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The short answer
This glossary defines 60 terms used in Nigeria's 2025 tax laws, from assessable profits and chargeable gains to Tax ID, Tax Ombud and zero-rated supply. Each entry gives the meaning in plain English and the section of the Nigeria Tax Act 2025 (NTA), Nigeria Tax Administration Act 2025 (NTAA) or Joint Revenue Board Act where it comes from.
How to use this glossary
The 2025 laws replaced most of Nigeria's separate tax Acts, so many familiar terms now have new section numbers, and some are new. Definitions below are shortened from the statutory wording; where the precise meaning matters, read the section cited. Terms are current as of October 2026. Abbreviations: NTA (Nigeria Tax Act 2025), NTAA (Nigeria Tax Administration Act 2025), JRB Act (Joint Revenue Board of Nigeria (Establishment) Act 2025).
A to E
- Additional assessment
- A further assessment raised where tax was under-assessed (NTAA s.36).
- Administrative penalty
- A fixed or percentage sum imposed by the tax authority without a court, set out in Chapter Four of the NTAA.
- Advance ruling
- A ruling by the tax authority on how a tax law applies, issued for clarity and consistency; it cannot amend the law (NTAA s.73).
- Arm's length
- A transaction on normal open-market commercial terms; related-party deals must meet this test (NTA s.191, s.201).
- Assessable profits
- Profits of a trade or business for a year of assessment, worked out under Part V of Chapter Two of the NTA before capital allowances. The development levy is charged on them.
- Basic food items
- Agriculture-based or aquatic-based staples listed in NTA s.188, zero-rated for VAT.
- Benefits-in-kind
- Non-cash benefits from employment, taxable as employment income (NTA s.14).
- Capital allowance
- The tax deduction for qualifying capital expenditure, under Part I of the First Schedule to the NTA, in place of accounting depreciation.
- Chargeable asset
- Any form of property, in Nigeria or not, including shares, rights, debts, digital assets and foreign currency, subject to exemptions (NTA s.34).
- Chargeable gain
- The gain on disposal of a chargeable asset: proceeds less cost or tax residue and disposal costs (NTA s.39-40).
- Chargeable income
- An individual's total income less eligible deductions; the figure the personal income tax bands apply to (NTA s.30).
- Covered taxes
- For the 15% minimum effective tax rate: company income tax, petroleum profits tax, hydrocarbon tax, development levy and priority sector tax credit (NTA s.57).
- Deduction at source
- Tax a payer deducts from a payment and remits for the payee, including withholding tax and PAYE (NTAA s.51).
- Development levy
- 4% of assessable profits of companies other than small and non-resident companies (NTA s.59).
- Digital or virtual asset
- A digital representation of value that can be traded or transferred, including cryptocurrencies and tokens, excluding national currencies, CBN e-money and some loyalty points (NTAA Fifth Schedule).
- Economic development tax credit
- A credit of 5% a year for five years on eligible qualifying capital expenditure of a priority company (NTA s.176).
- Effective tax rate (ETR)
- Covered taxes as a percentage of net income; large companies must reach at least 15% (NTA s.57).
- Electronic Fiscal System (EFS)
- A system the NRS may deploy for recording and reporting all taxable supplies in real time (NTAA s.23).
- Eligible deductions
- Pension, NHF and NHIS contributions, mortgage interest on an owner-occupied home, life assurance premiums and rent relief (NTA s.30(2)).
- Exempt supply
- A supply on which no VAT is charged and no input credit is available; listed in NTA s.185.
F to R
- Final tax
- A deduction at source that settles the payee's liability on that income, such as WHT on dividends, interest, rent and royalties paid to non-residents (NTAA s.51(2)).
- Fiscalisation
- Recording taxable supplies through the NRS's electronic fiscal system; failure attracts ₦200,000 plus 100% of the tax (NTAA s.104).
- Franked investment income
- A dividend received after tax was deducted at source, which is not taxed again (NTAA s.51(3)).
- Indirect transfer
- A non-resident's disposal of shares that changes ownership of a Nigerian company or of an asset in Nigeria; the gain is chargeable (NTA s.47).
- Input tax
- VAT paid on purchases, which can be credited against output tax (NTA s.155).
- Joint Revenue Board (JRB)
- The body that replaced the Joint Tax Board; it keeps the Tax ID database and resolves disputes between tax authorities (JRB Act s.3-5).
- Labelled startup
- A startup labelled under the Nigeria Startup Act; investors' gains on it after 24 months are exempt (NTA s.162(1)(m)).
- Local Government Revenue Committee
- The body in each local government area that assesses and collects local taxes, fines and rates (NTAA s.93-94).
- Minimum Wage exemption
- Employment income of a person earning the national minimum wage or less is exempt (NTA s.58, s.162(1)(t)).
- Net income
- For the ETR test, profit before tax in audited accounts, excluding franked investment income and unrealised gains or losses (NTA s.57).
- Nigeria Revenue Service (NRS)
- The federal tax authority that replaced FIRS (NRS (Establishment) Act 2025).
- Non-resident person
- A person not resident in Nigeria, taxable on Nigerian-source income and required to register if it supplies taxable goods or services (NTA s.17; NTAA s.6).
- Output tax
- VAT charged on sales.
- PAYE
- Pay As You Earn: income tax deducted from employees' emoluments by the employer (NTAA s.14, s.51(6)).
- Presumptive taxation
- Assessment on prescribed terms where income cannot be worked out from records (NTA s.29).
- Principal private residence
- A person's home; gains on it are exempt once in a lifetime (NTA s.51).
- Priority sector
- A sector listed in the Tenth Schedule to the NTA that can qualify for economic development incentives (NTA s.165).
- Relevant tax authority
- The NRS, a state internal revenue service or a local government revenue committee, depending on the tax.
- Rent relief
- 20% of annual rent paid, capped at ₦500,000, deducted from an individual's income (NTA s.30(2)(a)(vi)).
- Resident individual
- An individual domiciled in Nigeria, with a permanent home or habitual abode or substantial family and economic ties here, present 183 days or more in 12 months, or serving as a Nigerian diplomat (NTA s.201).
S to Z, and enforcement terms
- Self-assessment
- The taxpayer's own computation of tax due, filed with the return (NTAA s.34).
- Small business
- Turnover of ₦100m or less and fixed assets of ₦250m or less, excluding professional services; exempt from monthly VAT returns unless it opts in (NTAA s.22, s.147).
- Small company
- Gross turnover of ₦100m or less and total fixed assets of ₦250m or less; pays 0% company income tax (NTA s.56, s.201).
- State Internal Revenue Service
- The tax authority in each state for personal income tax, PAYE and other state taxes (NTAA s.87-88).
- Surcharge
- A 5% charge on chargeable fossil fuel products, starting on a date set by order (NTA s.158-160).
- Tax Appeal Tribunal
- The tribunal that hears tax disputes under federal and state tax laws (JRB Act s.23, s.29).
- Tax clearance certificate
- A certificate that tax for the last three years is paid or not due; needed for some licences, permits and government contracts (NTAA s.72).
- Tax ID
- Taxpayer Identification, which every taxable person must obtain and quote on returns and transaction documents (NTAA s.4, s.8).
- Tax Ombud
- An independent office that resolves complaints against tax authorities and officials without charge (JRB Act s.36-41).
- Total income
- For an individual, taxable income from all sources, including chargeable gains, less losses, capital allowances, exempt income and income taxed finally at source (NTA s.28).
- Total profits
- For a company, assessable profits from all sources plus chargeable gains, less losses and capital allowances (NTA s.27).
- Year of assessment
- The government tax year, 1 January to 31 December (NTA s.201).
- Zero-rated supply
- A taxable supply charged at 0%, on which input VAT can be recovered; listed in NTA s.186.
- Distraint
- Seizure of goods or property to recover unpaid tax, under warrant (NTAA s.61, Third Schedule).
- Demand notice
- A notice requiring payment of tax, penalty and interest; enforcement can follow after 30 days (NTAA s.65(2), s.67).
- Objection
- A taxpayer's formal challenge to an assessment, made to the tax authority before any appeal (NTAA s.41).
- Attribution
- Showing in a VAT return where taxable supplies were consumed, used for sharing VAT revenue (NTAA s.22(11), s.81).
- Special Purpose Tax Officer
- An officer designated for tax investigation and enforcement with the powers of police officers (NTAA s.147).
- VASP
- Virtual Asset Service Provider: a person offering exchange, custody or management of virtual assets for clients; must register and file monthly information (NTAA s.25).
- Withholding tax (WHT)
- Tax deducted from certain payments at rates in the deduction-at-source regulations (NTAA s.51).
For the numbers behind these terms, see personal income tax bands, VAT exempt and zero-rated items, penalties and the NRS explained.
How we put this together
We read the gazetted texts of the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 (Official Gazette No. 117, Vol. 112, dated 26 June 2025) section by section. The Nigeria Revenue Service website lists these Acts on its laws page, but its topic pages load in the browser and could not be read by our tools, so we worked from copies of the Gazette hosted by a third party and checked figures against the section and schedule numbers quoted here. Regulations, practice notes and orders issued after the Acts may change how a rule applies; where something depends on an order or regulation we say so. Where a term is not defined in an Act's interpretation section, we describe how the section cited uses it.
Questions people ask
What is the difference between exempt and zero-rated VAT in Nigeria?
Both mean no VAT is charged to the customer, but a zero-rated supplier can recover VAT paid on its costs and an exempt supplier cannot. The lists are in sections 185 and 186 of the Nigeria Tax Act 2025.
What is chargeable income in Nigeria?
An individual's total income less eligible deductions such as pension, NHF and rent relief. The personal income tax bands are applied to it.
What is assessable profit?
The profit of a trade or business for the year before capital allowances. Companies pay the 4% development levy on it.
What is the year of assessment in Nigeria?
The government tax year from 1 January to 31 December, as defined in section 201 of the Nigeria Tax Act 2025.
Sources
- Nigeria Tax Act, 2025 (Act No. 7), Official Gazette No. 117, Vol. 112, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Nigeria Tax Administration Act, 2025 (Act No. 5), Official Gazette No. 117, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Joint Revenue Board of Nigeria (Establishment) Act, 2025 (Act No. 6), Official Gazette No. 117 (gazetted copy) · accessed Oct 2026
- Nigeria Revenue Service: Laws and regulations · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.