multiple levies (such as tertiary education tax, IT levy) with a simpler development levy.

Reliefs for capital expenditure and export-based companies are also introduced. Altogether, these exemptions and reliefs aim to encourage formalisation of the economy, improved compliance, and fairness in tax treatment across citizens and businesses.

Below is a full list of 50 exemptions/reliefs under the new tax reform law:

1. Individuals earning up to ₦800,000 annually are exempt from personal income tax.
2. Small businesses with annual turnover of ₦50 million or less are exempt from company income tax or certain income taxes.
3. VAT exemption on essential goods and services, including certain food items, medical services, pharmaceuticals, educational fees etc.
4. Increased threshold for tax-exempt gain from sale of shares in Nigerian companies to ₦150 million in any 12-month period (provided gains do not exceed ₦10 million) before capital gains tax applies.
5. Relief / tax credit for “Economic Development Incentive” (EDI) allowing eligible companies to claim a tax credit of 5% per annum for 5 years on qualifying capital expenditure.
6. Exemption / relief for free-zone companies exporting goods/services (free zones) – some tax exemptions retained for exports up to defined proportions.
7. Exemption from the minimum tax (0.5% of turnover) for a company with no taxable profits under certain conditions.
8. Consolidation of multiple levies into a single “Development Levy” – relief from having to compute multiple overlapping levies.
9. Exemption of employees of start-ups and technology-driven service providers from certain income tax provisions (as proposed).
10. Exemption for individuals in wage-employment earning under the minimum wage from personal income tax (implicitly through threshold).
11. Rent relief allowance for taxpayers who pay rent (e.g., 20% of annual rent or capped amount) as a relief from taxable income.
12. Increased tax-exemption threshold for compensation for loss of employment or injury raised from ₦10 million to ₦50 million.
13. Exemption of certain informal traders or micro-enterprises through simplified rules and reliefs.
14. No withholding tax deduction requirement on business income of small businesses under the threshold.
15. Exemption for certain charitable, educational or religious organisations (non-commercial earnings) from tax.
16. Relief for low-income earners via removal of tax component for those defined as poor/earning below threshold.
17. Exemption of goods/services in free zones from certain taxes for export purposes (subject to conditions).
18. Transitional reliefs where previous “pioneer” tax holiday incentive replaced by EDI but some transitional exemptions preserved.
19. Relief/ exemption for companies whose effective tax rate falls below a minimum threshold (top-up tax applies rather than full tax).
20. Exemption of certain prizes, winnings, grant or awards from tax under specific conditions (though taxed in new regime, relief may apply).
21. Exemption of VAT on export of goods (subject to conditions).
22. Exemption of VAT on electricity and other utilities used by low-income households (within essential goods exemption).
23. Exemption of educational books and materials from VAT.
24. Exemption of medical equipment and services from VAT.
25. Exemption of tuition fees for education services from VAT.
26. Exemption for individuals whose total income falls below the defined threshold (₦800,000). (Repeats item 1 but emphasises relief nature)
27. Exemption of small business owners from paying income tax on their businesses under threshold. (Similar to item 2)
28. Exemption of informal sector traders via simplified tax rule and reduced burden. (similar to item 13)
29. Exemption for relief allowance on rent for employees paying rent (see item 11)
30. Relief for SMEs via increased threshold from ₦25 million to ₦50 million turnover for exemption.
31. Relief for capital gains where gains do not exceed certain limits (see item 4)
32. Exemption of share-transfers below certain value from tax. (relates to item 4)
33. Relief for eligible companies with qualifying capital expenditure purchased within five years starting production date. (item 5)
34. Exemption of multiple overlapping nuisance taxes and levies – streamlining relief.
35. Exemption of minimum tax for companies with no taxable profit (item 7)
36. Relief via absence of withholding tax deduction requirement on small enterprises (item 14)
37. Exemption of certain export earnings of free-zone companies (item 17)
38. Exemption of certain goods/services from VAT to protect vulnerable populations (item 3)
39. Relief to promote entrepreneurship via tax-free status for some start-ups (item 9)
40. Relief for low-income households via full exemption from income tax (reinforcement of item 16)
41. Exemption for non-commercial incomes of religious, charitable, and educational bodies (item 15)
42. Relief via rent relief allowance for taxpayers who pay rent (item 11)
43. Exemption for transfer pricing/international indirect share transfer rules with relief thresholds (item 4/19)
44. Relief via increased exemption threshold for compensation for loss of employment or injury (item 12)
45. Exemption of informal sector operators from certain rigid tax procedures (item 13)
46. Relief via consolidation of levies to reduce compliance burdens (item 8/34)
47. Exemption of low-income wage earners (item 10)
48. Relief for encouraging export-oriented firms via tax exemptions (item 17)
49. Exemption of goods in free zones from some taxes for export to customs territory (item 6/17)
50. Relief for eligible capital expenditure via tax credit (item 5/33)

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