Nigeria is tightening its rules on royalty payments, a move that could raise the tax bills of foreign companies operating through local branches.
Under the Nigeria Tax Act (NTA) 2025, permanent establishments (PEs) of non-resident companies may no longer be able to deduct royalty payments made to their head offices or related parties, except where those payments represent reimbursement of actual expenses.
The change, contained in Section 17(5)(e) of the Act, has become a key concern for multinational groups as authorities step up efforts to curb profit shifting and boost revenue.
