‘New Tax Laws Will Simplify Compliance, Boost Local Manufacturing’

Nigeria’s new Tax Act is introducing incentives for local manufacturing, aiming to boost the sector’s growth.

According to Kreston Pedabo, a professional services firm, the law signals a clear policy shift towards a more coordinated and incentive-driven fiscal environment, particularly for the manufacturing sector.

“The reform creates clear opportunities for manufacturers willing to invest,” said Kehinde Folorunsho, Partner, Tax Services at Kreston Pedabo Professional Services.

The Act offers a 5% annual tax credit for up to 5 years on qualifying capital expenditure for manufacturers, and revises capital allowance rules to ease cash flow pressure.

The reforms also introduce research and development deductions, permitting manufacturers to deduct up to 5% of turnover from taxable profits.

“This provision could encourage product development and technology upgrades, areas where many local manufacturers have historically lagged due to funding constraints,” said Pedabo.

Additionally, the Act retains the VAT rate at 7.5% but exempts certain locally produced goods, including agricultural products, medical supplies, and educational materials.