The Nigeria Tax Act 2025 - What IP Rights Holders And Creatives Need To Know (March 2026)

Introduction

Intellectual property ("IP") is increasingly becoming a key driver of value in Nigeria's modern economy. The IP industry accounted for approximately 2.3% of Nigeria's GDP in recent years, and the government projections aim to grow it substantially by 2030.¹ From music, film, fashion, publishing, and visual arts to software, digital platforms, branding, and content creation, economic value is increasingly driven not only by physical assets but by ideas, creativity, and intangible rights.

Against this backdrop, the enactment of the Nigeria Tax Act, 2025 (the "NTA"), on June 26, 2025, and its implementation from January 1, 2026, represents a critical development. The NTA is part of Nigeria's broader tax reform agenda to modernize the tax framework, expand the tax base, and align domestic tax rules with contemporary business models, particularly those involving digital transactions and intangible assets.

This article examines the key tax provisions and implications of the NTA for IP, with a focus on Nigerian creatives, innovators, and IP rights holders. Our objective is to provide a practical and commercially oriented review to help IP owners and creatives better position themselves for compliance while protecting their creations.

Intellectual Property as a Taxable Asset Class

The Finance Acts of 2019 to 2023 progressively brought income from digital activities and intangible assets within Nigeria's tax net. The NTA builds on these reforms by consolidating the previously scattered provisions into a single, more coherent framework, thereby improving clarity and certainty for businesses and intellectual property (IP) owners. In essence, the NTA harmonizes Nigeria's key federal tax laws and removes the fragmentation that previously affected the taxation of intangible assets. It confirms that income derived from intangible property is taxable and that gains realized from the disposal or transfer of IP assets are subject to tax.

The NTA also clarifies that a "taxable person" includes any individual or entity that exploits intangible assets to earn income. For IP owners, this means that the commercial use of IP is treated as a taxable economic activity, even where the owner does not operate a traditional business structure. Accordingly, creatives, software developers, content creators, and other IP holders who earn income through royalties, licensing, assignments, subscriptions, digital distribution, or platform-based monetization will generally be regarded as carrying on a taxable trade or business in Nigeria. This means that creatives and IP rights holders who do not already do so must deliberately begin to treat their IP as a business asset. IP owners should therefore maintain proper documentation, contracts, and financial records to support tax compliance.

Income and Capital Gains Tax

One of the significant reforms introduced by the NTA is the abolition of capital gains tax as a separate head of taxation. Capital gains are now integrated into the income tax regime, under Companies Income Tax for corporate taxpayers and Personal Income Tax for individuals. Consequently, gains that were previously subject to capital gains tax at a flat rate of 10% are now taxed at the applicable income tax rates.

For companies, this means that gains realized by large companies are currently taxed at 30%, while small companies continue to benefit from a 0% rate. For individuals, the NTA applies a progressive tax system, with rates increasing to a maximum of 25%. Accordingly, gains arising from the disposal, transfer, or assignment of IP assets, as well as royalty income and similar returns from the commercial exploitation of IP, are now taxed at the relevant income tax rates.

Furthermore, where an IP asset is transferred or disposed of as part of a corporate restructuring, the transaction is treated as a taxable event, and any gain arising is determined by reference to the asset's fair market value at the date of transfer.

Residency Rules and Double Taxation

Nigeria operates a residence-based tax system under which the worldwide income and gains of Nigerian residents are subject to tax. However, depending on the level of economic activity, the digital presence, or the involvement of local agents, non-resident IP owners may also create a taxable presence (permanent establishment) under the NTA, thereby expanding their Nigerian tax exposure.

Accordingly, the profits of a Nigerian company are deemed to accrue in Nigeria, regardless of whether they are remitted to or received in the country.² Similarly, gains realized by a Nigerian resident from the disposal of a taxable asset are subject to tax, regardless of whether the asset is located in Nigeria or offshore.³ These rules apply equally to all categories of IP transactions.

On the other hand, the income and gains of a non-resident would also be taxable where they accrue or are derived from Nigeria.⁴ In particular, the disposal of an IP asset by a non-resident company is taxable in Nigeria if the asset is deemed to be located there. This is particularly relevant for digital content, software-as-a-service (SaaS), online licensing arrangements, and cross-border IP transactions.

It is also important to mention that where IP or digital services are supplied to Nigerian customers and consumed in Nigeria, VAT obligations shall arise, notwithstanding that the supplier, IP owner, or platform is offshore or non-resident. For Nigerian creatives earning through foreign platforms or licensing arrangements, this may create indirect compliance exposure, as Nigerian counter parties, customers, intermediaries, or agents may be required to account for VAT or request additional documentation.

To protect a taxpayer from double taxation, where income or profits derived by a Nigerian resident from sources outside Nigeria are subject to tax in the source country and are also taxable in Nigeria, the foreign tax paid may be allowed as a credit against the Nigerian tax payable on that income. Such relief is generally available where the foreign tax paid is paid in a treaty partner country, subject to the applicable treaty provisions.⁵

Withholding Tax

Royalty payments are made for the use of copyright works, trademarks, brands, trade names, software, digital tools, and other proprietary rights remain subject to withholding tax ("WHT"), typically deducted at source by the payer, subject to applicable treaty reliefs and remitted to the Federal Inland Revenue Service ("FIRS"), now the Nigerian Revenue Service ("NRS"). The obligation to deduct and remit withholding tax rests on the payer, while the recipient may claim the deduction as a tax credit upon production of the relevant WHT credit note. For Nigerian creatives, this is particularly relevant as licensing is one of the dominant modes of IP exploitation.

Related Parties Transactions

For IP transactions between related parties, the relevant parties must ensure that the terms and conditions under which the arrangement is carried out are at arm's length and must report the arrangement in the form and manner prescribed by the NRS. Where this is not done, the tax authorities may make necessary adjustments to bring the arrangement into conformity with arm's length terms. ⁶ Related-party IP arrangements should therefore be conducted on arm's length terms and supported by appropriate transfer pricing documentation, including local and master files, inter company agreements, valuation reports, and transfer pricing declaration and disclosure forms filed with the NRS.

Conclusion

The Nigeria Tax Act 2025 represents an important step in the evolution of Nigeria's tax treatment of IP and the digital economy. While recent Finance Acts had already expanded the tax net to cover digital income, intangible assets, and related transactions, the NTA consolidates these developments into a single, more coherent framework. By harmonizing capital gains within the income tax system and clarifying the treatment of IP-related income and transfers, the NTA provides greater certainty and consistency for creatives and IP rights holders.

At the same time, this clarity comes with higher compliance expectations. The residence-based taxation rules, the broader scope for taxing non-resident activities, and the continued application of withholding tax, VAT, and transfer pricing requirements underscore the increasing reach of Nigeria's tax regime, particularly in cross-border and digital contexts. IP owners can no longer rely on informal structures or platform-based earnings without considering the associated tax obligations.

Ultimately, the NTA should be seen not as the introduction of new taxes on IP, but as a signal that IP is now firmly recognised as a mainstream business asset within Nigeria's tax system. For creatives and innovators, this presents an opportunity to formalize the management of their IP through proper documentation, valuation, structuring, and tax planning. Early engagement with tax advisers and proactive compliance will be essential to managing risk and positioning IP-driven businesses for sustainable growth in Nigeria's evolving creative and digital economy.

Footnotes

1 https://fmino.gov.ng/minister-calls-for-increased-investment-in-nigerias-creative-economy/ accessed February 1, 2026

2 Section 6 of the NTA.

3 Section 34(1) of the NTA.

4 Section 17 of the NTA.

5 Section 119 of the NTA.

6 Section 191 of the NTA.

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.