Nigeria’s manufacturing sector is entering a new fiscal era following the implementation of the Nigeria Tax Act (NTA) 2025, which became effective on January 1, 2026. Professional services firm Kreston Pedabo has highlighted that this landmark legislation moves the country away from a fragmented system of multiple tax statutes toward a unified, incentive-driven framework.
The success of these reforms will depend on the transparency of tax administration, as the Act replaces older tax holidays with a more rigorous, performance-based system that rewards capital investment and localized innovation.
A central feature of the new law is the introduction of Economic Development Tax Incentives (EDTI) for designated priority sectors, including manufacturing, agro-processing, mining, and renewable energy. Companies that produce “priority products” as defined in the Act’s Tenth Schedule can obtain an Economic Development Incentive Certificate.
This certificate grants a 5% annual tax credit on qualifying capital expenditure for up to five years. Furthermore, firms that demonstrate they are reinvesting 100% of their profits back into the expansion of these priority sectors may qualify for even longer incentive periods, essentially creating a pathway for sustained industrial growth.
To improve the immediate financial health of manufacturers, the Act also introduces a 5% turnover deduction for research and development expenses and revises capital allowance rules to offer uniform annual rates of 10%, 20%, or 25% depending on the asset type.
This change is intended to simplify cost recovery for machinery and industrial buildings, which has historically been a point of dispute between taxpayers and authorities. Additionally, the Act consolidates several existing levies—such as the Tertiary Education Tax and the NASENI Levy—into a single 4% Development Levy on assessable profits, significantly reducing the administrative burden on large firms.
The VAT regime has also been modified to support local production while protecting consumer purchasing power. While the headline VAT rate remains at 7.5%, the Act provides zero-rating for essential locally produced goods, including basic food items, medical supplies, and educational materials.
Smaller manufacturers with an annual turnover of N50 million or less now enjoy a 0% corporate income tax rate and are exempt from charging VAT, provided they remain compliant with regular filing requirements. For larger multinational entities, the law introduces a 15% Minimum Effective Tax Rate to ensure Nigeria remains aligned with global tax standards.
Despite these significant fiscal advantages, Kreston Pedabo partner Kehinde Folorunsho cautioned that tax reform alone cannot resolve deeper structural issues like the unreliable power supply or high logistics costs. While the Act provides a solid foundation for manufacturers to recover capital and reinvest in technology, it must be paired with broader infrastructure and industrial policies.
Manufacturers are advised to conduct a holistic impact analysis and update their accounting systems to ensure they can fully leverage the new credits while navigating the stricter compliance and e-invoicing requirements introduced by the Act.
 2025, which became effective on January 1, 2026. Professional services firm Kreston Pedabo has highlighted that this landmark legislation moves the country away from a fragmented system of multiple tax statutes toward a unified, incentive-driven framework.){kind=link}