{"id":990533,"date":"2026-01-08T08:14:39","date_gmt":"2026-01-08T07:14:39","guid":{"rendered":"https:\/\/1stattorneys.com\/articles\/?p=990533"},"modified":"2026-01-08T08:14:39","modified_gmt":"2026-01-08T07:14:39","slug":"glossary-of-key-terms-nigeria-tax-act-2025","status":"publish","type":"post","link":"https:\/\/1stattorneys.ng\/articles\/2026\/01\/08\/glossary-of-key-terms-nigeria-tax-act-2025\/","title":{"rendered":"Glossary of Key Terms: Nigeria Tax Act 2025"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"990533\" class=\"elementor elementor-990533\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-f2da02f elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"f2da02f\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5c9a08e\" data-id=\"5c9a08e\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-e5fbb51 elementor-widget elementor-widget-text-editor\" data-id=\"e5fbb51\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<article style=\"font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif; line-height: 1.6; color: #333; max-width: 800px; margin: auto; border: 1px solid #eee; padding: 20px; border-radius: 8px;\"><header style=\"border-bottom: 2px solid #0056b3; margin-bottom: 20px; padding-bottom: 10px;\">\n<h1 style=\"color: #0056b3; margin-bottom: 5px;\">Glossary of Key Terms: Nigeria Tax Act 2025<\/h1>\n<p style=\"font-style: italic; color: #666;\">Demystifying Nigerian Tax Law for Beginners and Professionals.<\/p>\n\n<\/header><section id=\"introduction\" style=\"background-color: #f9f9f9; padding: 15px; border-left: 5px solid #0056b3; margin-bottom: 30px;\">\n<h2 style=\"margin-top: 0;\">1.0 Introduction: Making Tax Terms Simple<\/h2>\nWelcome to this guide on Nigerian tax terminology. Understanding tax law can often feel like learning a new language, filled with specialized words and complex phrases. This document is a simple glossary designed to help beginners, students, and curious learners understand the essential vocabulary found in the <strong>Nigeria Tax Act 2025<\/strong>. Our goal is to break down these complex legal terms into clear, accessible definitions. By demystifying the language of taxation, we hope to make the principles behind the law easier to grasp for everyone.\n\n<\/section><nav style=\"margin-bottom: 30px; text-align: center; background: #eee; padding: 10px; border-radius: 5px;\"><strong>Quick Jump:<\/strong>\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#A\">A<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#B\">B<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#C\">C<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#D\">D<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#E\">E<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#G\">G<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#H\">H<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#I\">I<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#L\">L<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#N\">N<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#P\">P<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#Q\">Q<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#R\">R<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#S\">S<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#T\">T<\/a> |\n<a style=\"margin: 0 5px; text-decoration: none; color: #0056b3;\" href=\"#V\">V<\/a><\/nav>\n<div class=\"glossary-content\">\n\n<!-- Section A -->\n<h2 id=\"A\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">A<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Accounting Period:<\/strong> The specific period of time, typically 12 months, for which a company prepares its financial accounts (Source Reference: Section 202).\n\n<strong>Ad Valorem:<\/strong> A Latin term meaning &#8220;according to value&#8221;. It refers to a tax that is calculated as a <strong>percentage of the value<\/strong> of a transaction, property, or service (Source Reference: Sections 132, 202).\n\n<strong>Arm&#8217;s Length:<\/strong> A standard for transactions between related parties that requires the price and terms to be the same as if the parties were unrelated and independent. This principle prevents companies from artificially shifting profits to lower-tax jurisdictions (Source Reference: Section 192).\n\n<strong>Artificial Transactions:<\/strong> Any arrangement created <strong>primarily to reduce a tax bill<\/strong> rather than for genuine business reasons. Tax authorities can disregard these to prevent tax avoidance (Source Reference: Section 191).\n\n<strong>Assessable Profits:<\/strong> The profit figure calculated after deducting allowable business losses from the <em>adjusted profit<\/em> (Source Reference: Sections 67, 91).\n\n<strong>Associated Gas:<\/strong> Natural gas found in a reservoir that is either layered on top of crude oil or dissolved within the crude oil itself (Source Reference: Section 119).\n\n<\/div>\n<!-- Section B -->\n<h2 id=\"B\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">B<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Basis Period:<\/strong> The specific accounting period used to calculate taxable profit for a particular year of assessment (Source Reference: First Schedule, Part I, Paragraph 1).\n\n<strong>Bill of Exchange:<\/strong> A written order, such as a cheque, requiring one party to pay a specific sum of money to another (Source Reference: Section 128).\n\n<strong>Building:<\/strong> A permanent structure fixed to land providing shelter, excluding temporary structures like construction site offices on stilts (Source Reference: Section 202).\n\n<\/div>\n<!-- Section C -->\n<h2 id=\"C\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">C<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Capital Allowance:<\/strong> A tax deduction for the wear and tear of significant assets like machinery or buildings. It allows businesses to spread the cost of an asset over its useful life (Source Reference: First Schedule, Part I, Paragraph 6).\n\n<strong>Chargeable Assets:<\/strong> All forms of property subject to Capital Gains Tax when sold at a profit, such as land or shares (Source Reference: Section 34).\n\n<strong>Collective Investment Scheme:<\/strong> A fund where money from multiple investors is pooled to be invested in assets like stocks or real estate (Source Reference: Section 63).\n\n<strong>Connected Persons:<\/strong> Individuals or entities with close relationships, such as family or business partners, whose transactions are scrutinized to ensure <strong>arm&#8217;s length<\/strong> standards (Source Reference: Section 202).\n\n<strong>Crude Oil:<\/strong> Petroleum in its natural, unrefined liquid state after extraction (Source Reference: Section 119).\n\n<\/div>\n<!-- Section D -->\n<h2 id=\"D\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">D<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Digital Assets:<\/strong> Digital representations of value that can be electronically traded, including <strong>cryptocurrencies and NFTs<\/strong> (Source Reference: Section 202).\n\n<strong>Disposal of Assets:<\/strong> The act of selling, transferring, or giving up ownership of an asset (Source Reference: Section 35).\n\n<strong>Dividend:<\/strong> A distribution of a company&#8217;s profits to its shareholders (Source Reference: Section 4).\n\n<\/div>\n<!-- Section E -->\n<h2 id=\"E\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">E<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Effective Tax Rate:<\/strong> The actual rate a company pays, calculated by dividing total tax liability by profits before tax. Large companies must generally maintain a <strong>minimum rate of 15%<\/strong> (Source Reference: Section 57).\n\n<strong>Employment:<\/strong> Any job or office in the public or private sector for which a person receives remuneration (Source Reference: Section 202).\n\n<strong>Employment Income:<\/strong> Total earnings including salary, bonuses, and benefits subject to Personal Income Tax (Source Reference: Section 13).\n\n<\/div>\n<!-- Section G -->\n<h2 id=\"G\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">G<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Goods:<\/strong> For VAT purposes, includes all tangible property, whether movable (like a laptop) or immovable (like a building) (Source Reference: Section 202).\n\n<strong>Gross Turnover:<\/strong> The <strong>total revenue<\/strong> a business earns before any expenses are deducted (Source Reference: Section 202).\n\n<\/div>\n<!-- Section H & I -->\n<h2 id=\"H\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">H &amp; I<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Hydrocarbon Tax:<\/strong> A tax on profits from upstream petroleum operations under the Petroleum Industry Act framework (Source Reference: Section 66).\n\n<strong>Input VAT:<\/strong> The VAT a business pays to suppliers, which can typically be deducted from the VAT collected from customers (Source Reference: Section 152).\n\n<\/div>\n<!-- Section L & N -->\n<h2 id=\"L\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">L &amp; N<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Loan Capital:<\/strong> Debt raised by a company, generally excluding short-term loans or bank overdrafts (Source Reference: Section 137).\n\n<strong>Nigerian Company:<\/strong> A company incorporated in Nigeria or managed and controlled within the country (Source Reference: Section 202).\n\n<strong>Non-resident:<\/strong> A person or company not considered a resident for tax purposes, typically taxed only on income generated within Nigeria (Source Reference: Section 202).\n\n<\/div>\n<!-- Section P -->\n<h2 id=\"P\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">P<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Permanent Establishment:<\/strong> A fixed place of business (like a branch or factory) through which a non-resident company operates in Nigeria (Source Reference: Sections 17, 202).\n\n<strong>Person:<\/strong> A legal term including individuals, companies, partnerships, trusts, or any body recognized as a single entity for tax (Source Reference: Section 202).\n\n<strong>Petroleum Profits Tax:<\/strong> A tax for companies with older petroleum licenses that haven&#8217;t converted to the Petroleum Industry Act system (Source Reference: Section 90).\n\n<strong>Priority Company:<\/strong> A company in a crucial economic sector issued an &#8220;economic development incentive certificate&#8221; for special tax incentives (Source Reference: Section 202).\n\n<strong>Promissory Note:<\/strong> A written document containing an unconditional promise to pay a specific sum of money (Source Reference: Section 129).\n\n<\/div>\n<!-- Section Q & R -->\n<h2 id=\"R\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">Q &amp; R<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Qualifying Expenditure:<\/strong> Capital spending on long-term assets like industrial buildings that qualifies for capital allowances (Source Reference: First Schedule, Part I, Paragraph 5).\n\n<strong>Receipt:<\/strong> Any document acknowledging money received or a transaction settled (Source Reference: Section 202).\n\n<strong>Related Parties:<\/strong> Carries the same meaning as <strong>Connected Persons<\/strong> (Source Reference: Section 202).\n\n<strong>Resident Individual:<\/strong> An individual taxed on <strong>worldwide income<\/strong> based on factors like having a permanent home or spending significant time in Nigeria (Source Reference: Sections 12, 202).\n\n<strong>Royalty:<\/strong> A payment made for the right to use an asset such as a patent, copyright, or natural resource (Source Reference: Section 4).\n\n<\/div>\n<!-- Section S -->\n<h2 id=\"S\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">S<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Small Company:<\/strong> A company with gross turnover of <strong>\u20a650 million or less<\/strong> and fixed assets not exceeding \u20a6250,000,000. These may be eligible for a 0% corporate tax rate (Source Reference: Section 202).\n\n<strong>Supplies:<\/strong> Any transaction involving selling goods or performing a service for payment (Source Reference: Section 202).\n\n<\/div>\n<!-- Section T & V -->\n<h2 id=\"V\" style=\"background: #0056b3; color: white; padding: 5px 15px; border-radius: 4px;\">T &amp; V<\/h2>\n<div style=\"margin-bottom: 20px;\">\n\n<strong>Taxable Person:<\/strong> Any individual, company, or partnership carrying out economic activity and liable to pay tax (Source Reference: Section 202).\n\n<strong>Taxable Supply:<\/strong> A transaction for goods or services subject to VAT, unless specifically exempted (Source Reference: Section 146).\n\n<strong>Value Added Tax (VAT):<\/strong> A consumption tax levied at each stage of the production and distribution chain for most goods and services (Source Reference: Section 144).\n\n<\/div>\n<\/div>\n<footer style=\"margin-top: 30px; padding-top: 10px; border-top: 1px solid #ddd; font-size: 0.9em; color: #777;\">With these key terms demystified, you are now better equipped to navigate and understand the principles of Nigerian taxation.\n\n<\/footer><\/article>&#8220;`\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Glossary of Key Terms: Nigeria Tax Act 2025 Demystifying Nigerian Tax Law for Beginners and Professionals. 1.0 Introduction: Making Tax Terms Simple Welcome to this guide on Nigerian tax terminology&#8230;. <\/p>\n","protected":false},"author":1,"featured_media":990518,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"pagelayer_contact_templates":[],"_pagelayer_content":"","footnotes":""},"categories":[128],"tags":[],"class_list":["post-990533","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-law"],"_links":{"self":[{"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/posts\/990533","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/comments?post=990533"}],"version-history":[{"count":0,"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/posts\/990533\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/media\/990518"}],"wp:attachment":[{"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/media?parent=990533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/categories?post=990533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/1stattorneys.ng\/articles\/wp-json\/wp\/v2\/tags?post=990533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}