The Federal Inland Revenue Service (FIRS) has moved to quell growing public anxiety over the controversial 4 percent development levy on imported goods, insisting the charge is not an additional burden on businesses but a consolidation of existing taxes aimed at simplifying Nigeria’s fiscal framework and restoring investor confidence.

In a statement issued on Wednesday, the agency explained that concerns triggered by the new Nigeria Tax Act (NTA) and Nigeria Tax Administration Act (NTAA) stem largely from misinterpretations, stressing that the reforms are designed to strengthen economic competitiveness, protect incentives and secure long-term fiscal stability.

The clarification comes at a time when households and businesses are bracing for the implementation of sweeping tax changes from January 2026, with many fearing that the government is piling on fresh costs in an already fragile economy.

According to the FIRS, the 4 percent consolidated levy replaces multiple fragmented charges previously collected separately, including Tertiary Education Tax, NITDA Levy, NASENI Levy and Police Trust Fund Levy.

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The agency said the consolidation reduces compliance costs, eliminates unpredictability and ends the era of overlapping levies from different government bodies. It added that small businesses and non-resident companies are exempt, shielding the most vulnerable firms from further pressure.

Addressing apprehensions within Nigeria’s Free Trade Zones (FTZs), the FIRS maintained that incentives remain intact under the new law. FTZ companies will now be permitted to sell up to 25 per cent of their output into the domestic economy without forfeiting tax exemptions, supported by a three-year transition period to ensure a smooth adjustment.

Officials noted that the changes are also meant to curb abuses by companies that operate within the FTZ structure while competing unfairly in the domestic market.

The reforms further introduce a 15 percent minimum Effective Tax Rate (ETR) for large domestic and multinational companies in line with the global tax agreement adopted by more than 140 countries under the OECD/G20 framework.

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The FIRS warned that failure to adopt the rule would expose Nigeria to significant revenue loss through the Top-Up Tax mechanism, where foreign headquarters of multinational firms can legally take additional taxes if Nigeria charges below the 15 percent threshold. Instituting the tax locally ensures those revenues remain within the country.

Investors are also set to benefit from a modernised capital gains system—now referred to as chargeable gains, which includes a new reinvestment relief that exempts tax on gains reinvested in another Nigerian company within the same year.

The updated framework also improves loss recognition, shields low-value transactions, and closes loopholes that previously enabled firms to disguise business income as capital gains.

In November, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, assured the market that the new Capital Gains Tax (CGT) rules would not apply retroactively, a clarification issued after a steep market selloff driven by investor fears.

He explained that for assets acquired before 2026, the cost basis for calculating gains will be reset to the higher of the original purchase price or the market value as at 31 December 2025—an approach designed to protect existing investments and stabilise market expectations