On December 31, 2020, the President of Nigeria signed the Finance Act 2020 (the "Act") into law. The Act amended fourteen federal tax and finance legislations and came into effect on  January 1, 2021. The provisions of the Act are in line with the Government's agenda to improve the ease of doing business in Nigeria, promote investments and develop key sectors of the economy.

The table below highlights some of the salient provisions of the Act.

Applicable Section

Legislation Affected


Section 25

Personal Income Tax Act

Profits from trades or businesses of non-resident "individuals" providing technical, management and consultancy services to Nigerians shall be deemed to be derived from Nigeria and subject to personal income tax provided they have significant economic presence as declared by the Minister of Finance.


Section 30



Individuals who earn the national minimum wage or lower, are exempt from paying personal income tax on the wages earned.


Section 23

Industrial Development (Income Tax Relief) Act

Small or medium-sized companies with annual gross turnover of between 25 Million to 100 Million Naira, engaged in primary agricultural production such as raw or semi-processed goods, live animals and their direct produce, all kinds of fish and forestry products, may apply for tax exemption for a period of 4 years, in the first instance.

Section 60

Companies and Allied Matters Act 2020 (CAMA)

The law requires that dividends which are unclaimed by shareholders of private companies,  after a period of 12 years should be shared among the shareholders as profit. In the case of public li companies quoted on the Nigerian Stock Exchange, unclaimed dividends shall be transferred to the Unclaimed Funds Trust Fund after a period of 6 years and shall be a debt owed by the federal government which can be claimed by the shareholder subsequently.

Section 48

Stamp Duties Act

The introduction of the Electronic Money Transfer Levy of N50 (Fifty Naira) imposed on electronic transactions exceeding the sum of N10,000  in any financial institution.

Section 34

Tertiary Education Trust Fund Act

Small companies (as defined in CAMA [i]) are exempted from payment of the tertiary education tax.

Section 43

Value Added Tax Act (VATA)

Non-residents individuals are obligated to register under the VATA where they make a taxable supply of goods or service in Nigeria and obtain a Tax Identification Number.

Section 45


Commercial aircrafts, engines and spare parts, air transportation with registered airlines and lease of agricultural equipment are goods and services which are now exempt from VAT.


Section 13

Companies Income Tax ("CIT") Act

The minimum CIT for companies which have recorded a loss or no profit between the period of 1st January 2020 and 31st December 2021 has been reduced to 0.25% of the annual gross turnover of the company as opposed to the otherwise applicable 0.5%.


This relief was created to support businesses affected by the COVID 19 pandemic.

Section 16


All non-resident companies deriving profit from Nigeria are now required to submit audited financial statements identifying their Nigeran operations to the tax authorities.

Section 38

Customs and Excise Tariff (Consolidation) Act

Import duties for the following goods have been reduced as follows:

(i) Tractors, from 35% to 5%

(ii) Cars and motor vehicles for the transport of persons, from  30% to 5%

(iii) Vehicles for the transportation of above 10 people or goods, 35% to 10%.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.