While the differences may seem subtle at a glance, a deep dive reveals material discrepancies that could redefine tax liabilities for millions of businesses, particularly Small and Medium Enterprises (SMEs).Perhaps the most jarring difference lies in the very definition of a "Small Company." Under the FIRS version of the Act, a small company which enjoys a 0% Companies Income Tax (CIT) rate, is defined as a business with an annual gross turnover of N50,000,000 or less. In a significant departure, the Presidentially-signed Final Approved Copy raises this ceiling to N100,000,000. This N50 million gap is not merely semantic; it represents a vast segment of the Nigerian business community that would be exempt from income tax under the official law but potentially pursued for payment under the FIRS version.
Read more: Why Nigeria Cannot and Will Not Tax Your Bank Account - Eben JoelsAnother subtle but material difference lies in the taxation of “Digital” vs. “Virtual Assets”. As Nigeria seeks to formalize its burgeoning digital economy, the terminology used to describe what is to be taxed is not so straightforward. In the FIRS version, Section 4(1)(j) explicitly brings "profits or gains from transactions in digital or virtual assets" into the tax net. The Final Approved Copy, however, opts for the more concise "digital assets". While "digital" is often used as a catch-all, the inclusion of "virtual" in the FIRS version appears to cast a wider, more aggressive net over the crypto and blockchain space. The list of repealed laws is the bedrock of any new tax regime. Here, the FIRS version includes a critical addition: it lists the "Taxes and Levies (Approved List for Collection) Act" as being repealed. The version released by the National Assembly and signed by the President does not include this Act in its list of repeals. This creates a legal grey area regarding which agency; Federal, State, or Local has the authority to collect specific levies. If the Taxes and Levies Act remain in force (as the President’s signature suggests), many of the collection mandates assumed by the new Act could face constitutional challenges in court.
The energy sector is not exempt from the confusion. In Section 86, which governs decommissioning and abandonment funds for petroleum operations, the FIRS version demands that licensees deposit a minimum of 30% of the fund with a Nigerian bank. The national assembly version sets the threshold at 15%.Furthermore, the FIRS document contains an expanded Section 13 that provides detailed definitions for "financial technology" (fintech), "shared services", and "labelled startups". These technical definitions, intended to clarify the tax status of tech-driven services, are notably absent from the same section in the version signed into law by the President. In the eyes of the Nigerian judiciary, the rule of thumb is clear: the version signed by the Clerk of the National Assembly and given Presidential Assent is the law of the land. The "Final Approved Copy," which lists the Official Gazette range as A387-A596, remains the only legitimate reference for taxpayers.
Read more: The Limits of Regulatory Authority and the Imperative of Legislative ClarityThe instances mentioned above do not reflect all the material instances we have cited. For example, the scope of “employment income” appears broader in the unsigned version distributed earlier, before the recent version released by the National Assembly. There are also differences in what constitutes “Gas Production Credits”. Hidden somewhere in the previous version is a mandate for the Nigerian Upstream Petroleum Regulatory Commission to account for all royalties due within the ten years immediately preceding the Act's commencement. This material mandate is missing from the version released by the National Assembly. As the FIRS begins implementation, discrepancies such as referring to the "Nigeria Revenue Service" instead of the "Nigerian Revenue Service" cited in the signed copy and several other subtle differences may lead to avoidable litigation. For now, Nigerian businesses are advised to comply with the signed Gazette issued by the National Assembly.
