Lagos, Jan. 4, 2026 (Naija247news) — Nigeria’s newly implemented Tax Act (NTA 2025) is expected to reduce revenue leakages in the oil and gas sector while freeing regulatory agencies to focus on oversight and enforcement, an oil and gas expert, Prof. Ken Ife, has said.
Ife, an Energy Development Economist, spoke with the News Agency of Nigeria (NAN) on Sunday in Lagos, noting that the legislation, which took effect on Jan. 1, 2026, represents one of the most comprehensive fiscal reforms in decades for the petroleum industry.
“The NTA 2025 consolidates legacy statutes such as the Petroleum Profits Tax Act (PPTA) and integrates the Petroleum Industry Act (PIA) 2021 into a single, unified tax code,” Ife explained. “It repeals fragmented levies and establishes a streamlined fiscal framework designed to improve transparency, efficiency, and investor confidence.”
He said upstream companies will now face a split tax structure: Hydrocarbon Tax (HT) on crude oil profits, and Companies Income Tax (CIT) on general corporate earnings. HT ranges between 15 and 30 per cent depending on licence type, while CIT is set at 30 per cent for large operators, with a planned reduction to 25 per cent in the coming years.
Ife highlighted the introduction of a 15 per cent Minimum Effective Tax Rate (ETR) for International Oil Companies (IOCs) and large indigenous firms, aligning Nigeria with the OECD’s “Pillar Two” framework. “This blocks tax leakages and guarantees a minimum contribution from multinational groups,” he said.
The Tax Act also introduces a 4 per cent Development Levy on assessable profits, consolidating multiple previous levies, including the Tertiary Education Tax, NITDA Levy, NASENI Levy, and Police Trust Fund Levy. The levy applies only to profits subject to CIT, providing relief for core upstream operations.
On energy transition, Ife said a 5 per cent surcharge has been applied to fossil fuels like petrol and diesel at the pump, while clean energy products such as CNG, LPG, and household kerosene are exempt. He cautioned, however, that downstream pump prices could rise if the surcharge is fully enforced.
Addressing cost efficiency, Ife noted the Upstream Petroleum Operations (Cost Efficiency Incentives) Order 2025, which allows companies that lower operating costs below regulatory benchmarks to retain up to 50 per cent of savings. Gas projects also benefit from new Gas Tax Credits (GTC) and Gas Tax Allowances (GTA) for greenfield developments, positioning gas as a transition fuel.
Finally, the newly established Nigeria Revenue Service (NRS) now collects all petroleum-related taxes and royalties, simplifying processes previously handled by multiple agencies like NUPRC and FIRS. “This reduces revenue leakages and allows regulatory bodies to focus on monitoring, performance, and enforcement,” Ife said.
Joshua Chinonye ✔
Joshua Chinonye is the Energy Editor at Naija247news, covering Nigeria’s oil, gas, and power sectors. He reports on energy policy, market trends, and sustainability with a focus on informing public discourse and decision-makers.
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