Glossary of Key Terms under the Nigerian Tax Reform Act: A Guide for Tax Practitioners and Taxpayers

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1. Accelerator

Statutory Definition: “is as defined in the Nigeria Startup Act, No. 32, 2022”.
Plain English Explanation: A program or organization that provides mentorship, capital, and resources to help new businesses grow quickly in exchange for equity.
How It Works Under the Act: Accelerators are identified as entities whose asset disposals involving “labeled startups” may be exempt from tax, provided the assets are held for at least 24 months.
Where It Appears: s 163(1)(m), s 202 NTA 2025.
Related Terms: Labeled Startup; Angel Investor; Venture Capitalist.

2. Account

Statutory Definition: Not expressly defined in s 202; refers contextually to “records of income from all sources or bank records where tax duties are denoted”.
Plain English Explanation: A formal record used to track money coming in and going out of a person’s or business’s possession.
How It Works Under the Act: The Act requires trustees and executors to prepare accounts of income for settlements and estates until assets are fully distributed.
Where It Appears: s 202, Fifth Schedule NTA 2025.
Related Terms: Accounting Period; Tax Returns.

3. Accounting Date

Statutory Definition: “means the date on which a company usually prepares its accounting statement”.
Plain English Explanation: The specific day a business chooses to end its financial year and summarize its profits and losses.
How It Works Under the Act: Changes to this date must be reported to the tax authority 30 days before the return filing deadline to ensure correct tax calculations.
Where It Appears: ss 23, 119 NTA 2025.
Related Terms: Basis Period; Accounting Period.

4. Accounting Period

Statutory Definition: “means a period for which accounts have been made up”.
Plain English Explanation: The 12-month timeframe (usually) used by a business to calculate its financial performance for tax purposes.
How It Works Under the Act: It determines the “basis period” for when a company must report income. For upstream petroleum companies, it usually ends on 31 December unless the company ceases operations earlier.
Where It Appears: ss 119, 202 NTA 2025.
Related Terms: Year of Assessment; Basis Period.

5. Acquisition Cost

Statutory Definition: “includes all cost incurred in bringing an asset to its first use”.
Plain English Explanation: The total amount of money spent to buy an item and get it ready for use, including purchase price, delivery, and installation.
How It Works Under the Act: This cost is used to determine the “residue” for capital allowances and the starting point for calculating capital gains when the asset is sold.
Where It Appears: s 41, First Schedule NTA 2025.
Related Terms: Qualifying Capital Expenditure; Residue.

6. Adjusted Profits

Statutory Definition: “means adjusted profit as stated in sections 67 and 91 of this Act”.
Plain English Explanation: The profit a business makes after adding back non-deductible expenses and subtracting legally allowed deductions.
How It Works Under the Act: It is the middle step in tax calculation, found after adjusting the gross profit but before subtracting losses from previous years or capital allowances.
Where It Appears: ss 67, 91, 119 NTA 2025.
Related Terms: Assessable Profit; Total Profit.

7. Advalorem

Statutory Definition: “means the value of a transaction or property”.
Plain English Explanation: A tax or duty rate that is calculated as a percentage of the item’s value, rather than a fixed “flat” fee.
How It Works Under the Act: This method is used for Stamp Duties on legal documents and for calculating royalties on solid minerals.
Where It Appears: s 202, Eighth Schedule NTA 2025.
Related Terms: Stamp Duty; Royalty.

8. Agency of Government

Statutory Definition: “includes a Ministry, department, statutory body, public authority and an institution of the Federal, State and Local Government”.
Plain English Explanation: Any government-run organization, from big ministries to small local authorities.
How It Works Under the Act: These agencies are generally exempt from income tax on their public activities but are required to collect and remit VAT and withholding tax on contracts they award.
Where It Appears: ss 155, 163, 202 NTA 2025.
Related Terms: Public Character; Public Fund.

9. Aggregate Covered Tax Paid

Statutory Definition: “means the addition of the income taxes paid by a company for a year of assessment under this Act”.
Plain English Explanation: The total sum of all income taxes a company has paid to the government in a single tax year.
How It Works Under the Act: This figure is used to calculate a company’s “Effective Tax Rate” to ensure it meets the 15% global minimum tax standard if it is a large multinational or has very high turnover.
Where It Appears: ss 57, 202 NTA 2025.
Related Terms: Effective Tax Rate; Minimum Effective Tax Rate.

10. Aggregate Gas Price

Statutory Definition: “means the gas price determined under section 167(4) of Petroleum Industry Act”.
Plain English Explanation: The official price set for natural gas used in Nigerian industries.
How It Works Under the Act: It provides a standardized price for determining revenue and tax liability for companies involved in gas operations.
Where It Appears: s 119 NTA 2025.
Related Terms: Fiscal Gas Price; Natural Gas.

11. Agricultural Trade or Business

Statutory Definition: Includes primary crop, livestock, forestry, and fishing production, but excludes “any intermediate or final processing… or any other associated manufactured or derivative… product”.
Plain English Explanation: Farming, ranching, and fishing in their basic forms.
How It Works Under the Act: Companies in this sector enjoy a tax-free period for the first five years of operation to encourage food security.
Where It Appears: ss 163, 202 NTA 2025.
Related Terms: Small Company; Tax Incentive.

12. Allowable Deductions

Statutory Definition: Referred to in s 20 as “all expenses… wholly and exclusively incurred in the production of the income”.
Plain English Explanation: Legitimate business expenses (like salaries, rent, and repairs) that you can subtract from your total income to lower your tax bill.
How It Works Under the Act: Only expenses that are strictly for making a profit are allowed. Personal or capital expenses are generally not deductible.
Where It Appears: ss 20, 68, 92 NTA 2025.
Related Terms: Deductions Not Allowed; Assessable Profit.

13. Angel Investor

Statutory Definition: “is as defined in the Nigeria Startup Act, No 32, 2022”.
Plain English Explanation: A wealthy individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity.
How It Works Under the Act: Profits they make when selling their shares in a startup are exempt from tax if they hold the investment for at least two years.
Where It Appears: ss 163, 202 NTA 2025.
Related Terms: Venture Capitalist; Accelerator.

14. Appraisal Well

Statutory Definition: “means a well that, in the opinion of the Commission, is aimed at determining the size, distribution, characteristics and commerciality of a petroleum discovery”.
Plain English Explanation: A hole drilled into the ground to see if a newly found oil or gas field is big enough and good enough to make money.
How It Works Under the Act: The cost of the first two appraisal wells in a field can be fully deducted in the year the money is spent, rather than spread over many years.
Where It Appears: ss 68, 92, 119 NTA 2025.
Related Terms: Exploration Well; Upstream Petroleum Operations.

15. Approved Agent

Statutory Definition: “means any person approved by the Securities and Exchange Commission to function as an intermediary for the conduct of a regulated securities lending transaction”.
Plain English Explanation: A middleman (like a stockbroker) officially allowed by the government to handle loans of stocks and bonds between investors.
How It Works Under the Act: Payments made through these agents are subject to specific tax exemptions to keep the financial markets running smoothly.
Where It Appears: ss 163, 202 NTA 2025.
Related Terms: Regulated Securities Lending Transaction; Borrower; Lender.

16. Arm’s Length Terms and Conditions

Statutory Definition: “means such terms and conditions obtainable if the transaction or arrangement was between unrelated parties dealing in comparative circumstances”.
Plain English Explanation: A fair market price—treating a transaction with a family member or business partner exactly as if they were a complete stranger.
How It Works Under the Act: The tax authority can adjust a company’s tax bill if it discovers they are buying from or selling to “related parties” at artificial prices to avoid paying tax.
Where It Appears: s 192 NTA 2025.
Related Terms: Connected Persons; Artificial Transactions.

17. Assessable Income

Statutory Definition: “means assessable income determined under the provisions of chapter two of this Act”.
Plain English Explanation: The part of your income that the law says is subject to tax after basic rules are applied.
How It Works Under the Act: For an employee, this is their salary for the year; for a business, it is based on the previous year’s profit. It is the starting point before “reliefs” (like pension contributions) are subtracted.
Where It Appears: ss 26, 28, 202 NTA 2025.
Related Terms: Total Income; Chargeable Income.

18. Assessable Petroleum Profits Tax

Statutory Definition: Referred to in s 99 as “an amount equal to 85% of [a company’s] chargeable profits”.
Plain English Explanation: The calculated tax owed by oil companies that have not yet switched to the new Petroleum Industry Act rules.
How It Works Under the Act: This is a high-rate tax specifically for the traditional petroleum sector, though it can be lower (65.75%) for companies that are still paying off their initial setup costs.
Where It Appears: s 99 NTA 2025.
Related Terms: Chargeable Profits; Hydrocarbon Tax.

19. Assessable Profit

Statutory Definition: “means assessable profit as stated in sections 67 and 91 of this Act”.
Plain English Explanation: The profit of a business for a specific period after taking out losses from previous years but before claiming “capital allowances” for equipment.
How It Works Under the Act: This figure is used to calculate the Development Levy (4%) for large companies.
Where It Appears: ss 22, 119 NTA 2025.
Related Terms: Adjusted Profit; Total Profit.

20. Assessable Tax

Statutory Definition: For petroleum, found in s 99; for general companies, it is the tax calculated at the relevant rate (0% or 30%).
Plain English Explanation: The total amount of tax you are required to pay for the year.
How It Works Under the Act: It is the final result of all the calculations, representing the debt owed to the government.
Where It Appears: ss 56, 99 NTA 2025.
Related Terms: Chargeable Tax; Year of Assessment.

21. Assessment

Statutory Definition: Not formally defined in s 202; refers to the “process of determining the specific tax liability of a person”.
Plain English Explanation: The official “bill” or calculation from the tax office stating exactly how much money you owe in taxes.
How It Works Under the Act: It can be a “self-assessment” (where you calculate your own tax) or an assessment issued by the Nigeria Revenue Service. If the office thinks you underpaid, they can issue an “additional assessment”.
Where It Appears: ss 24, 122, 155 NTA 2025.
Related Terms: Tax Returns; Additional Assessment.

22. Assets

Statutory Definition: “all forms of property… whether situated in Nigeria or not, including—(a) any form of asset, shares, options, rights, debts, digital or virtual assets and incorporeal property generally”.
Plain English Explanation: Anything of value that you own, from land and cars to Bitcoin and copyrights.
How It Works Under the Act: The Act defines what can be taxed when sold for a profit (Capital Gains).
Where It Appears: ss 34, 202 NTA 2025.
Related Terms: Chargeable Assets; Disposal of Assets.

23. Associated Gas

Statutory Definition: “means— (a) natural gas, commonly known as gas-cap gas, which overlies and is in contact with crude oil… and (b) solution gas dissolved in crude oil”.
Plain English Explanation: Natural gas that is found in the same underground reservoir as crude oil.
How It Works Under the Act: The Act provides incentives for companies to use this gas rather than burning it off (flaring), allowing them to recover the costs of equipment needed to process it.
Where It Appears: s 119 NTA 2025.
Related Terms: Non-Associated Gas; Natural Gas.

24. Authorised Collective Investment

Statutory Definition: “means a scheme that is authorised by the Securities and Exchange Commission… to carry on the business of dealing in a mutual fund scheme or collective investment scheme”.
Plain English Explanation: A mutual fund or investment pool that is officially registered and follows government rules.
How It Works Under the Act: The profits made by these schemes and distributed to investors are exempt from certain taxes to encourage public saving and investment.
Where It Appears: ss 63, 163 NTA 2025.
Related Terms: Collective Investment Scheme; Unit Holder.

25. Authorised Officer

Statutory Definition: “means an officer who has been authorised by a tax authority to perform any function under this Act”.
Plain English Explanation: A government official given the power to carry out tax duties, such as audits or inspections.
How It Works Under the Act: Only these officers can legally demand to see financial records or issue official tax notices.
Where It Appears: s 202 NTA 2025.
Related Terms: Service; Nigerian Revenue Service.

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26. Bad or Doubtful Debts

Statutory Definition: Refers to debts “becoming bad during the said basis period… or doubtful debts estimated in accordance with generally acceptable accounting principles”.
Plain English Explanation: Money owed to a business that is unlikely ever to be paid.
How It Works Under the Act: A business can subtract these “lost” amounts from its profits to reduce its tax, but only if they can prove to the tax office that the debt is truly uncollectible.
Where It Appears: ss 20, 92 NTA 2025.
Related Terms: Assessable Profit; Allowable Deductions.

27. Bank

Statutory Definition: “means a bank as defined under the Banks and Other Financial Institutions Act… 2020”.
Plain English Explanation: A licensed financial institution where people and businesses keep their money and get loans.
How It Works Under the Act: Banks have special rules for how much interest they can deduct and are often used as “collecting agents” to hold tax money in escrow for the government.
Where It Appears: ss 86, 202, Third Schedule NTA 2025.
Related Terms: Banking; Financial Institutions.

28. Banking

Statutory Definition: “means business conducted or services offered by a bank”.
Plain English Explanation: The act of providing financial services, such as accepting deposits or managing transfers.
How It Works Under the Act: Banking services are relevant for determining tax residency and interest deductibility rules.
Where It Appears: s 202, Third Schedule NTA 2025.
Related Terms: Bank; Financial Services.

29. Barrel

Statutory Definition: “means a barrel of 42 United States gallons”.
Plain English Explanation: The standard unit of measurement for oil.
How It Works Under the Act: It is the unit used to calculate the “Production Allowance” (e.g., $2.50 per barrel) and royalties owed to the government.
Where It Appears: s 119, Sixth Schedule, Seventh Schedule NTA 2025.
Related Terms: Crude Oil; Production Allowance.

30. Basis Period

Statutory Definition: “for an allowance means the basis period for assessable profit or income”.
Plain English Explanation: The actual timeframe (often the previous year) used to calculate the figures for the current tax year.
How It Works Under the Act: It aligns the taxpayer’s financial year with the government’s tax year to ensure everyone is reporting on a consistent 12-month cycle.
Where It Appears: s 22, First Schedule NTA 2025.
Related Terms: Year of Assessment; Accounting Period.

31. Beneficial Owner

Statutory Definition: “means a person who has ownership, control, rights, indirect benefit or beneficial interest over shares or clients, or over income, goods, services or assets subject to tax, or on whose behalf a transaction is carried out”.
Plain English Explanation: The “real” owner who ultimately gets the money or benefit, even if the legal title is in someone else’s name.
How It Works Under the Act: This term is vital for stopping people from hiding wealth behind “shell companies” and for determining who is eligible for benefits under international tax treaties.
Where It Appears: s 121, s 202 NTA 2025.
Related Terms: Connected Persons; Resident Individual.

32. Benefits-in-Kind

Statutory Definition: Refers to cases where an employer “incurs an expense in the provision of any benefit or perquisite” for an employee, such as an asset or housing.
Plain English Explanation: Non-cash perks from your job, like a company car or free house, which have a money value that can be taxed.
How It Works Under the Act: The law treats these as “hidden” salary. For example, if you use a company asset, 5% of its cost is added to your taxable income each year.
Where It Appears: s 14 NTA 2025.
Related Terms: Employment Income; Gross Monthly Remuneration.

33. Bill of Exchange

Statutory Definition: “includes draft, order, cheque and letter of credit, and any document… entitling a person… to payment by any other person… of any sum of money”.
Plain English Explanation: Any written order used in business that requires one person to pay a specific amount of money to another, like a check or a bank draft.
How It Works Under the Act: These documents are subject to “Stamp Duty” (a small tax) when they are issued.
Where It Appears: s 128 NTA 2025.
Related Terms: Promissory Note; Stamp Duty.

34. Borrower

Statutory Definition: “means an approved borrower in a regulated securities lending transaction”.
Plain English Explanation: A person or entity that takes a temporary “loan” of stocks or bonds.
How It Works Under the Act: The Act ensures that simply borrowing and returning shares does not count as “selling” them, so no capital gains tax is triggered.
Where It Appears: s 34, s 185, s 202 NTA 2025.
Related Terms: Lender; Regulated Securities Lending Transaction.

35. Building

Statutory Definition: “any structure permanently affixed to land for all or most of the useful life of that structure… but excludes any fixtures or structures that can easily be removed… such as radio and television masts, transmission lines, cell towers, vehicles, mobile homes, caravans and trailers”.
Plain English Explanation: A permanent house, office, or factory on land.
How It Works Under the Act: This definition determines what qualifies for “Qualifying Building Expenditure,” allowing a business to claim yearly tax deductions for the cost of its facilities.
Where It Appears: s 202, First Schedule NTA 2025.
Related Terms: Qualifying Capital Expenditure; Real Property.

36. Business Restructuring

Statutory Definition: Refers contextually to the rules in s 190 regarding a “merger of two or more trades or businesses” or “sale or transfer”.
Plain English Explanation: The legal and financial rearranging of a company, such as when two companies join together or a business is sold.
How It Works Under the Act: It provides “continuity,” meaning the new or surviving company can often keep using the tax losses and equipment deductions of the old company so they aren’t lost during the change.
Where It Appears: s 190 NTA 2025.
Related Terms: Merger; Cessation of Trade.

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37. Capital Allowance

Statutory Definition: An allowance made to a person who has incurred “qualifying expenditure wholly and exclusively for the purposes of its trade or business”.
Plain English Explanation: A tax deduction that lets a business “write off” the cost of its big purchases (like machinery or buildings) over several years to account for wear and tear.
How It Works Under the Act: Instead of subtracting the full cost of an expensive machine from profit in one year, the business subtracts a percentage (e.g., 20%) every year until the cost is recovered.
Where It Appears: s 27, First Schedule NTA 2025.
Related Terms: Qualifying Capital Expenditure; Residue.

38. Capital Redemption Business

Statutory Definition: “means the business of effecting and carrying out contracts of insurance… whereby… a sum or a series of sums is to become payable to the insured in the future, excluding life or industrial assurance business”.
Plain English Explanation: A type of insurance business where the company pays out a lump sum at the end of a specific period.
How It Works Under the Act: The rights under these specific policies are treated as assets that can yield a “Chargeable Gain” when they are disposed of.
Where It Appears: s 49 NTA 2025.
Related Terms: Life Assurance Policies; Industrial Assurance Business.

39. Chargeable Assets

Statutory Definition: “all forms of property… whether situated in Nigeria or not, including—(a) any form of asset, shares, options, rights, debts, digital or virtual assets and incorporeal property generally”.
Plain English Explanation: Anything you own that, if sold for a profit, would require you to pay “Capital Gains Tax”.
How It Works Under the Act: This category has been expanded to include modern items like Bitcoin and NFTs, ensuring the government can tax profits from the digital economy.
Where It Appears: s 34 NTA 2025.
Related Terms: Chargeable Gains; Digital Assets.

40. Chargeable Gains

Statutory Definition: “has the meaning given in section 33 of this Act,” referring to gains “accruing to any person in a year of assessment” from the disposal of assets.
Plain English Explanation: The profit you make when you sell an asset for more than you paid for it.
How It Works Under the Act: This profit is calculated separately from regular income and is taxed at a specific rate when a “disposal” (like a sale or gift) happens.
Where It Appears: ss 33, 202 NTA 2025.
Related Terms: Capital Gains; Disposal of Assets.

41. Chargeable Hydrocarbon Tax

Statutory Definition: “shall be a percentage of the aggregated chargeable profit… and it shall be— (a) 30%… or (b) 15%…” depending on the location of the oil field.
Plain English Explanation: A specialized tax on the profits made by companies that produce crude oil in Nigeria.
How It Works Under the Act: Onshore and shallow water oil production is taxed at 30%, while newer or riskier projects are taxed at a lower 15% rate.
Where It Appears: s 72 NTA 2025.
Related Terms: Hydrocarbon Tax; Chargeable Profits.

42. Chargeable Income

Statutory Definition: “is the total income of that individual… less eligible deductions”.
Plain English Explanation: The actual amount of your money that the government uses to calculate your final tax bill after all allowed “discounts” are taken off.
How It Works Under the Act: You start with your total earnings, subtract things like pension and health insurance contributions, and the remaining number is your “Chargeable Income”.
Where It Appears: s 30 NTA 2025.
Related Terms: Total Income; Eligible Deductions.

43. Chargeable Oil

Statutory Definition: “means crude oil, condensate or natural gas liquids produced upstream of the measurement point”.
Plain English Explanation: Raw oil or liquid gas that has been brought to the surface and measured for tax purposes.
How It Works Under the Act: It is the “raw material” used to calculate how much revenue an oil company made and, consequently, how much tax and royalty they owe.
Where It Appears: ss 67, 78, 119 NTA 2025.
Related Terms: Crude Oil; Measurement Point.

44. Chargeable Profit

Statutory Definition: “means chargeable profit as stated in sections 67 and 91 of this Act”.
Plain English Explanation: The profit an oil company has left after subtracting all its allowed business costs and special production allowances.
How It Works Under the Act: This is the final number that the tax rate (like 30% or 15%) is applied to for the Hydrocarbon Tax.
Where It Appears: ss 67, 71, 91, 119 NTA 2025.
Related Terms: Assessable Profit; Production Allowance.

45. Chargeable Volume

Statutory Definition: “means the chargeable volume as set out in paragraph 2 of the Seventh Schedule to the Petroleum Industry Act”.
Plain English Explanation: The actual amount of oil or gas produced that is used to calculate the “Royalty” (the government’s share of the production).
How It Works Under the Act: This volume is determined at a “Measurement Point” to ensure the government gets its fair share of every barrel produced.
Where It Appears: s 119, Seventh Schedule NTA 2025.
Related Terms: Royalty; Measurement Point.

46. Collective Investment Scheme

Statutory Definition: “means any arrangement made for the purpose of providing facilities for the participation of the public… in profits or income arising from the acquisition, holding, management or disposal of securities or any other property”.
Plain English Explanation: An investment vehicle (like a mutual fund) where many people pool their money together to invest in the stock market or property.
How It Works Under the Act: These schemes are treated like companies for tax purposes, but the profits are often taxed in the hands of the individual investors rather than the fund itself.
Where It Appears: s 63 NTA 2025.
Related Terms: Authorised Collective Investment; Unit Holder.

47. Commencement Date

Statutory Definition: “means the date that an entity carries out its first transaction” which could be its first sale, purchase, or the date it obtains an operating license.
Plain English Explanation: The official “birthday” of a business for tax purposes—when it actually starts doing business.
How It Works Under the Act: This date is critical because it triggers the start of tax reporting and determines when specialized tax incentives (like the 5-year tax holiday for farms) begin.
Where It Appears: s 202 NTA 2025.
Related Terms: Commencement of Business; Year of Assessment.

48. Commencement of Business

Statutory Definition: “means the starting of operation of a business”.
Plain English Explanation: The point at which a company moves from just being “registered” to actually functioning and trading.
How It Works Under the Act: It marks the transition where “pre-production” costs stop and regular business expenses begin to be deducted against actual profits.
Where It Appears: s 202 NTA 2025.
Related Terms: Commencement Date; Pre-production Cost.

49. Communication Infrastructure

Statutory Definition: “means telecommunications fibre optics, satellite cellular networks, broadband systems radio transmission towers, undersea cables and other similar infrastructure”.
Plain English Explanation: The physical systems (cables, towers, satellites) that make the internet and phones work.
How It Works Under the Act: These specific assets qualify for unique tax treatment or are relevant for determining the “Significant Economic Presence” of foreign tech companies.
Where It Appears: s 17, s 202 NTA 2025.
Related Terms: Significant Economic Presence; Digital Footprint.

50. Compensating Payments

Statutory Definition: “any payments made in lieu of interest or dividend under a regulated securities lending transaction”.
Plain English Explanation: Money paid to someone who lent out their shares or bonds to make up for the dividend or interest they missed while the shares were gone.
How It Works Under the Act: To keep the markets simple, the Act often treats these payments exactly like the original dividend or interest for tax purposes.
Where It Appears: s 4, s 202 NTA 2025.
Related Terms: Regulated Securities Lending Transaction; Dividend; Interest.

51. Connected Persons

Statutory Definition: Includes relatives, married couples, business partners, or companies where one person controls both (e.g., holding 30% or more of voting rights).
Plain English Explanation: People or businesses that have a close relationship, making it more likely they might “help” each other avoid tax by charging artificial prices.
How It Works Under the Act: Transactions between these persons are closely watched by the tax office to ensure they use “Arm’s Length” (fair market) pricing.
Where It Appears: s 191, s 202 NTA 2025.
Related Terms: Beneficial Owner; Arm’s Length Terms and Conditions.

52. Constituent Entity

Statutory Definition: “means any company, permanent establishment or business unit that is a member of a multinational enterprise”.
Plain English Explanation: Any single branch or branch office that is part of a large international company.
How It Works Under the Act: If a constituent entity in Nigeria is paying a very low tax rate, the Act may require the parent company to pay a “top-up” tax to reach the 15% global minimum.
Where It Appears: s 57, s 202 NTA 2025.
Related Terms: Multinational Enterprise (MNE); Effective Tax Rate.

53. Conveyance in Consideration of a Debt

Statutory Definition: “Where a property is conveyed to a person in consideration… of a debt due… the debt shall be deemed the consideration”.
Plain English Explanation: When you transfer land or a building to someone specifically to pay off a debt you owe them.
How It Works Under the Act: This transfer is treated like a normal sale for tax purposes, meaning Stamp Duty is calculated based on the value of the debt that was cancelled.
Where It Appears: s 132 NTA 2025.
Related Terms: Conveyance on Sale; Stamp Duty.

54. Conveyance on Sale

Statutory Definition: “means the transfer of interest in real property, being land and building, only”.
Plain English Explanation: The official legal transfer of ownership of land or a house from a seller to a buyer.
How It Works Under the Act: This is one of the primary transactions subject to Stamp Duty. The person receiving the property is responsible for paying the tax.
Where It Appears: ss 126, 131, 202 NTA 2025.
Related Terms: Real Property; Stamp Duty.

55. Cost Oil

Statutory Definition: “shall be allocated to the contractor in such quantum as shall generate an amount sufficient for the recovery of operating costs”.
Plain English Explanation: A portion of the oil produced that an oil company is allowed to keep for itself to pay back the money it spent on drilling and operations.
How It Works Under the Act: Under “Production Sharing Contracts,” the company first takes “Cost Oil” to pay its bills, then the government and the company split whatever oil is left.
Where It Appears: s 109 NTA 2025.
Related Terms: Production Sharing Contract; Profit Oil.

56. Crude Oil

Statutory Definition: “petroleum, which is in liquid conditions upon production… either in its natural state or after the extraction of water, sand or other foreign substance… but before any such oil has been refined”.
Plain English Explanation: Raw “black gold”—the natural liquid oil that comes directly out of the ground before it is turned into gasoline or diesel.
How It Works Under the Act: This is the primary subject of the Hydrocarbon Tax and the specialized royalty rules for the petroleum sector.
Where It Appears: s 119 NTA 2025.
Related Terms: Petroleum; Chargeable Oil.

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57. Decommissioning and Abandonment

Statutory Definition: “means the approved process of cessation of operations of crude oil and natural gas wells… including shutting down… total or partial removal of installations… and environmental restoration”.
Plain English Explanation: The final cleanup of an oil well or factory after it is no longer being used.
How It Works Under the Act: Companies are required to set aside money for this cleanup. They can deduct these contributions from their taxes, but only if the money is kept in a special, restricted bank account.
Where It Appears: ss 68, 86, 119 NTA 2025.
Related Terms: Upstream Petroleum Operations; Environmental Remediation.

58. Deductible Interest

Statutory Definition: Contextually described in s 20 as “any sum payable by way of interest on debt employed in generating the income”.
Plain English Explanation: The interest you pay on a business loan that you are allowed to subtract from your profit to lower your tax.
How It Works Under the Act: There is a “cap”—you can generally only deduct interest up to 30% of your business earnings (EBITDA) if the loan is from a related party, to prevent companies from shifting profits out of Nigeria.
Where It Appears: s 20, Third Schedule NTA 2025.
Related Terms: Excess Interest; Allowable Deductions.

59. Deductions

Statutory Definition: Specific sums referred to throughout Part IV and VII that are “subtracted from gross income”.
Plain English Explanation: Legitimate costs and allowances that reduce the final amount of money the government taxes.
How It Works Under the Act: Deductions are split into “Business Deductions” (like rent and salaries) and “Individual Deductions” (like pension contributions or rent relief).
Where It Appears: ss 20, 28, 30 NTA 2025.
Related Terms: Allowable Deductions; Eligible Deductions.

60. Deep Offshore

Statutory Definition: “any area within the territorial waters… having a water depth in excess of 200 metres”.
Plain English Explanation: Oil and gas fields located in very deep parts of the ocean.
How It Works Under the Act: These projects have different tax rates and royalty rules because they are much more expensive and difficult to build than projects on land.
Where It Appears: s 105, s 119 NTA 2025.
Related Terms: Shallow Water; Onshore.

61. Development Levy

Statutory Definition: “A development levy of 4% is imposed on the assessable profits of all companies… other than small companies and non-resident companies”.
Plain English Explanation: A mandatory contribution (4% of profit) that large Nigerian companies pay to fund education, security, and technology projects.
How It Works Under the Act: The money is split among agencies like the Tertiary Education Trust Fund (50%) and the Nigerian Education Loan fund (15%).
Where It Appears: s 59 NTA 2025.
Related Terms: Assessable Profit; Small Company.

62. Digital Assets

Statutory Definition: “means digital representation of value that can be digitally exchanged, including crypto assets, utility tokens, security tokens, non-fungible tokens (NFT)…”.
Plain English Explanation: Virtual items that have financial value, like Bitcoin, Ethereum, or digital art (NFTs).
How It Works Under the Act: These are now officially classified as “Chargeable Assets,” meaning you must pay tax on any profit you make when you sell or trade them.
Where It Appears: ss 34, 46, 202 NTA 2025.
Related Terms: Incorporeal Property; Chargeable Assets.

63. Digital Footprint

Statutory Definition: Not expressly defined in s 202; used operationally to describe a “Significant Economic Presence”.
Plain English Explanation: The online activity a foreign company has in Nigeria (like streaming or app store downloads) that allows the government to tax them.
How It Works Under the Act: Even if a tech giant like Netflix or Google doesn’t have an office in Nigeria, their “digital footprint” means they are making money from Nigerians and must pay tax on those profits.
Where It Appears: s 17 NTA 2025.
Related Terms: Significant Economic Presence; Permanent Establishment.

64. Disposal of Assets

Statutory Definition: Occurs where “any sum is derived from a sale, lease, transfer, an assignment, a compulsory acquisition or any other disposition of assets”.
Plain English Explanation: Any way you “get rid of” or transfer ownership of something you own—selling it, giving it away, or the government taking it.
How It Works Under the Act: The disposal is the “trigger event” that makes you calculate whether you made a profit and pay the necessary tax on that gain.
Where It Appears: s 35 NTA 2025.
Related Terms: Chargeable Gains; Market Value.

65. Dividend

Statutory Definition: Includes profits distributed to shareholders, bonus shares, and distributions made during a company’s liquidation.
Plain English Explanation: A share of a company’s profit that it pays out to its owners/shareholders.
How It Works Under the Act: For individuals, this is part of their “investing income.” For companies, it is generally included in their profits at the “gross” amount (before any tax was taken out).
Where It Appears: ss 4, 8, 202 NTA 2025.
Related Terms: Nigerian Dividends; Franked Investment Income.

66. Double Taxation Agreement

Statutory Definition: An agreement with a “treaty partner for the purpose of providing relief from double taxation”.
Plain English Explanation: A deal between Nigeria and another country to make sure you don’t have to pay tax twice on the same income.
How It Works Under the Act: If you pay tax in London, you can get a “credit” (a discount) on your Nigerian tax bill for that same income, so you only pay once.
Where It Appears: ss 120, 121 NTA 2025.
Related Terms: Relief for Double Taxation; Treaty Partner.

67. Dutiable Instruments

Statutory Definition: Contextually refers to any “instrument executed in Nigeria… chargeable with a duty”.
Plain English Explanation: Legal documents (like land titles, loan agreements, or checks) that require a tax stamp to be legally valid.
How It Works Under the Act: If you don’t pay the duty and get the document “stamped” within 30 days, the document cannot be used as evidence in a court or arbitration.
Where It Appears: ss 124, 126, 127 NTA 2025.
Related Terms: Stamp Duty; Advalorem.

E

68. Economic Development Incentive Certificate

Statutory Definition: “means a certificate issued under this Act certifying… a company to be a priority company”.
Plain English Explanation: An official document given to a company in an important industry (like farming or refining) that grants them special tax holidays and discounts.
How It Works Under the Act: It is issued by the President and lasts for 5 years. During this time, the company’s profits are essentially tax-free to help it get established.
Where It Appears: s 167, s 202 NTA 2025.
Related Terms: Priority Company; Economic Development Tax Credit.

69. Economic Development Tax Credit

Statutory Definition: “The tax payable on the profits of a priority product or service… shall constitute economic development tax credit for the company”.
Plain English Explanation: A specialized “credit” that a priority company earns during its tax holiday.
How It Works Under the Act: If the company earns more credits than it can use during its 5-year holiday, it can “save” them and use them to lower its tax for up to 5 more years after the holiday ends.
Where It Appears: s 177 NTA 2025.
Related Terms: Priority Business; Economic Development Incentive Certificate.

70. Effective Tax Rate

Statutory Definition: “means the rate produced by dividing the aggregate covered tax paid by a company… by the profits of the company”.
Plain English Explanation: The actual percentage of your profit you pay in tax, as opposed to the “official” rate (which is usually 30%).
How It Works Under the Act: The Act requires very large companies to have an effective tax rate of at least 15%. If their rate is lower because of too many loopholes or deductions, they must pay a “top-up” tax.
Where It Appears: s 57 NTA 2025.
Related Terms: Minimum Effective Tax Rate; Aggregate Covered Tax Paid.

71. Employment Income

Statutory Definition: “salaries, wages, fees, allowances, compensations, bonuses, premiums, benefits or other perquisites” given to an employee.
Plain English Explanation: Everything you earn from your job—not just your basic salary, but also your bonuses and perks.
How It Works Under the Act: It is generally taxed on a “Pay-As-You-Earn” (PAYE) basis, where your employer takes the tax out before paying you.
Where It Appears: s 4, s 13 NTA 2025.
Related Terms: Assessable Income; Benefits-in-Kind.

72. Entertainment

Statutory Definition: “includes any exhibition and performance in which admission of people is subject to payment,” but excludes government-approved school plays or religious events.
Plain English Explanation: Shows, concerts, and exhibitions where you have to buy a ticket to enter.
How It Works Under the Act: Businesses in this sector have specific rules for calculating taxable profits and may be eligible for “Priority Sector” incentives if they involve digital content or film production.
Where It Appears: s 202, Tenth Schedule NTA 2025.
Related Terms: Priority Industry; Digital Assets.

73. Excess Interest

Statutory Definition: “shall mean an amount of total interest paid… to a connected person in excess of 30% of [EBITDA]”.
Plain English Explanation: The part of the interest on a loan from a business partner that is “too high” according to the law.
How It Works Under the Act: The government only lets you subtract interest up to a certain point (30% of your earnings). Anything above that “excess” cannot be used to lower your tax in the current year.
Where It Appears: Third Schedule NTA 2025.
Related Terms: Deductible Interest; Connected Persons.

74. Executor

Statutory Definition: “includes any person administering the estate of a deceased person”.
Plain English Explanation: The person (or bank) responsible for handling the money and property of someone who has died.
How It Works Under the Act: The executor is legally responsible for filing tax returns and paying any taxes owed by the deceased person’s estate.
Where It Appears: s 202, Fifth Schedule NTA 2025.
Related Terms: Personal Representatives; Settlement.

75. Exempt Supplies

Statutory Definition: Specific goods and services listed in s 186 that are not subject to VAT, such as baby products, basic foods, and medical services.
Plain English Explanation: Essential items that the government has decided should not have any VAT added to their price.
How It Works Under the Act: Unlike “Zero-Rated” items, if you sell exempt supplies, you cannot claim back the VAT you paid on your own business costs.
Where It Appears: s 186 NTA 2025.
Related Terms: Value Added Tax (VAT); Zero-Rated Supplies.

76. Export Processing Zone Entity

Statutory Definition: “means an approved and licensed enterprise under the Nigeria Export Processing Zones Act”.
Plain English Explanation: A business operating in a special area (like a free trade zone) that makes products specifically to be sent abroad.
How It Works Under the Act: These companies are 100% tax-free as long as they export almost everything they make. If they sell more than 25% of their products inside Nigeria, they must start paying tax.
Where It Appears: s 60, Second Schedule NTA 2025.
Related Terms: Exported Goods; Export Free Zone Entity.

77. Exported Goods

Statutory Definition: “means goods produced or procured for commercial purposes by a person in Nigeria and supplied to a person outside Nigeria”.
Plain English Explanation: Nigerian-made products that are sold to customers in other countries.
How It Works Under the Act: To encourage Nigerian businesses to sell abroad, these goods are “Zero-Rated,” meaning they have 0% VAT.
Where It Appears: ss 187, 189 NTA 2025.
Related Terms: Exported Service; Zero-Rated Supplies.

78. Exported Service

Statutory Definition: “means a service rendered to a non-resident person outside Nigeria… regardless of where the service is rendered,” provided it is not used by a Nigerian branch of that foreign customer.
Plain English Explanation: Work (like consulting or programming) done by a Nigerian for someone living abroad.
How It Works Under the Act: These services are also “Zero-Rated” (0% VAT) to encourage Nigerians to earn foreign currency.
Where It Appears: s 187, s 202 NTA 2025.
Related Terms: Exported Goods; Non-Resident Person.

F

79. Family Income

Statutory Definition: “income of a family recognised under any law or custom in Nigeria… in which the several interests of individual members… cannot be separately determined”.
Plain English Explanation: Money earned by an entire family together, where you can’t say exactly which part belongs to which person.
How It Works Under the Act: The family is taxed as a single unit, and the tax is paid in the state where the person who usually receives the money lives.
Where It Appears: ss 3, 202, Twelfth Schedule NTA 2025.
Related Terms: Individual; Taxable Person.

80. Field

Statutory Definition: “includes an area consisting of a single reservoir or multiple reservoirs all grouped on… the same geological structural feature”.
Plain English Explanation: A specific underground location where oil or gas is found.
How It Works Under the Act: Most oil taxes and “Production Allowances” are calculated on a “field basis” rather than for the whole company.
Where It Appears: s 119, Sixth Schedule, Seventh Schedule NTA 2025.
Related Terms: Reservoir; Upstream Petroleum Operations.

81. Finance Lease

Statutory Definition: “means a lease arrangement where the lessee effectively assumes most of the risks and rewards associated with asset ownership”.
Plain English Explanation: A long-term rental where you are essentially buying the item (like a car or machine) by making payments over time.
How It Works Under the Act: The law treats the person renting (the lessee) as the “owner” for tax purposes, meaning they—not the rental company—get to claim the equipment tax deductions.
Where It Appears: s 202, First Schedule NTA 2025.
Related Terms: Operating Lease; Qualifying Capital Expenditure.

82. Financial Institutions

Statutory Definition: “includes depository institutions, custodial institutions, investment institutions and insurance companies”.
Plain English Explanation: Any business that deals with managing money, including banks, investment firms, and insurance companies.
How It Works Under the Act: These institutions have different rules for interest deductions and are often exempt from the “excess interest” caps that apply to regular businesses.
Where It Appears: s 202, Third Schedule NTA 2025.
Related Terms: Financial Services; Bank.

83. Financial Services

Statutory Definition: “includes depository services, custodial services, investment services and insurance services”.
Plain English Explanation: The specialized work done by financial institutions, such as managing your savings or insuring your house.
How It Works Under the Act: The income from these services is taxable, but they may have specific VAT exemptions or specialized calculation rules for insurance.
Where It Appears: ss 61, 202 NTA 2025.
Related Terms: Financial Institutions; Insurance.

84. Fiscal Gas Price

Statutory Definition: “means the price established in paragraph 8(3) of the Seventh Schedule to the Petroleum Industry Act”.
Plain English Explanation: The official price set by the government for natural gas to ensure every company pays the same fair amount of tax.
How It Works Under the Act: This price is used to calculate royalties and “Gas Production Tax Credits” to encourage clean energy investment.
Where It Appears: s 84, s 119 NTA 2025.
Related Terms: Natural Gas; Royalty.

85. Fiscal Oil Price

Statutory Definition: “means the price established in paragraphs 8(1) and (2) of the Seventh Schedule of the Petroleum Industry Act”.
Plain English Explanation: The official price set by the government for a barrel of crude oil for tax purposes.
How It Works Under the Act: If an oil company sells its oil to its own “sister company” at a suspiciously low price, the tax office will ignore that low price and use the “Fiscal Oil Price” to calculate the tax instead.
Where It Appears: ss 73, 100, 119 NTA 2025.
Related Terms: Crude Oil; Arm’s Length.

86. Fiscal Stabilisation

Statutory Definition: Refers to sections in contracts that protect companies from future law changes; the NTA 2025 states these “shall not be applicable to… generally applicable taxes” like VAT and Stamp Duties.
Plain English Explanation: A promise from the government that the “tax rules won’t change” during a long contract.
How It Works Under the Act: The Act limits these promises. Even if an oil company has a stabilization deal, they still have to follow new rules regarding the environment, labor laws, and climate change taxes.
Where It Appears: s 88 NTA 2025.
Related Terms: Production Sharing Contract; Climate Change Act.

87. Foreign Company

Statutory Definition: “means a non-resident company or any company other than a Nigerian company”.
Plain English Explanation: Any business that was not incorporated or “born” in Nigeria.
How It Works Under the Act: They are generally only taxed on money they make inside Nigeria, whereas Nigerian companies are taxed on their global income.
Where It Appears: ss 6, 202 NTA 2025.
Related Terms: Nigerian Company; Non-Resident.

88. Foreign Income/Tax

Statutory Definition: “means any tax paid to a treaty partner… [or] an income liable to tax under this Act and to a treaty partner”.
Plain English Explanation: Money you earn in another country, or the tax you paid to that country’s government.
How It Works Under the Act: You can use the tax you paid abroad as a “credit” to reduce your Nigerian tax bill, so you aren’t taxed twice on the same dollar or pound.
Where It Appears: ss 120, 123 NTA 2025.
Related Terms: Double Taxation Agreement; Relief for Double Taxation.

89. Franked Investment Income

Statutory Definition: Not formally defined in s 202; refers contextually to “dividend income… gross of any tax paid or deducted at source”.
Plain English Explanation: Investment income (like dividends) that has already had its tax taken out by the payer before it reaches you.
How It Works Under the Act: Because the tax has already been paid once, the company receiving the money doesn’t have to pay tax on it again when they summarize their profits.
Where It Appears: ss 8, 9 NTA 2025.
Related Terms: Dividend; Withholding Tax.

90. Frontier Acreages

Statutory Definition: “means any or all acreages in an area on land in Nigeria defined as a frontier in a regulation issued by the Commission”.
Plain English Explanation: New, unexplored areas (often in the North or inland) where the government thinks there might be oil or gas but hasn’t proven it yet.
How It Works Under the Act: To encourage companies to take the risk of exploring these new areas, the Act provides much lower royalty rates (7.5%) and other tax breaks.
Where It Appears: s 65, s 119, Seventh Schedule NTA 2025.
Related Terms: Frontier Basin; Upstream Petroleum Operations.

G

91. General Insurance Company

Statutory Definition: “whether proprietary or mutual, other than a life insurance company”.
Plain English Explanation: An insurance business that covers things like cars, fire, or theft (non-life items).
How It Works Under the Act: They calculate their taxable profit by taking the total premiums they received and subtracting a “reserve” for claims they expect to pay in the future.
Where It Appears: s 61 NTA 2025.
Related Terms: Life Insurance Company; Insurance.

92. Goods

Statutory Definition: “for the purposes of Chapter Six of this Act, means all forms of tangible properties, movable or immovable”.
Plain English Explanation: Physical things you can touch, like electronics, clothes, and even land or houses.
How It Works Under the Act: Most goods are subject to VAT (7.5%) when they are sold, unless they are specifically listed as “Exempt” or “Zero-Rated”.
Where It Appears: ss 146, 202 NTA 2025.
Related Terms: Services; Taxable Supplies.

93. Greenfield Non-Associated Gas Development

Statutory Definition: “means all existing undeveloped non-associated gas rights and future non-associated gas rights granted under the licensing bid rounds”.
Plain English Explanation: A brand-new project to produce natural gas from an area where no oil is present.
How It Works Under the Act: To encourage clean energy, these “Greenfield” projects get a special “Gas Production Tax Credit” for the first 10 years after they start making money.
Where It Appears: s 85, s 119 NTA 2025.
Related Terms: Non-Associated Gas; Gas Production Tax Credit.

94. Gross Turnover

Statutory Definition: “means the gross inflow of economic benefits during the period… including sales of goods, supply of services, receipt of interest, rents, royalties or dividends…”.
Plain English Explanation: The total “top line” money a business brings in before it pays for any expenses, salaries, or taxes.
How It Works Under the Act: This is the primary number used to decide if a company is “Small” (₦50 million or less), “Medium,” or “Large,” which determines their tax rate.
Where It Appears: ss 56, 202 NTA 2025.
Related Terms: Small Company; Taxable Income.

H

95. Hire Purchase

Statutory Definition: “means a financial arrangement in which a person acquires immediate use of an asset by making regular instalment payments… and may gain ownership… on completion”.
Plain English Explanation: A “rent-to-own” deal where you pay monthly for a machine or car and eventually own it at the end.
How It Works Under the Act: The person renting the item (the hirer) is treated as the owner for tax purposes, meaning they get to claim the equipment tax deductions (Capital Allowances) even before they have fully paid for it.
Where It Appears: s 202, First Schedule NTA 2025.
Related Terms: Finance Lease; Capital Allowance.

96. Holder

Statutory Definition: “means any Nigerian company who holds an oil prospecting licence or oil mining lease”.
Plain English Explanation: A company that has the official legal permit to search for or produce oil in Nigeria.
How It Works Under the Act: The holder is responsible for paying royalties and taxes to the government on behalf of all the other partners in an oil project.
Where It Appears: ss 105, 119 NTA 2025.
Related Terms: Licensee; Contractor.

97. Host Communities

Statutory Definition: “means communities situated in or appurtenant to the area of operation of a settlor”.
Plain English Explanation: The villages and towns located near oil rigs or factories.
How It Works Under the Act: Companies must contribute money to a special fund for these communities. These contributions are “tax deductible,” meaning they lower the company’s tax bill.
Where It Appears: ss 68, 82, 119 NTA 2025.
Related Terms: Host Communities Development Trust.

98. Host Communities Development Trust

Statutory Definition: “has the meaning given to it in section 235(1) of Petroleum Industry Act”.
Plain English Explanation: A special legal fund established by an oil company to pay for projects (like schools or clinics) in the local area where they work.
How It Works Under the Act: It provides a mechanism to ensure that the 3% contribution from oil companies actually reaches and benefits the local people.
Where It Appears: s 119 NTA 2025.
Related Terms: Host Communities; Upstream Petroleum Operations.

99. Hydrocarbon Tax

Statutory Definition: A tax “levied upon the profits of any company engaged in upstream petroleum operations in relation to crude oil”.
Plain English Explanation: A specialized income tax paid only by companies that produce crude oil.
How It Works Under the Act: It is calculated separately from regular company tax. The rates are 15% or 30%, depending on where the oil is found.
Where It Appears: s 66 NTA 2025.
Related Terms: Chargeable Hydrocarbon Tax; Upstream Petroleum Operations.

I

100. Import / Importer

Statutory Definition: “means bringing in goods and services from another country… [an importer is] any person who imports goods”.
Plain English Explanation: Buying products from abroad and bringing them into Nigeria.
How It Works Under the Act: Importers must pay VAT (7.5%) and any applicable duties at the port before the goods are allowed to leave.
Where It Appears: ss 150, 156, 202 NTA 2025.
Related Terms: Value Added Tax (VAT); Exported Goods.

101. Income from Investing Activities

Statutory Definition: “includes dividend, interest, royalty and any other income of similar nature”.
Plain English Explanation: Money you make from your savings, shares, or property, rather than from a daily job.
How It Works Under the Act: For individuals, this is added to their salary to find their “Total Income.” For many people, the tax is already taken out at the source (withholding tax).
Where It Appears: s 28, s 202 NTA 2025.
Related Terms: Dividend; Interest; Royalty.

102. Income Tax

Statutory Definition: “means any tax chargeable under Chapters Two and Three of this Act”.
Plain English Explanation: The generic term for the tax paid on money earned by people (Personal Income Tax) and companies (CIT).
How It Works Under the Act: It is the primary way the government collects revenue from the economy, covering everything from small shop profits to massive oil revenues.
Where It Appears: ss 3, 202 NTA 2025.
Related Terms: Tax; Assessable Tax.

103. Incubator

Statutory Definition: “is as defined in the Nigeria Startup Act, No. 32, 2022”.
Plain English Explanation: A company or facility that provides early-stage office space, training, and support to very new businesses to help them survive the first few years.
How It Works Under the Act: Like accelerators, incubators are part of the startup ecosystem and get special tax exemptions when they eventually sell their successful investments.
Where It Appears: ss 163, 202 NTA 2025.
Related Terms: Accelerator; Labeled Startup.

104. Individual

Statutory Definition: “includes a corporation sole and a body of individuals but does not include a company, partnership, community, family, trustee or executor…”.
Plain English Explanation: A single human being or a specific official office (like a King or Bishop).
How It Works Under the Act: This separates “people” from “businesses.” Individuals pay Personal Income Tax on a graduated scale (0% up to 25%), while companies pay a flat 30%.
Where It Appears: ss 58, 202 NTA 2025.
Related Terms: Taxable Person; Resident Individual.

105. Industrial Assurance Business

Statutory Definition: “means the business of effecting… contracts of insurance in connection with any industrial assurance whereby… a sum… is to become payable to the insured in the future”.
Plain English Explanation: Specialized insurance for factory workers or industrial projects.
How It Works Under the Act: Similar to capital redemption business, the rights under these policies are treated as “Chargeable Assets” that can be taxed if they are sold for a profit.
Where It Appears: s 49 NTA 2025.
Related Terms: Life Assurance Policies; Capital Redemption Business.

106. Inland Basin

Statutory Definition: “means any of the following Basins namely, Anambra, Benin, Benue, Chad, Gongola, Sokoto…”.
Plain English Explanation: Specific geological areas inside Nigeria (not near the coast) that are being explored for oil and gas.
How It Works Under the Act: Companies working here get better tax terms (lower rates) than those working in established oil regions because it is more expensive to transport oil from the middle of the country.
Where It Appears: s 119, Seventh Schedule NTA 2025.
Related Terms: Deep Offshore; Onshore.

107. Input VAT

Statutory Definition: “The VAT paid by a taxable person… on the taxable supply made to the person”.
Plain English Explanation: The VAT you pay when you buy supplies for your business.
How It Works Under the Act: If you are a registered business, you can subtract the “Input VAT” you paid to your suppliers from the “Output VAT” you collected from your customers. You only send the difference to the government.
Where It Appears: ss 152, 156 NTA 2025.
Related Terms: Output VAT; Value Added Tax (VAT).

108. Instrument

Statutory Definition: “includes any document relating to transactions consummated through conventional, electronic or other means”.
Plain English Explanation: Any formal piece of paper or digital file that records a deal, like a contract, a check, or a property deed.
How It Works Under the Act: This is the base unit for “Stamp Duty.” Every instrument must be stamped to be legally binding in a Nigerian court.
Where It Appears: ss 124, 202 NTA 2025.
Related Terms: Stamp Duty; Dutiable Instruments.

109. Insurance

Statutory Definition: “includes assurance”.
Plain English Explanation: A contract where you pay a small amount of money (premium) so that the insurance company will pay you a large amount if something bad happens (like an accident or death).
How It Works Under the Act: Insurance companies have their own special section in the law for calculating profit because they have to hold massive “reserves” for future claims.
Where It Appears: ss 61, 202 NTA 2025.
Related Terms: General Insurance Company; Life Insurance Company.

110. Intangible Drilling Costs

Statutory Definition: “means all expenditure for labour, fuel, repairs, maintenance, hauling, and supplies… incidental to drilling, cleaning, deepening or completing wells”.
Plain English Explanation: The “unseen” costs of drilling an oil well—you can’t see the labor or the fuel after the job is done, but they are essential.
How It Works Under the Act: Companies are allowed to deduct these costs quickly to help them recover the huge investment needed to start an oil project.
Where It Appears: s 68, s 92, s 119 NTA 2025.
Related Terms: Exploration Well; Qualifying Drilling Expenditure.

111. Interest

Statutory Definition: Includes penal interest, income from government or corporate bonds, premiums, prizes, and “share of profit in non-interest finance arrangements”.
Plain English Explanation: The “extra” money you pay to borrow money, or the money you earn by lending it.
How It Works Under the Act: It is generally taxable. However, the government limits how much interest a company can “deduct” from its profits if the loan is from a related party (to stop profit-shifting).
Where It Appears: s 4, Third Schedule NTA 2025.
Related Terms: Deductible Interest; Franked Investment Income.

112. Investment Tax Allowance

Statutory Definition: “a rate of 50% of the qualifying expenditure in accordance with the provisions of existing applicable legislation”.
Plain English Explanation: A massive 50% tax “bonus” given to oil companies for buying new equipment.
How It Works Under the Act: If a company spends ₦1 million on a new rig in the deep ocean, they get to immediately subtract ₦500,000 from their taxable profit as a special incentive.
Where It Appears: s 105 NTA 2025.
Related Terms: Capital Allowance; Deep Offshore.

113. Investor in Gas Pipeline

Statutory Definition: “means a person issued a gas transportation pipeline licence… with the exclusive right to own, construct, operate and maintain a gas transportation pipeline”.
Plain English Explanation: A company that builds the massive pipes used to move natural gas across the country.
How It Works Under the Act: To encourage more gas use, these investors are granted a 5-year tax holiday after they finish building their pipeline.
Where It Appears: ss 80, 202 NTA 2025.
Related Terms: Priority Industry; Economic Development Incentive Certificate.

114. Itinerant Worker

Statutory Definition: “includes an individual… who works at any time in any state… by working in more than one State and work for a minimum of 20 days in at least three months”.
Plain English Explanation: A “migrant” worker who moves from one Nigerian state to another for short-term jobs (like a construction worker or harvest hand).
How It Works Under the Act: This definition helps decide which state government has the legal right to collect that worker’s income tax.
Where It Appears: s 202, Twelfth Schedule NTA 2025.
Related Terms: Resident Individual; Twelfth Schedule.

115. Invoice

Statutory Definition: “includes any document issued as evidence of demand for payment”.
Plain English Explanation: A formal bill sent from a seller to a buyer.
How It Works Under the Act: For VAT purposes, a “VAT Invoice” must include specific details like the seller’s Tax ID and the amount of tax charged. An invoice “triggers” the obligation to pay VAT to the government, even if the customer hasn’t paid you yet.
Where It Appears: ss 147, 153, 202 NTA 2025.
Related Terms: VAT Invoice; Taxable Supplies.

L

116. Labelled Startup

Statutory Definition: “is as defined in the Nigeria Startup Act No. 32, 2022”.
Plain English Explanation: A new Nigerian tech company that has been officially certified by the government to receive special benefits.
How It Works Under the Act: These startups and their investors get significant tax breaks, including a 0% tax rate on their initial profits to help them survive their first few years.
Where It Appears: s 202 NTA 2025.
Related Terms: Startup; Angel Investor.

117. Land

Statutory Definition: “means the earth’s crust, or parcelled plots”.
Plain English Explanation: The ground we build on or farm.
How It Works Under the Act: Most profit made from selling land is subject to Capital Gains Tax, but selling your “Principal Private Residence” (the house you actually live in) is exempt from this tax once in your lifetime.
Where It Appears: s 51, s 202 NTA 2025.
Related Terms: Principal Private Residences; Chargeable Assets.

118. Large-Scale Gas Utilisation Industries

Statutory Definition: Includes industries that use natural gas as a “feedstock” (like fertilizer or gas-to-liquid plants) or for power generation.
Plain English Explanation: Massive factories that use natural gas to make products or electricity.
How It Works Under the Act: These industries receive special tax incentives (like the Gas Production Tax Credit) to encourage Nigeria to stop importing chemicals and start using its own natural gas.
Where It Appears: s 119 NTA 2025.
Related Terms: Natural Gas; Greenfield Non-Associated Gas Development.

119. Lease / Lessee

Statutory Definition: Includes agreements for letting or hiring an asset; a “lessee” is the person renting the asset.
Plain English Explanation: A contract to rent an item or land for a set period. The lessee is the “tenant”.
How It Works Under the Act: For equipment leases, the “lessee” can often claim the tax deductions for the equipment’s cost as if they were the owner, provided it is a “finance lease”.
Where It Appears: s 202, First Schedule NTA 2025.
Related Terms: Finance Lease; Operating Lease.

120. Lender

Statutory Definition: “means an approved lender in a regulated securities lending transaction”.
Plain English Explanation: An investor who allows someone else to “borrow” their shares or bonds for a short time.
How It Works Under the Act: The lender is protected so they aren’t taxed for “selling” their shares when they lend them out, and they are allowed to receive “compensating payments” tax-free in many cases.
Where It Appears: s 4, s 34, s 202 NTA 2025.
Related Terms: Borrower; Regulated Securities Lending Transaction.

121. Licence / Licensee

Statutory Definition: An official certificate or permit issued by a regulator (like the Upstream Commission); the “licensee” is the person holding that permit.
Plain English Explanation: A “license” is the permission to do business (like drilling for oil), and the “licensee” is the company that has that permission.
How It Works Under the Act: The licensee is legally responsible for ensuring all taxes and royalties from that specific project are paid to the government.
Where It Appears: s 119, Seventh Schedule NTA 2025.
Related Terms: Oil Prospecting Licence; Holder.

122. Life Assurance Policies

Statutory Definition: Policies or “contract[s] for a deferred annuity on the life of any person”.
Plain English Explanation: A contract with an insurance company that pays out money to your family when you die or gives you a regular income in old age.
How It Works Under the Act: The money you pay for these policies (premiums) can be subtracted from your income to lower your tax bill (an “Eligible Deduction”).
Where It Appears: s 30, s 48 NTA 2025.
Related Terms: Eligible Deductions; Chargeable Income.

123. Life Insurance Company

Statutory Definition: A company engaged in the specialized “life class” of insurance business.
Plain English Explanation: A company that sells life insurance and pension-related products.
How It Works Under the Act: They calculate their profit differently from regular companies, using “investment income” and subtracting management expenses and commissions.
Where It Appears: s 61 NTA 2025.
Related Terms: General Insurance Company; Insurance.

124. Liquefied Natural Gas (LNG)

Statutory Definition: “natural gas in its liquid state at approximately atmospheric pressure”.
Plain English Explanation: Natural gas that has been cooled until it turns into a liquid so it can be shipped across the ocean in massive tankers.
How It Works Under the Act: Projects that make LNG are considered “Large-Scale Gas Utilisation” and receive significant tax breaks and 0% royalties on the gas they use.
Where It Appears: s 119 NTA 2025.
Related Terms: Natural Gas; Large-Scale Gas Utilisation Industries.

125. Loan Capital

Statutory Definition: “means any debenture stock, other stock or funded debt… raised by any corporation… established in Nigeria”.
Plain English Explanation: Large-scale borrowing by a company, usually by selling “bonds” or “debentures” to the public.
How It Works Under the Act: When a company issues these loans, they must pay “Stamp Duty” based on a percentage of the total money they are borrowing.
Where It Appears: s 137 NTA 2025.
Related Terms: Share Capital; Stamp Duty.

126. Lottery and Gaming

Statutory Definition: Includes “gambling, wagering, video poker, roulette… games of chance… betting… or promocional competition for prizes”.
Plain English Explanation: Casinos, sports betting, and even “raffle draws” done for marketing.
How It Works Under the Act: These businesses can subtract the “winnings” they pay out to customers from their profits before they calculate their tax bill.
Where It Appears: s 62 NTA 2025.
Related Terms: Professional Services.

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127. Manufacturer / Manufacturing

Statutory Definition: “a person who engages in the production of goods… including assembling, bottling, mixing, blending, grinding, cutting, bending, twisting and joining”.
Plain English Explanation: A business that makes something new out of raw materials or parts.
How It Works Under the Act: Manufacturers can claim “Capital Allowances” on their factory machinery and may be eligible for “Priority Sector” tax holidays if they produce essential goods.
Where It Appears: s 202, Tenth Schedule, First Schedule NTA 2025.
Related Terms: Goods; Priority Industry.

128. Marginal Field

Statutory Definition: “means a field or discovery which has been declared a marginal field prior to 1 January, 2021”.
Plain English Explanation: A small oil field that big companies might find too small to bother with, but which smaller local companies can still make money from.
How It Works Under the Act: These small fields get lower royalty rates (5%) for the first few barrels they produce to help them stay profitable.
Where It Appears: s 119, Seventh Schedule NTA 2025.
Related Terms: Field; Upstream Petroleum Operations.

129. Market Value

Statutory Definition: “means the price which the asset might reasonably be expected to fetch on a sale conducted at arm’s length, or in the open market”.
Plain English Explanation: What an item is actually worth “today” if you tried to sell it to a stranger.
How It Works Under the Act: If you give a gift or trade an item without using money, the tax office uses the “Market Value” to decide how much tax you should have paid.
Where It Appears: s 45, s 149, s 202 NTA 2025.
Related Terms: Arm’s Length Terms and Conditions; Transaction at Arm’s Length.

130. Marketable Security

Statutory Definition: Not expressly defined in s 202; refers to “securities issued… by or on behalf of a company… formed or established in Nigeria”.
Plain English Explanation: Stocks, bonds, or other investments that can be easily bought and sold on an exchange.
How It Works Under the Act: The “Contract Notes” issued when these are traded are subject to Stamp Duty, though many common transfers of shares are now exempt.
Where It Appears: ss 130, 138, 185 NTA 2025.
Related Terms: Share Capital; Stamp Duty.

131. Marketable Natural Gas

Statutory Definition: “means natural gas which meets specifications… for distribution to wholesale customers and retail customers” as fuel or industrial material.
Plain English Explanation: Clean natural gas that is ready to be used in your stove, car, or factory.
How It Works Under the Act: This term defines when a product leaves the “raw material” phase and enters the “Midstream/Downstream” phase where it is taxed under regular company rules.
Where It Appears: s 119 NTA 2025.
Related Terms: Natural Gas; Downstream Gas Operations.

132. Measurement Point

Statutory Definition: “a point determined in the field development plan… where petroleum is being measured and its value is determined for royalty purposes”.
Plain English Explanation: The official “meter” or “scale” where the government checks how much oil a company is producing.
How It Works Under the Act: This is the most important location in an oil field for tax purposes, as it is the exact spot where the obligation to pay tax and royalties is “triggered”.
Where It Appears: ss 67, 78, 119 NTA 2025.
Related Terms: Chargeable Oil; Royalty.

133. Medical Products

Statutory Definition: “articles, instruments, apparatus, machine or software used in the prevention, diagnosis or treatment of illness or disease”.
Plain English Explanation: Tools and supplies used by doctors, like thermometers, MRI machines, or bandages.
How It Works Under the Act: These products are “Zero-Rated,” meaning there is 0% VAT on them to keep healthcare affordable for everyone.
Where It Appears: s 187, s 189 NTA 2025.
Related Terms: Pharmaceutical Products; Medical Services.

134. Midstream Petroleum Liquids Operations

Statutory Definition: Includes building pipelines, storage tanks, and refineries for petroleum liquids “downstream of the measurement points”.
Plain English Explanation: The part of the oil business that happens after the oil comes out of the ground—transporting it, storing it, and turning it into gasoline.
How It Works Under the Act: These operations are taxed like regular businesses (CIT) rather than being subject to the specialized Hydrocarbon Tax.
Where It Appears: ss 79, 119 NTA 2025.
Related Terms: Upstream Petroleum Operations; Downstream Petroleum Operations.

135. Mining Operations

Statutory Definition: “any trade or business, other than petroleum operations, involving the exploitation or extraction of mineral resources” like coal, gold, or salt.
Plain English Explanation: Digging for solid minerals in the ground.
How It Works Under the Act: Mining companies must pay “Solid Mineral Royalties” based on the value of what they dig up (e.g., 15% for gold). They can deduct these royalty payments from their income tax.
Where It Appears: s 64, s 202, Eighth Schedule NTA 2025.
Related Terms: Solid Minerals Royalty; Advalorem.

136. Minister

Statutory Definition: “means the Minister responsible for finance”.
Plain English Explanation: The high-ranking government official in charge of Nigeria’s money and economy.
How It Works Under the Act: The Minister has the power to sign new tax regulations, grant extensions for certain deadlines, and recommend new “Priority Sectors” for tax holidays to the President.
Where It Appears: ss 166, 195, 202 NTA 2025.
Related Terms: Government; Service.

137. MMBtu / MMcf

Statutory Definition: “millions of British thermal units” and “one million cubic feet”.
Plain English Explanation: The units used to measure how much energy or natural gas a company has produced.
How It Works Under the Act: These units are used to calculate the tax and royalties for natural gas, similar to how “barrels” are used for oil.
Where It Appears: ss 84, 85, 119 NTA 2025.
Related Terms: Natural Gas; Barrel.

138. Multinational Enterprise (MNE) / MNE Group

Statutory Definition: “a company that carries on business in more than one country or jurisdiction through subsidiary companies, associated companies, permanent establishments…”.
Plain English Explanation: A massive international corporation that does business in several countries, like Shell, Google, or MTN.
How It Works Under the Act: MNEs have strict “Transfer Pricing” rules to make sure they aren’t hiding their Nigerian profits in other countries with lower taxes.
Where It Appears: ss 57, 202 NTA 2025.
Related Terms: Constituent Entity; Effective Tax Rate.

139. Model Contract

Statutory Definition: “means a contract under section 85 of Petroleum Industry Act”.
Plain English Explanation: The “standard template” agreement that every oil company must sign with the government.
How It Works Under the Act: The model contract sets the specific rules for how that specific company will share its oil and pay its taxes.
Where It Appears: ss 68, 77, 119 NTA 2025.
Related Terms: Production Sharing Contract; Petroleum Industry Act.

140. Money Instruments

Statutory Definition: “means instruments traded in money markets including government securities, treasury Acts… commercial papers, certificates of deposits…”.
Plain English Explanation: Financial “papers” that are almost as good as cash, like government bonds or IOUs from big companies.
How It Works Under the Act: If you sell these “papers” for a profit, that money is considered “Investing Income” and is subject to tax.
Where It Appears: ss 4, 28, 202 NTA 2025.
Related Terms: Chargeable Assets; Investing Income.

141. Mortgage

Statutory Definition: “means a security by way of deposit of real property for the payment of any definite and certain sum of money advanced”.
Plain English Explanation: A loan (usually for a house) where the bank gets to take the property if you don’t pay the money back.
How It Works Under the Act: If you have a mortgage on your “owner-occupied” home, the interest you pay to the bank is an “Eligible Deduction” that lowers your taxable income.
Where It Appears: s 30, s 202 NTA 2025.
Related Terms: Eligible Deductions; Chargeable Income.

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142. Natural Gas

Statutory Definition: “all gaseous hydrocarbons, and all substances contained in it… as exist in natural state in strata… and are in a gaseous state upon production”.
Plain English Explanation: Raw gas that comes out of the ground, often found alongside oil.
How It Works Under the Act: The government provides lower royalty rates for gas used inside Nigeria compared to gas sent abroad, to encourage local industrial growth.
Where It Appears: s 119, Seventh Schedule NTA 2025.
Related Terms: Associated Gas; Fiscal Gas Price.

143. Natural Gas Liquids (NGL)

Statutory Definition: “hydrocarbons liquefied at the surface in separators, field facilities or in gas processing plants, and include ethane, propane, butanes…”.
Plain English Explanation: Components of natural gas that turn into liquid when they reach the surface, often used as fuel for cooking or in factories.
How It Works Under the Act: For tax purposes, these liquids are treated as “Natural Gas,” but if they are mixed into the oil stream, they are taxed as “Oil”.
Where It Appears: s 65, s 119, Seventh Schedule NTA 2025.
Related Terms: Natural Gas; Crude Oil.

144. Nigerian Company

Statutory Definition: A company “(a) formed, registered or incorporated under any law in Nigeria; (b) whose central place of management or control is Nigeria; or (c) whose effective place of management or control is Nigeria”.
Plain English Explanation: A “local” company that is officially based and managed in Nigeria.
How It Works Under the Act: They must pay tax on their profits from everywhere in the world, not just what they earn inside Nigeria.
Where It Appears: ss 6, 202 NTA 2025.
Related Terms: Foreign Company; Resident.

145. Non-Associated Gas

Statutory Definition: “means natural gas that is found in a reservoir which does not contain significant quantities of crude oil”.
Plain English Explanation: Natural gas that is found “all by itself” in the ground, without any oil nearby.
How It Works Under the Act: Projects to develop this gas are eligible for the most significant tax credits (Greenfield Incentives) because the risk of finding only gas is higher than finding gas with oil.
Where It Appears: s 85, s 119 NTA 2025.
Related Terms: Associated Gas; Greenfield Non-Associated Gas Development.

146. Non-Productive Rents

Statutory Definition: “means and includes the amount of any rent as to which there is provision for its deduction from the amount of any royalty…”.
Plain English Explanation: The rent an oil company pays to the government for a piece of land where they haven’t found any oil yet.
How It Works Under the Act: Companies are allowed to subtract these rent payments from their tax bill as an expense.
Where It Appears: s 92, s 119 NTA 2025.
Related Terms: Royalty; Upstream Petroleum Operations.

147. Non-Resident / Non-Resident Individual

Statutory Definition: An individual who “is not domiciled in Nigeria,” has no home there, and stays for less than 183 days (about 6 months) in a year.
Plain English Explanation: A person or business that doesn’t “live” in Nigeria.
How It Works Under the Act: They only pay Nigerian tax on money they make inside Nigeria. They are not taxed on money they make in other countries.
Where It Appears: ss 17, 202 NTA 2025.
Related Terms: Resident Individual; Permanent Establishment.

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148. Official Gazette

Statutory Definition: “means the Federal Government Gazette or the Gazette of any State in the Federation”.
Plain English Explanation: The official “newspaper” of the government where all new laws, rules, and notices are published for the public to see.
How It Works Under the Act: A new tax exemption or incentive is not “real” until it has been published in the Gazette.
Where It Appears: ss 161, 166, 202 NTA 2025.
Related Terms: Government; Regulation.

149. Official Market Rate

Statutory Definition: “means currency exchanged market approved by the Central Bank of Nigeria”.
Plain English Explanation: The “official” price of the Naira against other currencies (like the Dollar) set by the CBN.
How It Works Under the Act: If you spend Dollars for your business, you can only deduct those costs from your tax using the “Official Rate,” even if you actually bought the Dollars at a higher “Black Market” rate.
Where It Appears: s 20, s 202, First Schedule NTA 2025.
Related Terms: Central Bank of Nigeria (CBN).

150. Oil Mining Lease (OML)

Statutory Definition: “means for the purposes of… Part II… a lease granted… for the purpose of winning petroleum”.
Plain English Explanation: The official legal contract that lets a company start actually “digging” and producing oil (as opposed to just looking for it).
How It Works Under the Act: Companies with these leases have the most significant tax and royalty obligations but also the most revenue.
Where It Appears: ss 87, 119, Sixth Schedule NTA 2025.
Related Terms: Oil Prospecting Licence; Holder.

151. Oil Prospecting Licence (OPL)

Statutory Definition: “means an oil prospecting licence granted under the Petroleum Act, prior to the effective date of the Petroleum Industry Act”.
Plain English Explanation: A permit that lets a company “search” for oil in a specific area.
How It Works Under the Act: This is a temporary license (usually 5 to 10 years). If the company finds oil, they can upgrade it to an Oil Mining Lease.
Where It Appears: ss 87, 103, 119 NTA 2025.
Related Terms: Oil Mining Lease; Upstream Petroleum Operations.

152. Onshore

Statutory Definition: “any land areas above the high-water mark, other than frontier acreages”.
Plain English Explanation: Oil and gas projects located on land (not in the ocean).
How It Works Under the Act: These projects pay the highest royalty rate (15% to 20%) because they are generally cheaper and easier to operate than projects in the deep ocean.
Where It Appears: s 119, Seventh Schedule NTA 2025.
Related Terms: Shallow Water; Deep Offshore.

153. Operating Lease

Statutory Definition: “an arrangement involving the transfer of the right to use an asset… in return for rental payments… but the asset is not wholly amortised”.
Plain English Explanation: A short-term or “standard” rental deal (like renting a generator for a month) where you have no intention of ever owning the item.
How It Works Under the Act: Unlike a “Finance Lease,” the actual owner of the equipment gets to claim the tax deductions (Capital Allowances), not the person renting it.
Where It Appears: s 202, First Schedule NTA 2025.
Related Terms: Finance Lease; Capital Allowance.

154. Output VAT

Statutory Definition: “The VAT collected by a taxable person… on making taxable supplies”.
Plain English Explanation: The 7.5% VAT you add to your customers’ bills.
How It Works Under the Act: This is the money you hold “for the government.” At the end of the month, you take your “Output VAT” and subtract your “Input VAT” to find how much to send to the tax office.
Where It Appears: ss 154, 156 NTA 2025.
Related Terms: Input VAT; Value Added Tax (VAT).

155. Owner

Statutory Definition: “means in respect of any goods… a person… who holds out himself to be the owner, or the person in possession of beneficial interest in, or having control…”.
Plain English Explanation: The person who actually “has” the item and controls it, regardless of whose name is on the old receipt.
How It Works Under the Act: The owner is the one responsible for paying duties on imported goods and the one allowed to claim tax deductions for business equipment.
Where It Appears: ss 150, 202, First Schedule NTA 2025.
Related Terms: Beneficial Owner; Lessee.

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156. Part Disposal

Statutory Definition: Occurs where “an interest or right in or over the assets is created… and a part of the interest… remains with the person making the disposal”.
Plain English Explanation: Selling or giving away only part of something you own (like selling half of a large plot of land).
How It Works Under the Act: You must split the original cost of the whole item between the part you sold and the part you kept to calculate the correct tax profit.
Where It Appears: s 35, s 41 NTA 2025.
Related Terms: Disposal of Assets; Chargeable Gains.

157. Partnership

Statutory Definition: “an association, or a body of two or more persons who have agreed to combine their rights, powers, property, labour or skill for the purpose of carrying on a trade or business and sharing the profit”.
Plain English Explanation: A business owned and run by two or more people together.
How It Works Under the Act: The partnership itself usually doesn’t pay income tax. Instead, the “Share of Profit” is given to each partner, and each person pays their own tax on that amount.
Where It Appears: ss 11, 15, 202 NTA 2025.
Related Terms: Connected Persons; Share of Profit.

158. Permanent Establishment

Statutory Definition: “means taxable presence of a non-resident person,” including a fixed place of business like a branch, office, factory, or mine in Nigeria.
Plain English Explanation: A “home base” or significant presence that a foreign company has in Nigeria.
How It Works Under the Act: If a foreign company has a permanent establishment (like an office in Lagos), the government can tax them on all the profits they make through that office, just like a local company.
Where It Appears: ss 17, 202 NTA 2025.
Related Terms: Significant Economic Presence; Non-Resident.

159. Permissible By-Products

Statutory Definition: “means goods or services… necessarily or ordinarily produced in the course of producing a priority product”.
Plain English Explanation: Extra things a factory makes by accident while making their main product (like “bran” being a by-product of making flour).
How It Works Under the Act: These by-products are often included in the company’s “Tax Holiday” benefits, so they don’t have to pay tax on the sales of these items either.
Where It Appears: s 170, s 202 NTA 2025.
Related Terms: Priority Product; Economic Development Incentive Certificate.

160. Person

Statutory Definition: “includes a company, partnership, community, family, individual, executor, trustee and legal arrangement”.
Plain English Explanation: In legal talk, a “person” isn’t just a human; it’s anything that can own property or pay taxes.
How It Works Under the Act: This is the word the law uses to make sure everyone—businesses and individuals—follows the tax rules.
Where It Appears: ss 3, 202 NTA 2025.
Related Terms: Taxable Person; Individual; Company.

161. Personal Chattels

Statutory Definition: “tangible movable property being personal chattels of an individual”.
Plain English Explanation: Your “stuff”—your phone, your watch, your furniture.
How It Works Under the Act: If you sell your personal belongings for a profit, you don’t have to pay tax as long as the total sale is less than ₦5 million or three times the minimum wage.
Where It Appears: s 52 NTA 2025.
Related Terms: Chargeable Assets; Market Value.

162. Personal Injury

Statutory Definition: Contextually refers to “wrong or injury suffered by an individual in his person or in his profession”.
Plain English Explanation: Physical harm or serious damage to your reputation (like libel).
How It Works Under the Act: If you win money in court (damages) for being injured, that money is tax-free as long as it is less than ₦50 million.
Where It Appears: s 50 NTA 2025.
Related Terms: Compensation for Loss of Office.

163. Personal Representatives

Statutory Definition: “the executor or the representative, or administrator for the time being of a deceased person”.
Plain English Explanation: The people legally chosen to handle all the paperwork and money after someone dies.
How It Works Under the Act: They are the ones who must talk to the tax office on behalf of the deceased person and make sure any final taxes are paid from the inheritance.
Where It Appears: s 36, s 202, Fifth Schedule NTA 2025.
Related Terms: Executor; Trust.

164. Petroleum

Statutory Definition: “hydrocarbons and associated substances as exist in its natural state in strata, and includes crude oil, natural gas, condensate… but does not include bitumen and coal”.
Plain English Explanation: The general name for oil and gas found underground.
How It Works Under the Act: The Act has a whole specialized chapter (Chapter 3) just for petroleum because it is Nigeria’s biggest source of tax money.
Where It Appears: s 119 NTA 2025.
Related Terms: Crude Oil; Natural Gas; Hydrocarbon Tax.

165. Petroleum Exploration Licence (PEL)

Statutory Definition: “means a licence under section 71 of Petroleum Industry Act”.
Plain English Explanation: A basic permit that lets a company do geological surveys to “look” for oil, but not to start drilling deep wells yet.
How It Works Under the Act: The costs of this license are “tax deductible,” but the company doesn’t start paying royalties yet because they haven’t produced anything.
Where It Appears: s 119 NTA 2025.
Related Terms: Oil Prospecting Licence; Licence.

166. Petroleum Investment Allowance

Statutory Definition: “an allowance… at the appropriate rate set forth in Table I” for companies under older tax rules.
Plain English Explanation: A “tax gift” for older oil projects to encourage them to keep investing in their equipment.
How It Works Under the Act: It is a special percentage (5% to 15%) that an oil company can subtract from its profit in addition to their regular machinery deductions.
Where It Appears: s 98, First Schedule NTA 2025.
Related Terms: Capital Allowance; Chargeable Profit.

167. Petroleum Mining Lease (PML)

Statutory Definition: “means a lease under section 81 of the Petroleum Industry Act”.
Plain English Explanation: The “full” permit that lets an oil company actually pump and sell oil for many years.
How It Works Under the Act: Companies with this lease pay the 30% Hydrocarbon Tax and are subject to the highest standards of reporting.
Where It Appears: ss 65, 79, 119 NTA 2025.
Related Terms: Oil Mining Lease; Upstream Petroleum Operations.

168. Petroleum Operations

Statutory Definition: “means… the winning or obtaining and transportation of petroleum or chargeable oil in Nigeria… by any drilling, mining, extracting… but not including refining at a refinery”.
Plain English Explanation: Everything related to getting oil out of the ground and moving it to a pipe or ship.
How It Works Under the Act: These operations are taxed much more heavily than regular businesses because they are using Nigeria’s natural resources.
Where It Appears: ss 65, 90, 119 NTA 2025.
Related Terms: Upstream Petroleum Operations; Midstream Petroleum Liquids Operations.

169. Petroleum Products

Statutory Definition: “materials derived from crude oil and natural gas processing such as… gasoline, diesel, gas oil, jet fuel, transportation fuels, fuel oils…”.
Plain English Explanation: The “finished” products we buy at the station, like petrol or diesel.
How It Works Under the Act: Most of these are “Zero-Rated” or “Exempt” from VAT to keep the cost of living and transportation low for Nigerians.
Where It Appears: s 119, Eleventh Schedule NTA 2025.
Related Terms: Zero-Rated Supplies; Surcharge.

170. Petroleum Profits Tax (PPT)

Statutory Definition: A tax “levied upon the profits of each accounting period of a company engaged in petroleum operations” under older licenses.
Plain English Explanation: The “old system” of taxing oil companies that haven’t switched to the 2021 laws.
How It Works Under the Act: It is a very high tax (up to 85%) on the profits made from producing oil.
Where It Appears: s 90 NTA 2025.
Related Terms: Hydrocarbon Tax; Assessable Petroleum Profits Tax.

171. Petroleum Prospecting Licence (PPL)

Statutory Definition: “means a licence under section 72 of Petroleum Industry Act”.
Plain English Explanation: The permit that lets a company start actually “drilling” wells to find oil (not just looking from the surface).
How It Works Under the Act: If a company with this license finds oil, they pay a lower 15% Hydrocarbon Tax to help them pay for the expensive work of setting up a new field.
Where It Appears: ss 72, 119 NTA 2025.
Related Terms: Petroleum Exploration Licence; Upstream Petroleum Operations.

172. Petroleum Royalty

Statutory Definition: Not expressly defined; described as a tax on “all production of petroleum… including production tests”.
Plain English Explanation: The “rent” or “share” an oil company gives the government just for the right to take oil out of the ground.
How It Works Under the Act: It is calculated monthly based on the amount of oil produced (the volume) and the current market price.
Where It Appears: s 89, Seventh Schedule NTA 2025.
Related Terms: Royalty; Fiscal Oil Price.

173. Pipeline

Statutory Definition: “all parts of any tubular infrastructure through which petroleum is conveyed, including pipes, valves, pumping and compressor stations”.
Plain English Explanation: The massive underground or underwater pipes used to move oil and gas across the country.
How It Works Under the Act: Companies get a special tax deduction for the cost of building these (20% “Qualifying Pipeline Expenditure”).
Where It Appears: s 119, First Schedule NTA 2025.
Related Terms: Investor in Gas Pipeline; Midstream Petroleum Liquids Operations.

174. Place of Residence

Statutory Definition: “means a place available for his domestic use in Nigeria on a relevant day, and does not include any hotel, rest house or other place at which he is temporarily lodging”.
Plain English Explanation: Your actual “home”—where you live permanently, not just a hotel where you’re staying for a weekend.
How It Works Under the Act: This helps decide which state government you should be paying your taxes to.
Where It Appears: Twelfth Schedule NTA 2025.
Related Terms: Principal Place of Residence; Resident Individual.

175. Policy of Insurance / Policy of Life Insurance

Statutory Definition: “means an instrument by which a contract of insurance is made or agreed to be made”.
Plain English Explanation: The formal “insurance paper” you sign that proves you are covered.
How It Works Under the Act: These documents are subject to a small tax (Stamp Duty) based on the premium you pay.
Where It Appears: s 202, Ninth Schedule NTA 2025.
Related Terms: Insurance; Life Assurance Policies.

176. Policy of Insurance Against Personal Injury

Statutory Definition: “means a policy of insurance for any payment agreed to be made as compensation for personal injury”.
Plain English Explanation: Insurance that pays you if you get hurt, like workers’ compensation.
How It Works Under the Act: The money you get from these policies if you are injured is generally “tax-free” for the first ₦50 million.
Where It Appears: s 50, s 202 NTA 2025.
Related Terms: Personal Injury; Policy of Insurance.

177. Policy of Marine Insurance

Statutory Definition: “any formal contract whereby an insurer undertakes to indemnify an insured against losses incident to marine adventure”.
Plain English Explanation: Insurance for ships and the cargo they carry across the ocean.
How It Works Under the Act: These policies have their own flat rate of Stamp Duty (₦500) to keep shipping documents simple.
Where It Appears: s 202, Ninth Schedule NTA 2025.
Related Terms: Insurance; Bill of Lading.

178. Presumptive Taxation

Statutory Definition: A regime applied where “income… cannot be ascertained or records are not kept in such a manner as to enable proper assessment”.
Plain English Explanation: A simplified tax system for small traders (like market sellers) who don’t keep formal bank records or receipts.
How It Works Under the Act: The government “guesses” or “presumes” how much you made based on your business type and location, so you only pay a small flat amount rather than doing complicated math.
Where It Appears: s 29 NTA 2025.
Related Terms: Taxable Person; Small Company.

179. Principal Place of Residence

Statutory Definition: The place where an individual “usually resides” or the home that is “nearest to his usual place of work”.
Plain English Explanation: Your main home where you spend most of your time.
How It Works Under the Act: This is used to determine your “tax base”—basically, which state gets the money from your salary.
Where It Appears: Twelfth Schedule NTA 2025.
Related Terms: Place of Residence; Resident Individual.

180. Principal Private Residences

Statutory Definition: “a dwelling-house or part of such dwelling-house… [and] land… immediately adjoining… up to a maximum of one acre”.
Plain English Explanation: The house you own and actually live in (not a rental property).
How It Works Under the Act: If you sell the house you live in, any profit you make is tax-free. You are allowed to use this “free pass” only once in your lifetime.
Where It Appears: s 51 NTA 2025.
Related Terms: Land; Chargeable Gains.

181. Priority Business / Priority Company / Priority Industry / Priority Product

Statutory Definition: Terms relating to companies and sectors listed in the Tenth Schedule (like agriculture, refining, or digital animation) that are essential for Nigeria’s growth.
Plain English Explanation: “Priority” means “important.” These are the businesses the government wants to help by giving them tax-free years.
How It Works Under the Act: If your business is in a priority sector, you can apply for an “Incentive Certificate” that makes your profits tax-free for 5 years.
Where It Appears: ss 166-180, s 202, Tenth Schedule NTA 2025.
Related Terms: Economic Development Incentive Certificate; Tax Incentive.

182. Priority Sectors

Statutory Definition: “The sectors listed in the 10th Schedule to this Act are classified as priority sectors”.
Plain English Explanation: A “whitelist” of businesses (like making batteries, refining oil, or building hospitals) that get the best tax breaks.
How It Works Under the Act: The President can add or remove industries from this list at any time to adjust to what the country needs.
Where It Appears: s 166, Tenth Schedule NTA 2025.
Related Terms: Priority Industry; Economic Development Tax Credit.

183. Production Allowance

Statutory Definition: “There shall be a production allowance for crude oil production… determined as follows— (a) for onshore areas, the lower of US $8.00 per barrel… or 20% of the fiscal oil price…”.
Plain English Explanation: A specialized “discount” on the tax paid for every barrel of oil a company produces.
How It Works Under the Act: It helps newer or smaller oil companies stay profitable by letting them pay less tax on their first 50 million or 100 million barrels.
Where It Appears: s 71, Sixth Schedule NTA 2025.
Related Terms: Chargeable Profit; Hydrocarbon Tax.

184. Production Day

Statutory Definition: The date a service-based company is “ready to provide… priority service on a commercial scale” or a manufacturing company “begins to produce… in commercial quantities”.
Plain English Explanation: The first day your business “really” opens for customers.
How It Works Under the Act: Your 5-year tax holiday (for priority businesses) starts exactly on this day.
Where It Appears: s 173, s 178 NTA 2025.
Related Terms: Commencement Date; Economic Development Incentive Certificate.

185. Production Oil

Statutory Definition: Not formally defined in s 202; refers contextually to “the balance of available crude oil after deducting royalty oil, tax oil and cost oil”.
Plain English Explanation: The “leftover” oil that is actually split as profit between the oil company and the government.
How It Works Under the Act: This is the most important part for an oil company, as this is the oil they actually get to sell and keep the money from.
Where It Appears: s 111 NTA 2025.
Related Terms: Cost Oil; Tax Oil; Profit Oil.

186. Production Sharing Contract (PSC)

Statutory Definition: “any agreement for the exploration… on terms under which the financial risk-bearing party shall recover costs and receives a share of the profits based on a share of production”.
Plain English Explanation: A deal where an oil company pays all the drilling bills and “shares” the oil they find with the Nigerian government.
How It Works Under the Act: The government doesn’t have to spend any money; the oil company takes all the risk. If they find nothing, the company loses its money. If they find oil, they split it according to the rules in the contract.
Where It Appears: ss 102, 119 NTA 2025.
Related Terms: Cost Oil; Profit Oil.

187. Professional Services

Statutory Definition: “services provided by an individual or a firm having specialised knowledge, skills, and qualifications… including consulting, planning, or support services, excluding artisans or vocational services”.
Plain English Explanation: Jobs that require a university degree and specialized training, like being a lawyer, an accountant, or an engineer.
How It Works Under the Act: Companies that do professional services cannot be classified as “Small Companies,” even if they make less than ₦50 million, meaning they must always pay tax at the full 30% rate.
Where It Appears: s 56, s 202 NTA 2025.
Related Terms: Small Company; Individual.

188. Profit Oil

Statutory Definition: “the balance of available crude oil after deducting royalty oil, tax oil and cost oil”.
Plain English Explanation: Same as “Production Oil”—the final amount of oil split as profit.
How It Works Under the Act: The split of this oil determines how much tax each party pays.
Where It Appears: ss 111, 113 NTA 2025.
Related Terms: Cost Oil; Tax Oil.

189. Promissory Note

Statutory Definition: “includes any document… except a bank note, containing a promise to pay any sum of money”.
Plain English Explanation: A written IOU—a document where you formally promise to pay someone back by a certain date.
How It Works Under the Act: These are subject to a small Stamp Duty of 0.1% of the value of the note.
Where It Appears: s 129, Ninth Schedule NTA 2025.
Related Terms: Bill of Exchange; Stamp Duty.

190. Public Character

Statutory Definition: An organization that “(a) is registered in accordance with relevant law… and (b) does not distribute or share its profit in any manner to members or promoters”.
Plain English Explanation: A true “not-for-profit” charity, church, or school.
How It Works Under the Act: These organizations are exempt from income tax as long as they don’t start running a regular side-business for profit.
Where It Appears: s 163, s 202 NTA 2025.
Related Terms: Public Fund; Exemptions.

191. Public Fund

Statutory Definition: “any fund set up by any government… to finance a specific service, project, or obligation of Government to the public”.
Plain English Explanation: A pool of taxpayer money meant for a specific project, like building a road or paying for school loans.
How It Works Under the Act: If a business donates money to one of these funds, they can subtract that donation from their profit to lower their tax bill (up to a certain limit).
Where It Appears: s 164, s 202 NTA 2025.
Related Terms: Deductible Donations; Agency of Government.

Q

192. Qualifying Capital Expenditure

Statutory Definition: “expenditure incurred in a basis period for the acquisition, refurbishment and improvement of the value of the asset,” including plant, machinery, buildings, mining, and software.
Plain English Explanation: Money spent on big, long-term business items (like a new truck, a factory building, or accounting software).
How It Works Under the Act: You can’t subtract the whole cost of a new building from your tax in one go. Instead, you use this “Qualifying Expenditure” to calculate your “Capital Allowance” (the yearly tax deduction for wear and tear).
Where It Appears: First Schedule NTA 2025.
Related Terms: Capital Allowance; Residue.

R

193. Rate of VAT

Statutory Definition: “VAT shall be charged on the value of all taxable supplies at the rate of 7.5%”.
Plain English Explanation: The standard percentage added to your bill when you buy things.
How It Works Under the Act: Most products and services in Nigeria have this 7.5% added, which the seller must collect and send to the government every month.
Where It Appears: s 148 NTA 2025.
Related Terms: Value Added Tax (VAT); Taxable Supplies.

194. Rates of Tax for Companies

Statutory Definition: “(a) a small company, at 0%; and (b) any other company, at the rate of 30%”.
Plain English Explanation: The standard income tax for businesses is 30% of their profit. However, tiny businesses (making less than ₦50 million) pay 0%.
How It Works Under the Act: This encourages small businesses to grow by not burdening them with taxes until they become successful.
Where It Appears: s 56 NTA 2025.
Related Terms: Small Company; Company.

195. Rates of Tax for Individuals

Statutory Definition: Graduated rates found in the Fourth Schedule, starting at 0% for the first ₦800,000 and going up to 25% for income above ₦50 million.
Plain English Explanation: The “rich pay more” system—the more you earn, the higher your tax percentage becomes.
How It Works Under the Act: It’s a “staircase” system. Everyone’s first ₦800k is tax-free, then the next chunk of money is taxed at 15%, then 18%, and so on.
Where It Appears: s 58, Fourth Schedule NTA 2025.
Related Terms: Assessable Income; Minimum Wage.

196. Real Estate Investment Company

Statutory Definition: “a company duly approved by the Securities and Exchange Commission to operate as a real estate investment scheme in Nigeria”.
Plain English Explanation: A company that owns and manages several rental properties (like apartments or shopping malls) and allows people to invest in them like stocks.
How It Works Under the Act: As long as they give 75% of their rent and dividend profits back to their investors every year, the company itself doesn’t have to pay income tax on that money.
Where It Appears: s 163, s 202 NTA 2025.
Related Terms: Dividend; Trust.

197. Realisable Price

Statutory Definition: “the realisable price… established by the holder… shall be used to determine the amount payable on royalty and petroleum profits tax”.
Plain English Explanation: The “final” price a company actually got for selling a barrel of oil, used to calculate how much tax they owe.
How It Works Under the Act: In complex oil contracts, this price is used to ensure the government gets a fair share of the actual market value of the oil.
Where It Appears: s 114 NTA 2025.
Related Terms: Fiscal Oil Price; Royalty.

198. Receipt

Statutory Definition: “includes a note, memorandum, writing or electronic inscription whereby money… is acknowledged to have been received”.
Plain English Explanation: A written or digital confirmation that you paid for something.
How It Works Under the Act: Any receipt for a value of ₦10,000 or more is subject to a ₦50 “Stamp Duty,” which is why you often see ₦50 deducted from your bank transfers.
Where It Appears: s 202, Ninth Schedule NTA 2025.
Related Terms: Invoice; Stamp Duty.

199. Regulated Securities Lending Transaction

Statutory Definition: “means any Eleventh Schedule securities lending transaction conducted under rules made by the SEC”.
Plain English Explanation: A formal loan where an investor lends their stocks to someone else for a short period.
How It Works Under the Act: The NTA 2025 makes these loans tax-friendly by making sure the person lending the shares isn’t taxed as if they had “sold” them.
Where It Appears: s 4, s 34, s 202 NTA 2025.
Related Terms: Borrower; Lender; Compensating Payments.

200. Related Parties

Statutory Definition: “has the same meaning as connected persons”.
Plain English Explanation: Same as “Connected Persons”—family or business partners.
How It Works Under the Act: Deals between these parties must be at “Arm’s Length” (market prices) to prevent cheating on taxes.
Where It Appears: s 192, s 202 NTA 2025.
Related Terms: Connected Persons; Arm’s Length.

201. Relative

Statutory Definition: “means brother, sister, ancestor or lineal descendant”.
Plain English Explanation: Your parents, grandparents, children, brothers, and sisters.
How It Works Under the Act: If you do business with these people, the tax office considers you “Connected Persons” and will check to make sure your prices are fair.
Where It Appears: s 202 NTA 2025.
Related Terms: Connected Persons; Individual.

202. Relevant Interest

Statutory Definition: “means, in relation to an expenditure incurred on the construction of a building… the interest in that building… which the person who incurred the expenditure was entitled”.
Plain English Explanation: The legal right (like a title deed) that the person who built the house has over that property.
How It Works Under the Act: Only the person who has this “Relevant Interest” is allowed to claim the equipment tax deductions (Capital Allowances) for that building.
Where It Appears: First Schedule NTA 2025.
Related Terms: Qualifying Capital Expenditure; Building.

203. Relevant Priority Product

Statutory Definition: “means priority product and the permissible by-products specified in a priority certificate”.
Plain English Explanation: The main item and the accidental side-items a company makes that are covered by its tax holiday.
How It Works Under the Act: If a company makes both “priority” items (like clean fuel) and “regular” items (like plastic bags), only the money from the “relevant priority products” is tax-free.
Where It Appears: s 177, s 202 NTA 2025.
Related Terms: Priority Product; Permissible By-Products.

204. Relevant Tax Authority

Statutory Definition: “is in accordance with the provision to this Act and section 3 of the Nigeria Tax Administration Act, 2025”.
Plain English Explanation: The specific government office you are supposed to pay your tax to (usually the FIRS for companies or the State Inland Revenue for individuals).
How It Works Under the Act: It is the official office that has the legal power to audit your books, give you tax notices, or collect your payments.
Where It Appears: ss 17, 202 NTA 2025.
Related Terms: Service; Nigeria Revenue Service.

205. Relief for Double Taxation

Statutory Definition: A credit allowed “against the tax payable in Nigeria” for any part of the income that has already been charged to tax in another country.
Plain English Explanation: A discount on your Nigerian tax bill to make up for tax you already paid abroad.
How It Works Under the Act: If you earn $100 in the USA and pay $10 in tax there, Nigeria will subtract that $10 from whatever tax you would have owed here, so you only pay the difference.
Where It Appears: ss 120-123 NTA 2025.
Related Terms: Double Taxation Agreement; Foreign Tax.

206. Rent

Statutory Definition: “means payments of any kind, received or receivable… for the use of, or the right to use property or equipment… including remuneration for the use, letting, hire… of movable or immovable property”.
Plain English Explanation: Money you pay to use someone else’s land, house, or equipment.
How It Works Under the Act: For individuals, you can get “Rent Relief” (20% of your rent, up to ₦500k) to lower your tax. For businesses, rent is a deductible expense.
Where It Appears: ss 20, 30, 202 NTA 2025.
Related Terms: Lease; Eligible Deductions.

207. Reservoir

Statutory Definition: “a subsurface rock formation containing an individual and separate natural accumulation of producible petroleum characterised by a single natural pressure system”.
Plain English Explanation: A “pocket” of oil or gas trapped deep underground in the rock.
How It Works Under the Act: This definition is used to decide whether an oil company has found a “new” field (which gets special tax breaks) or just another part of an old field.
Where It Appears: s 119 NTA 2025.
Related Terms: Field; Upstream Petroleum Operations.

208. Resident / Resident Company

Statutory Definition: “means resident person, individual or company,” with companies specifically being those incorporated in Nigeria or managed from Nigeria.
Plain English Explanation: A person or business that officially “belongs” to Nigeria.
How It Works Under the Act: If you are a resident, you are taxed on money you make anywhere in the world. If you are non-resident, you are only taxed on money you make in Nigeria.
Where It Appears: ss 6, 202 NTA 2025.
Related Terms: Nigerian Company; Resident Individual.

209. Resident Individual

Statutory Definition: Someone who is “domiciled in Nigeria,” has a permanent home there, or stays for at least 183 days (about 6 months) in a year.
Plain English Explanation: A person who lives in Nigeria.
How It Works Under the Act: They must report all their income from all over the world to the Nigerian tax office.
Where It Appears: s 12, s 202 NTA 2025.
Related Terms: Domicile; Non-Resident Individual.

210. Residue

Statutory Definition: “the total qualifying expenditure incurred on or before the date… less the total of capital allowance made… before that date”.
Plain English Explanation: The “remaining value” of an item in your business books—what’s left after you’ve already claimed several years of tax deductions.
How It Works Under the Act: If you sell a business machine, you calculate your tax profit by taking the sale price and subtracting this “Residue” value.
Where It Appears: s 39, First Schedule NTA 2025.
Related Terms: Qualifying Capital Expenditure; Capital Allowance.

211. Royalties

Statutory Definition: “includes payments of any kind, received as a consideration for— (a) the use of, or the right to use— (i) any copyright… (ii) any patent, trademark… or (iii) industrial, commercial or scientific equipment”.
Plain English Explanation: Money paid for the right to use something someone else owns, like a song, a book, a brand name, or an oil field.
How It Works Under the Act: When a company pays royalties, they must take out “Withholding Tax” (10%) and send it to the government before giving the rest to the owner.
Where It Appears: s 4, s 64, s 202 NTA 2025.
Related Terms: Petroleum Royalty; Solid Minerals Royalty.

S

212. Sale or Purchase of Options

Statutory Definition: Contextually described as any “contract under which an option is given or taken to purchase or sell any stock or marketable security”.
Plain English Explanation: Buying the “right” to buy something later at a set price, without actually buying the item yet.
How It Works Under the Act: These contracts are treated as separate “Chargeable Assets” that are subject to Capital Gains Tax and Stamp Duty.
Where It Appears: s 44, s 130 NTA 2025.
Related Terms: Digital Assets; Marketable Security.

213. Service / Services

Statutory Definition: “means anything other than goods” and “includes any intangible or incorporeal (product, asset or property) over which a person has ownership”.
Plain English Explanation: Doing work for someone else, rather than selling them a physical item.
How It Works Under the Act: Services are subject to VAT (7.5%) and are considered “Taxable Supplies” if they are consumed by someone in Nigeria.
Where It Appears: s 146, s 202 NTA 2025.
Related Terms: Taxable Supplies; Exported Service.

214. Settlement / Settlor

Statutory Definition: “settlement includes any disposition, trust, covenant, agreement, arrangement or transfer of assets” and the “settlor” is the person who created it or provided the funds.
Plain English Explanation: A legal arrangement (like a trust) where you put money or property aside for someone else (like your children) to use.
How It Works Under the Act: The law watches these closely. If you still have control over the money, the tax office will treat it as your income rather than the children’s income to prevent tax avoidance.
Where It Appears: s 16, Fifth Schedule NTA 2025.
Related Terms: Trust; Executor.

215. Shallow Water

Statutory Definition: “any area within the territorial waters… offshore of Nigeria up to and including a water depth of 200 metres”.
Plain English Explanation: Oil and gas fields located in parts of the ocean that are not very deep (less than 200 meters).
How It Works Under the Act: These fields pay a lower royalty rate (12.5%) than projects on land, but higher than those in the deep ocean.
Where It Appears: s 119, Seventh Schedule NTA 2025.
Related Terms: Deep Offshore; Onshore.

216. Significant Economic Presence (SEP)

Statutory Definition: (Operational Term) Where a person “transmits… signals, sounds, messages, images or data… to Nigeria” for activities like e-commerce, app stores, or streaming services.
Plain English Explanation: A “digital footprint” that allows the government to tax foreign tech giants (like Netflix or Google) even if they don’t have a physical office in Nigeria.
How It Works Under the Act: If a foreign company makes a lot of money from Nigerian users online, they are treated as having a presence here and must pay tax on those profits.
Where It Appears: s 17 NTA 2025.
Related Terms: Permanent Establishment; Digital footprint.

217. Small Company

Statutory Definition: “means a company that earns gross turnover of ₦50,000,000 or less per annum with total fixed assets not exceeding ₦250,000,000,” excluding professional service firms.
Plain English Explanation: A business making less than ₦50 million a year.
How It Works Under the Act: These tiny companies pay 0% income tax to help them grow. However, they must still file tax returns every year to prove they are still “small”.
Where It Appears: ss 56, 59, 202 NTA 2025.
Related Terms: Gross Turnover; Professional Services.

218. Solid Minerals Royalty

Statutory Definition: A duty imposed on “any person who extracts any solid mineral” at rates found in the Eighth Schedule.
Plain English Explanation: The government’s share of the value of minerals (like coal, gold, or tin) dug up from the ground.
How It Works Under the Act: The rate is between 7.5% and 15% of the value of the minerals. The company digging the minerals must pay this every month to the Nigeria Revenue Service.
Where It Appears: s 64, Eighth Schedule NTA 2025.
Related Terms: Mining Operations; Advalorem.

219. Stamp Duty

Statutory Definition: Duties imposed on “instruments” that are first executed in Nigeria or relate to property in Nigeria.
Plain English Explanation: A tax you pay on important legal papers (like land deeds, loan agreements, or company shares) to make them legally valid.
How It Works Under the Act: If a document is “dutiable” but doesn’t have the official tax stamp, you cannot use it as evidence in a lawsuit.
Where It Appears: ss 124-143, Ninth Schedule NTA 2025.
Related Terms: Advalorem; Dutiable Instruments.

220. Startup

Statutory Definition: “means a Nigerian company granted start-up label under the Nigeria Startup Act, 2022”.
Plain English Explanation: A new, innovative business that has been officially certified by the government to receive tax breaks.
How It Works Under the Act: Labeled startups have their own specialized exemptions, including lower tax rates for their employees in certain cases.
Where It Appears: s 13, s 202 NTA 2025.
Related Terms: Labeled Startup; Angel Investor.

221. Supplies / Supply of Goods / Supply of Services

Statutory Definition: “means any transaction, whether it is the sale of goods or the performance of a service for a consideration”.
Plain English Explanation: Any deal where you provide a product or do work and get paid for it.
How It Works Under the Act: This is the base for charging VAT. If a supply is “taxable,” the seller must add 7.5% to the price and send it to the government.
Where It Appears: ss 146, 202 NTA 2025.
Related Terms: Taxable Supplies; Value Added Tax (VAT).

222. Surcharge

Statutory Definition: “A surcharge is imposed at 5% on chargeable fossil fuel products provided or produced in Nigeria”.
Plain English Explanation: An extra 5% tax added to the price of fuel (like petrol or diesel).
How It Works Under the Act: This is a “Green Tax” meant to encourage people to use cleaner energy. Products like solar panels and cooking gas are exempt from this surcharge.
Where It Appears: s 159, s 162 NTA 2025.
Related Terms: Petroleum Products; Clean or Renewable Energy.

T

223. Tax

Statutory Definition: “means any imposition, duty, levy, royalty or revenue accruing to government in full or in Part under this Act [or] any other law”.
Plain English Explanation: Any money the law says you must pay to the government (income tax, VAT, stamp duties, etc.).
How It Works Under the Act: This is the big “umbrella” term that covers every type of payment required by the Nigeria Tax Act.
Where It Appears: ss 3, 202 NTA 2025.
Related Terms: Assessable Tax; Chargeable Tax.

224. Tax ID

Statutory Definition: “is as provided for under Nigeria Tax Administration Act, 2025”.
Plain English Explanation: Your official “tax number” (like a TIN) that identifies you to the government.
How It Works Under the Act: You must include this number on every tax return and every “VAT Invoice” you send to customers.
Where It Appears: s 153, s 202 NTA 2025.
Related Terms: Tax Returns; Taxable Person.

225. Tax Oil

Statutory Definition: “shall be allocated to the Commission or the holder… in such quantum as shall generate an amount equal to the actual petroleum profit tax liability”.
Plain English Explanation: A portion of the oil produced that the government keeps specifically to pay for the oil company’s taxes.
How It Works Under the Act: Instead of the company paying cash, they just “give” the government some of the oil they pumped as payment.
Where It Appears: s 110 NTA 2025.
Related Terms: Cost Oil; Profit Oil.

226. Tax Relief / Eligible Deductions

Statutory Definition: Includes specific items like pension contributions, health insurance, and “rent relief of 20%… subject to a maximum of ₦500,000”.
Plain English Explanation: Legal ways to lower the amount of your income that the government can tax.
How It Works Under the Act: By contributing to things like the National Housing Fund or your pension, you “save” money because that portion of your income is taken out of your tax calculation.
Where It Appears: s 30 NTA 2025.
Related Terms: Eligible Deductions; Chargeable Income.

227. Tax Returns

Statutory Definition: Referred to contextually as “Documents and schedules (like income statements) that a person or company must file”.
Plain English Explanation: The official forms you fill out to tell the tax office how much you earned and how much tax you already paid.
How It Works Under the Act: Every taxable person and company must file these annually (or monthly for VAT). If you miss the deadline, you will have to pay a penalty.
Where It Appears: s 28, s 156 NTA 2025.
Related Terms: Assessment; Year of Assessment.

228. Taxable Income

Statutory Definition: “the aggregate amount of— (i) assessable profits… (ii) employment income, (iii) income from investing activities… and (v) chargeable gains”.
Plain English Explanation: The total sum of all your money from all sources (job, rent, selling items) that is potentially subject to tax.
How It Works Under the Act: This is your “Gross” number before you start taking off the “Reliefs” to find the final “Chargeable Income”.
Where It Appears: s 28 NTA 2025.
Related Terms: Assessable Income; Total Income.

229. Taxable Person

Statutory Definition: “includes a company, individual or body of individuals, family, community, corporations sole, trustee, executor or any other legal arrangement… who earns income, or carries out an economic activity”.
Plain English Explanation: Anyone—whether a person or a business—that the law says is responsible for paying tax or filing paperwork.
How It Works Under the Act: This is the primary subject of the law to whom all reporting and payment obligations apply.
Where It Appears: ss 146, 202 NTA 2025.
Related Terms: Individual; Company; Tax ID.

230. Taxable Supplies

Statutory Definition: “means any transaction for sale of goods or the performances of a service, for a consideration”.
Plain English Explanation: Any sale of a product or performance of work for which you receive payment.
How It Works Under the Act: This is the legal reason for charging and collecting Value Added Tax (VAT). If a supply is “taxable,” it gets the 7.5% tax added to the bill.
Where It Appears: s 146, s 202 NTA 2025.
Related Terms: Value Added Tax (VAT); Exempt Supplies.

231. Tenure

Statutory Definition: Not formally defined in s 202; refers contextually to “duration of a lease or concession”.
Plain English Explanation: The length of time a contract or legal right lasts (e.g., a 10-year oil license).
How It Works Under the Act: Tenure is important because it decides how quickly a company can “write off” their equipment costs (Capital Allowances). If the tenure ends, the tax deductions end too.
Where It Appears: First Schedule NTA 2025.
Related Terms: Lease; Concession.

232. Trade or Business

Statutory Definition: “means any activity or venture from which income is generated, for whatever scale or period it is carried on, but does not include employment”.
Plain English Explanation: Running a company, a shop, or a professional practice—basically, working for yourself rather than having a boss.
How It Works Under the Act: “Business” income is calculated differently from “Employment” income. Businesses pay 30% tax on their profit, while employees pay a graduated rate on their salary.
Where It Appears: s 202, First Schedule NTA 2025.
Related Terms: Employment; Individual.

233. Transaction at Arm’s Length

Statutory Definition: “means a transaction on normal open market commercial terms”.
Plain English Explanation: A deal where the price is fair and normal—the same price you would give to a stranger.
How It Works Under the Act: The tax office has the right to “ignore” prices used in deals between family or partner companies if those prices aren’t fair (Arm’s Length).
Where It Appears: s 191, s 202 NTA 2025.
Related Terms: Arm’s Length Terms and Conditions; Connected Persons.

234. Trust

Statutory Definition: Not formally defined in s 202; refers contextually to a “settlement” or arrangement where “property is held by trustees for the benefit of others”.
Plain English Explanation: A legal “safe” where you put money or property to be managed by one person (the trustee) for the benefit of another (the beneficiary).
How It Works Under the Act: The income of the trust is usually taxed in the hands of the beneficiary who gets the money. If no money is given out, the trustee pays the tax on it.
Where It Appears: s 16, Fifth Schedule NTA 2025.
Related Terms: Trustee; Beneficiary; Settlement.

U

235. Unit Holder

Statutory Definition: “means any investor, beneficiary or person who acquired units in a scheme and who is entitled to a share of the investments”.
Plain English Explanation: An individual investor who owns a “piece” of a mutual fund or collective investment scheme.
How It Works Under the Act: When the mutual fund makes a profit, they give the unit holders their “share” (dividends). The unit holder is responsible for paying tax on that share.
Where It Appears: s 63 NTA 2025.
Related Terms: Collective Investment Scheme; Dividend.

236. Upstream Petroleum Operations

Statutory Definition: “means the exploration for, appraisal of, development of and winning or obtaining of petroleum in Nigeria… all activities upstream of the measurement points”.
Plain English Explanation: The part of the oil business that involves finding oil and bringing it up from the ground.
How It Works Under the Act: These specific companies must pay the Hydrocarbon Tax (15-30%) and are subject to the strictest environmental and reporting rules.
Where It Appears: ss 65, 119 NTA 2025.
Related Terms: Midstream Petroleum Liquids Operations; Hydrocarbon Tax.

V

237. Value Added Tax (VAT)

Statutory Definition: A tax “imposed on all taxable supplies in Nigeria” at a rate of 7.5%.
Plain English Explanation: A “consumption tax” added to the price of most things you buy.
How It Works Under the Act: The business collects the 7.5% from you and sends it to the government. It’s meant to be a tax on how much you spend, rather than how much you earn.
Where It Appears: ss 144-158, s 202 NTA 2025.
Related Terms: Taxable Supplies; Input VAT; Output VAT.

238. Vehicle

Statutory Definition: “includes… every description of conveyance for the transportation by land of human beings or goods”.
Plain English Explanation: Cars, trucks, buses, and motorcycles.
How It Works Under the Act: You don’t have to pay Capital Gains Tax if you sell your own private car. For businesses, the cost of a vehicle is a “Qualifying Capital Expenditure” (25% deduction per year).
Where It Appears: s 53, s 202, First Schedule NTA 2025.
Related Terms: Qualifying Capital Expenditure; Personal Chattels.

239. Venture Capitalist

Statutory Definition: “is as defined in the Nigeria Startup Act No. 32, 2022”.
Plain English Explanation: A firm or person that provides “risk” money to new startups that have high growth potential.
How It Works Under the Act: Like angel investors, venture capitalists get tax exemptions on the profits they make selling their shares in Nigerian “labeled startups”.
Where It Appears: s 163, s 202 NTA 2025.
Related Terms: Angel Investor; Startup.

240. Vessel

Statutory Definition: “means a mode of transportation or conveyance by water, of human beings or goods”.
Plain English Explanation: Ships, boats, and tankers.
How It Works Under the Act: Ships used for international transport are considered to be “in Nigeria” for tax purposes if the owner lives here or has an office here.
Where It Appears: s 46, s 202 NTA 2025.
Related Terms: Policy of Marine Insurance; Vehicle.

Y

241. Year of Assessment

Statutory Definition: “means government tax year being 1st of January to 31st of December of any year”.
Plain English Explanation: The official calendar year that the government uses to summarize and collect everyone’s taxes.
How It Works Under the Act: Even if your business year ends in June, the government will still summarize your total tax liability for the full 12-month Jan-Dec “Year of Assessment”.
Where It Appears: ss 28, 202 NTA 2025.
Related Terms: Accounting Period; Tax Returns.

Z

242. Zero-Rated Supplies

Statutory Definition: Taxable supplies listed in s 187 that are charged at 0% VAT, such as basic foods, medicine, and books.
Plain English Explanation: Items where the government wants the tax to be “zero” to keep prices low.
How It Works Under the Act: This is better for businesses than being “Exempt.” If you sell 0% items, you can still claim back the VAT you paid to your own suppliers, making your business more profitable.
Where It Appears: s 187 NTA 2025.
Related Terms: Exempt Supplies; Value Added Tax (VAT).