But Nigeria’s new tax administration framework introduces an additional requirement for certain arrangements designed primarily to obtain a tax advantage.

Under the Nigeria Tax Administration Act 2025 (NTAA), a person who enters into, or intends to enter into, a disclosable transaction or arrangement may be required to proactively disclose relevant information to the appropriate tax authority.

What is a disclosable arrangement?

The rule focuses on transactions or arrangements where the principal purpose is to obtain a tax advantage.

The Act defines a tax advantage broadly. It can include obtaining or increasing a tax relief or repayment, reducing or avoiding a tax liability, delaying a tax payment, or avoiding an obligation to deduct or account for tax.

This does not mean every business decision that happens to produce a tax benefit must be reported.

The key question is whether obtaining the tax advantage is the principal purpose of the arrangement.

That distinction matters.

What information has to be disclosed?

The NTAA gives the relevant tax authority the power to determine the information that must be provided, the format for disclosure and when it must be submitted.

It also provides for penalties where required disclosures are not made, are made late, are incomplete or contain false information.

So the obligation is already established by law, while some of the practical reporting requirements can be prescribed by the relevant authority.

This is not the same as banning tax planning

There is an important difference between tax planning and tax avoidance.

A business can legitimately consider the tax consequences of a transaction.

The NTAA also gives the tax authority powers to counteract certain prohibited tax avoidance arrangements, including arrangements where obtaining a tax benefit is the main purpose and the arrangement involves misuse of the tax law, lacks commercial substance or is otherwise contrary to the purpose of the law.

So disclosure does not automatically mean an arrangement is illegal.

It means the tax authority can see certain arrangements that are principally designed around obtaining a tax advantage.

What this means for businesses

The practical lesson is simple: documentation matters.

If a business enters into a significant transaction for tax planning reasons, it should be able to explain the transaction, keep the relevant agreements and records, and show the commercial reasoning behind the decision.

This is particularly important as Nigeria’s tax administration becomes more focused on identifying arrangements that could reduce, defer or avoid tax.

For freelancers and small businesses, this doesn’t mean reporting every ordinary business expense or financial decision.

It does mean keeping your contracts, invoices, receipts and other supporting documents organised, especially when dealing with significant transactions or arrangements that have tax implications.

LessaTax is built around that simple idea: your tax position shouldn’t start making sense only when tax season arrives.

Good records give you a clearer picture of what you earned, what you spent and how your business decisions affect your tax obligations.

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