Baha's Books

Understanding Chargeable Gains Under the Nigerian Tax Act 2025 The Nigerian Tax Act 2025 sets out clear rules on how chargeable gains —profits from the disposal of assets—are treated for tax purposes. This part of the law ensures that when individuals or companies benefit from selling, transferring, or otherwise disposing of assets, those gains are fairly taxed, except where exemptions apply. What Are Chargeable Gains? Chargeable gains are profits made when you dispose of assets. Assets in this context are broadly defined to include shares, debts, options, rights, digital or virtual assets, and all forms of tangible and intangible property, whether in Nigeria or abroad. The wide definition ensures that nearly all economic gains are brought within the tax system. Exemptions for Nigerian Company Shares While most gains are taxable, the law provides relief in certain cases. If the total disposal proceeds in a year are less than ₦150 million and the chargeable gain does not exceed ₦10...

Nigerian Tax Law: Understanding Eligible Deductions for Individuals When it comes to paying taxes in Nigeria, individuals often ask one key question: What deductions can reduce my taxable income? The Nigeria Tax Act, 2025 gives clear guidance on this, explaining how chargeable income is calculated and what expenses qualify as legitimate deductions. What Is Chargeable Income? Chargeable income is simply your total income for the year of assessment, minus the deductions that the law allows you to claim. These deductions are called “eligible deductions,” and they help lower the amount of tax you owe. Eligible Deductions You Can Claim The Act highlights several categories of deductions: Statutory Contributions : Payments you make into the National Housing Fund , National Health Insurance Scheme , or under the Pension Reform Act all qualify. Loan Interest : If you take a loan to develop an owner-occupied house , the interest on that loan is deductible. Insurance & Annui...

Nigeria Tax Act 2025: How Assessable Profits Are Determined for Individuals and Companies The Nigeria Tax Act, 2025 provides a detailed framework for how both individuals and companies are taxed on their income and profits. It covers everything from continuity of trade to capital allowances, losses, and even situations where proper records are not kept. Let’s break down what this means in practical terms for entrepreneurs, businesses, and individuals. Continuity of Trade A business or profession does not stop being taxable simply because of a change in residence or because someone joins or leaves a partnership. As long as the trade itself continues in the same nature, it is treated as ongoing. This prevents individuals from escaping tax obligations by making formal changes while carrying on essentially the same business. Assessable Income for Individuals For individuals, assessable income includes business or professional profits, employment income, pensions, and chargeable gain...

Nigeria Tax Act 2025: How Assessable Profits Are Calculated One of the most important questions for businesses and professionals when it comes to taxation is: what profits will the government assess for tax purposes? The Nigeria Tax Act, 2025 provides clear guidance on this, setting out rules for ongoing businesses, new businesses, businesses that change their accounting dates, and even those that cease operations or involve deceased individuals. The Standard Rule For most businesses, the assessable profits for a tax year are taken from the accounting period immediately preceding that year. In other words, when a company is being assessed for 2025, the profits that will be considered are those earned during its 2024 accounting period. This keeps assessments consistent and tied to recent performance. New Businesses For businesses just starting out, the rules are slightly different. The profits used for the first year of tax assessment cover the period from the date the business b...

Nigeria Tax Act 2025: Expenses That Cannot Be Deducted When calculating taxable profits, businesses often try to maximize deductions to reduce their tax liabilities. However, the Nigeria Tax Act, 2025 makes it clear that not every cost is deductible. While the law recognizes legitimate business expenses such as salaries, pensions, and repairs, it also draws strict boundaries to prevent abuse and safeguard Nigeria’s tax base. What Cannot Be Deducted The Act prohibits deductions for capital repayments or withdrawals, as these are returns of investment, not expenses tied to generating income. Expenditures of a capital nature—such as acquiring or improving fixed assets—are similarly excluded. Personal or domestic expenses and any spending on assets not used in the business are also disallowed. Recoverable sums under insurance or indemnity contracts cannot be deducted, since they do not represent net losses. Taxes on income or profits, whether imposed in Nigeria or abroad, are explicit...

Nigeria Tax Act 2025: What Business Expenses Are Deductible? When calculating taxable profits, one of the most important questions every business owner asks is: what expenses can I deduct? The Nigeria Tax Act, 2025 provides a clear framework, ensuring businesses account only for legitimate expenses directly tied to generating income. This section of the law is crucial for businesses, accountants, and tax professionals because it determines how much profit is actually taxable after expenses are considered. Deductible Expenses Explained The Act recognizes that running a business involves costs, and many of these can rightfully reduce taxable income. For instance, interest on loans used to finance business activities is deductible, as are rent and premiums paid on premises or land used for business. Salaries, wages, and benefits given to employees also qualify, along with expenses on repairs and maintenance of buildings, machinery, or equipment. Businesses may also deduct costs tied...

  Nigeria Tax Act 2025: How Foreign Shipping and Airline Companies Are Taxed International trade and transport play a vital role in Nigeria’s economy. Every day, ships dock at Nigerian ports and aircraft land at Nigerian airports carrying passengers, goods, livestock, and mail. But when these vessels and planes are operated by foreign companies, a big question arises: should Nigeria tax the profits earned from those activities? The Nigeria Tax Act, 2025 provides a clear answer. Yes—if a non-resident person earns profits from carrying on the business of transport by sea or air in Nigeria, those profits are taxable. This applies whenever their ships or aircraft, whether owned, leased, or chartered, call at Nigerian ports to ship or load passengers, cargo, or mail. The Trans-shipment Exception There is an important carve-out. If passengers, goods, or mail are simply brought into Nigeria for transfer—say, from one aircraft to another or between an aircraft and a ship—then those ea...

  Understanding Nigeria’s 2025 Tax Rules for Non-Resident Companies In today’s global economy, businesses don’t always need to be physically present in a country to earn income there. This is especially true in Nigeria, where both traditional and digital businesses often reach customers without opening local offices. The Nigeria Tax Act, 2025 sets out clear rules to ensure that when foreign companies or individuals make profits linked to Nigeria, they contribute their fair share of taxes. Taxing Non-Residents: The Basics The Act states that income, profits, or gains made by a non-resident person from Nigeria are taxable in Nigeria. This applies whether the income comes from selling goods, providing services, running digital platforms, or even disposing of assets tied to Nigeria. A non-resident can be taxed in two major ways: Permanent Establishment – where the foreign business has a physical or long-term presence in Nigeria, such as an office, factory, branch, workshop, or ...

Understanding Partnership Taxation in Nigeria: What Every Partner Should Know When two or more people come together to run a business, they often choose a partnership structure. But while this model is flexible and allows partners to pool resources, it also comes with unique tax obligations. Unlike a company, a partnership in Nigeria is not taxed as a single entity . Instead, each partner is personally taxed on their share of the income. So, how exactly does this work? A partner’s taxable income is made up of two key elements. The first part covers any direct payments or benefits they receive from the partnership. This can include remuneration, interest on capital, travel or recreation allowances, or even benefits in kind charged to the partnership account. The second part is the partner’s share of the overall profit—after taking into account the items mentioned above for all partners. Private or domestic expenses, however, cannot be deducted when calculating taxable income. Losses...

  Employment Income Taxation in Nigeria: What Every Worker and Employer Should Know By Baha’s Books Understanding the Basics Employment income in Nigeria is taxable if the employee is a resident in Nigeria or if the work is performed in Nigeria. This applies even when the salary is paid by a foreign company with a Nigerian branch or when the income is not taxed in the employee’s country of residence. Non-Resident Employees and Exemptions There are exemptions for non-resident employees working in startups, technology-driven services, or creative arts. If their income is already taxed in their country of residence, it will not be taxed again in Nigeria. This provision encourages international collaboration and supports the growth of Nigeria’s startup and tech ecosystem. Government Employees and Seafarers Special provisions apply to government employees and seafarers. Government employees working abroad are still taxable in Nigeria unless exempted under international or dipl...

  Dividend Taxation in Nigeria: What Every Business Should Know By Baha’s Books 📊 Dividend Income Counts as Profit In Nigeria, any dividend income a company earns — even if tax has already been deducted at the source — must still be included as part of the company’s profits. This means that if your business receives dividends from investments in other companies, you cannot exclude them from your taxable income. They are considered part of your overall profit and will be taxed accordingly. 🟢 Dividends in Shares Are Not Taxed Twice However, there is an important exception. If your company receives dividends in the form of shares (rather than cash), those dividends are not taxed again. This prevents double taxation and provides some relief for businesses investing in other companies. ⚠️ Dividends Without Profit Still Get Taxed Some companies issue dividends even when they have no profit or when their profit is less than the dividends being paid. In such cases, the Nigeri...

Profits Made Anywhere Still Count in Nigeria Many Nigerian companies are expanding their operations beyond the country’s borders. While this creates exciting opportunities, it also brings new responsibilities — especially when it comes to taxes. Under Nigerian tax law, profits made by a Nigerian company are treated as if they were earned in Nigeria — no matter where in the world they come from. Whether revenue is generated locally or from a foreign subsidiary, it is still taxable in Nigeria. 💸 Even Undistributed Foreign Profits Are Taxed If a Nigerian company controls a foreign company and that foreign company makes profits but decides not to send the money back to Nigeria , those profits are still considered taxable in Nigeria. This means that Nigerian companies can’t avoid tax simply by leaving profits in their foreign branches — Nigeria treats them as if they were brought home. ⚖️ Covering Tax Gaps from Foreign Subsidiaries If a foreign company linked to a Nigerian compa...

  As part of Nigeria’s recent tax reforms, the Federal Government has introduced two major updates that directly affect businesses — especially small companies. At Baha’s Books, we believe every entrepreneur and business owner should stay informed to remain compliant and make smarter financial decisions. 🟢 1. Increased Exemption Threshold for Small Companies Small companies are now exempt from Companies Income Tax (CIT), Capital Gains Tax (CGT), and the newly introduced Development Levy — provided they meet these criteria: Annual gross turnover of up to ₦100 million (previously ₦25 million), and Total fixed assets not exceeding ₦250 million This is a big relief for small businesses. It allows them to retain more profits , reinvest in growth , and avoid heavy tax compliance burdens in their early stages. 🟡 2. Increased Capital Gains Tax (CGT) Rate The Capital Gains Tax rate for companies has been increased from 10% to 30% . This aligns the CGT with the Companie...

Why Understanding Taxable Income Matters  When it comes to personal or business finance, knowing what counts as taxable income can save you from unexpected tax liabilities — and help you plan your finances with clarity. Many individuals and business owners in Nigeria often focus only on salaries and wages, forgetting that the law recognizes other forms of income as taxable too. Understanding these categories helps you stay compliant, avoid penalties, and build a solid foundation for financial growth. The 5 Main Categories of Taxable Income in Nigeria Here are the income categories recognized by Nigerian tax law: 💼 1. Employment Income This includes salaries, wages, allowances, bonuses, compensations, fees, and benefits from your job. It also covers pensions, annuities, and similar income earned after retirement. If you receive money or benefits because of your work — and not as repayment for an expense — it is considered taxable. 👨‍👩‍👧 2. Family Income Income ...

  Understanding the Imposition of Income Tax in Nigeria Taxes are the backbone of any economy,  and understanding how they work is vital for individuals, families, and businesses. At Baha’s Books , we believe financial literacy begins with knowing your tax obligations. This post breaks down the different forms of income that are chargeable to tax under Nigerian law, using our new visual guide to make it simple and clear. What Is Income Tax Imposed On? Under the tax laws, income tax is imposed on: Profits or gains of any company or enterprise Income of any individual or family Income arising, accruing, or due to a trustee or an estate This means whether you run a company, freelance, or manage an estate, you are required to pay tax on your earnings. Types of Income, Profits or Gains Chargeable to Tax Here’s a breakdown of the key income types subject to taxation: Profits from trade or business — earnings from your business, profession, or vocation. Roy...

  The Solution Is Investing: How to Build Wealth Without Stress By Bahas Books Why We Talk About Investing But Rarely Do It We all love to talk about “investing.” It sounds powerful, ambitious, even sophisticated. But let’s be honest — most people only say the word; they never practice it. The truth is, investing is not just for the wealthy. It is the very bridge that takes you from where you are now to where you dream to be . It’s not magic. It’s math. At Bahas Books, we want to show you exactly what investing can do. Playing the Long Game To invest, you must be willing to play the long game . It is not about put small, chop small — the quick in-and-out mindset that destroys wealth before it grows. This is why many people avoid investing: it requires patience, consistency, and the discipline to delay gratification. We all want to eat our cake and have it too, but wealth doesn’t work that way. What If You Just Started Small? Imagine you decided to invest just ₦50...

  Understanding the Four Pillars of Taxation At Baha's Books , we believe that understanding taxation is the first step to building financially sound businesses. Whether you are a startup, an SME, or an established corporation, knowing how tax systems work can help you stay compliant and make informed financial decisions. In this post, we’ll break down the four major pillars of taxation every business owner should know: Tax Policy, Tax Legislation, Tax Administration, and Tax Jurisprudence. 📘 Tax Policy Definition: Tax policy refers to the guidelines and principles established by government for the implementation and collection of tax. Why it matters: Tax policy sets the tone for the entire tax system. It reflects government priorities—whether to encourage investment, promote equity, or raise revenue. A sound tax policy ensures fairness, clarity, and predictability in the tax environment. 📗 Tax Legislation Definition: Tax legislation is the body of tax laws, rules, a...

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