The Federal Inland Revenue Service (FIRS) has clarified that the much-debated 4% Development Levy on imported goods is not a new or additional burden on businesses, noting that it is a consolidation of multiple existing charges designed to simplify compliance, reduce unpredictability and strengthen Nigeria’s investment climate.
The Service gave the explanation in a statement issued on Wednesday, where it noted that the new Nigeria Tax Act (NTA) and Nigeria Tax Administration Act (NTAA) have generated significant public reactions largely because of “misinterpretations,” especially around the new levy structure.
The agency stressed that the reforms are aimed at enhancing economic competitiveness, protecting incentives and securing long-term fiscal stability.
This explanation comes amidst serious concerns by individual Nigerians and businesses that the government would be placing more tax burden on them as it implements new tax laws from January 2026.
According to the agency, the 4% levy replaces a long list of fragmented charges that businesses previously paid separately, including Tertiary Education Tax, NITDA Levy, NASENI Levy, and Police Trust Fund Levy.
“This consolidation reduces compliance costs, eliminates unpredictability and ends the era of multiple agency-driven levies. The law also exempts small businesses and non-resident companies, offering protection to firms most vulnerable to economic shocks,” the FIRS explained.
Another major element of the reforms is the introduction of a 15% minimum Effective Tax Rate (ETR) for large domestic and multinational companies.
While some businesses have expressed worry about the impact, FIRS said the measure aligns with a global tax agreement endorsed by more than 140 countries under the OECD/G20 deal.
The agency warned that without adopting this rule, Nigeria risked losing revenue to the “Top-Up Tax” mechanism, where the home country of a multinational collects additional taxes if the host country charges below 15%.
By implementing it locally, Nigeria ensures that those revenues remain within its borders. The 15% ETR also applies to large domestic companies to maintain fairness and discourage profit-shifting.
The reforms equally introduce a modernized approach to taxing capital gains, now referred to as chargeable gains.
One of the standout provisions is the new reinvestment relief, which exempts investors from tax on gains if they reinvest proceeds from share sales into another Nigerian company within the same year.
The new rules also update loss treatment mechanisms, exempt low-value transactions to protect small investors and close loopholes that previously allowed companies to mask business income as capital gains.
In November, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, had to clarify to the investing community that the new Capital Gains Tax (CGT) framework would not retroactively tax investment gains made before 2026.