FRESH facts have emerged that thousands of Nigerian businesses could be paying less tax than necessary under the country’s sweeping new tax regime, as fresh incentives, expanded deductions, and clearer compliance provisions create substantial legal opportunities to lower liabilities.

Some tax experts have confirmed that the tax reforms, aimed at modernising Nigeria’s fiscal framework, are prompting a surge in strategic tax planning. businesses across sectors are scrutinising their operations to fully leverage reliefs, with many discovering they have been overpaying by overlooking legitimate savings.

“Companies are restructuring, merging with complementary businesses, adjusting branch operations, and reorganising recordkeeping to meet tax incentives eligibility requirements,” said Marvis Oduogu, lead taxation partner at Stren & Blan Partners.

“Interest in tax planning has skyrocketed since implementation. Firms are reviewing expenses, investment decisions, compensation structures, and available tax credits to ensure they are not leaving money on the table.”

The reforms arrive as the government ramps up revenue collection efforts. Nigeria’s tax-to-GDP ratio has risen to approximately 13 percent from below 10 percent in recent years. While this marks progress, it still lags the African average of around 16 percent, highlighting the ongoing push for improved compliance. For businesses, however, the conversation has shifted from mere survival under heavy taxation to smart optimisation within the new rules.

A key opportunity lies in claiming every legitimate business deduction. Under the updated Nigerian tax laws, companies can deduct expenses that are wholly, exclusively, necessarily, and reasonably incurred in the production of taxable income.

Allowable deductions now cover a broader range, including rent for business premises, salaries and wages, interest on loans, repairs and maintenance of assets, utilities, professional fees, and marketing expenses. Businesses are also encouraged to properly document these to withstand scrutiny during audits.

Beyond deductions, new incentives are transforming investment decisions. Pioneer status incentives, investment allowances, and enhanced capital allowances for assets in priority sectors such as manufacturing, agriculture, and renewable energy offer significant relief. Export-oriented businesses can benefit from additional tax credits and duty drawbacks, while research and development (R&D) expenditures now attract more generous write-offs.

Tax advisers note that many small and medium-sized enterprises (SMEs) are yet to fully understand these provisions. “The reforms have introduced clarity around group relief, thin capitalisation rules, and transfer pricing, which were previously grey areas,” Oduogu added. “Mergers and acquisitions are being structured differently to maximise group loss relief and consolidated filings.”

Analysts say the changes promote voluntary compliance while reducing the overall tax burden on productive activities.

The Federal Inland Revenue Service (FIRS) has emphasised that the reforms are designed to create a fairer, more predictable environment that supports economic growth rather than purely increasing collections.

However, experts caution against aggressive tax avoidance. “Compliance remains non-negotiable,” warned Adekunle Adeyemi, a senior tax consultant at KPMG Nigeria. “Businesses must maintain robust records and ensure transactions have genuine commercial substance. The new regime strengthens anti-avoidance rules, and penalties for non-compliance have been stiffened.”

The ripple effects are already visible. Several firms in Lagos and Abuja have reported reduced effective tax rates after internal reviews, freeing up capital for expansion. In the manufacturing sector, where margins are often thin, these savings could prove decisive for competitiveness.

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