By Yinka Kolawole Jan 12, 2026
The Nigeria Tax Act (NTA) 2025, which came into force at the start of 2026, introduces performance-based tax incentives and reforms that could significantly benefit manufacturers by boosting investment, reducing costs, and simplifying tax obligations — shifting the tax system from one focused solely on revenue to one that also stimulates industrial development.
Key Benefits for Manufacturers
🔹 Economic Development Tax Incentives (EDTI)
Manufacturers in designated priority sectors can qualify for a 5% annual tax credit on eligible capital expenditure for up to five years.
Those that reinvest 100% of profits back into sector growth may qualify for extended incentive periods — creating long-term growth potential.
Research & Development (R&D) Benefits
A 5% turnover deduction is now available for qualifying R&D expenses, encouraging innovation and product improvement.
Simplified capital allowance rules with 10%, 20%, or 25% rates help manufacturers more easily recover the cost of machinery and industrial buildings.
Simplified Levies and Lower Compliance Burden
Multiple industry levies (like the Tertiary Education Tax and NASENI levy) have been consolidated into a single 4% Development Levy on assessable profits, reducing administrative burden for manufacturers.
Supportive VAT Changes
The VAT rate remains at 7.5%, but zero-rating now applies for key locally produced goods, including basic food items and materials critical to manufacturing, protecting consumer purchasing power and lowering supply chain costs.
Small Manufacturer Relief
Small manufacturers with turnover ≤ ₦50 million enjoy a 0% corporate income tax rate and are exempt from charging VAT, so long as they stay compliant.
This creates space to retain earnings for reinvestment, create jobs, and scale production.
What This Means in Practice
According to tax experts cited in the analysis:
The reforms encourage manufacturers to structure operations strategically to take full advantage of incentives rather than just comply with tax obligations.
By lowering production costs and improving margins, the new law aims to strengthen competitiveness of Nigerian manufacturers relative to imports.
Higher investment in machinery, technology, and workforce expansion could result from clearer incentive frameworks.
Government’s Target
The Finance Minister has stressed that the new tax regime is specifically designed to:
Boost local manufacturing
Attract investment
Create jobs
Reduce dependence on imported goods
These goals align with broader economic and industrial policy objectives for Nigeria’s long-term growth.
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