Global Tax Rules Are Changing — Is Your Group Structure Ready?

A group structure is often built for commercial, legal, or financing reasons and reviewed for tax only when a problem appears. Changing global tax rules make an earlier review worthwhile. Minimum tax provisions, closer attention to transfer pricing, and stronger data expectations all depend on how the group is organized and how well its records can be brought together. This post sets out a practical readiness check for Nigerian businesses that belong to a group or that are building one.

What Is Changing

• Minimum tax. The Nigeria Tax Act, 2025 contains a 15 percent minimum effective tax rate for constituent entities of multinational groups and for companies with turnover of ₦20 billion or more, together with a top-up tax for Nigerian parents with low-taxed foreign subsidiaries.
• International coordination. The OECD Side-by-Side Package of 5 January 2026 changes how the Pillar Two rules apply to groups with US parent companies, while other jurisdictions continue to apply their own rules.
• Administration. The Nigeria Revenue Service (NRS) has replaced the Federal Inland Revenue Service, and the Nigeria Tax Administration Act has introduced consolidated penalties, an advance ruling mechanism, a Tax Ombuds office, and an accreditation regime for tax agents.

How a Group Structure Affects Tax

Structure influences where profits are reported, how funds move between entities, and which rules apply to each transaction. Holding companies, financing arrangements, shared service centers, and intellectual property ownership each raise their own questions. A structure that worked under earlier rules may produce different results under current ones.

Step-by-Step: A Group Structure Readiness Check

1. Prepare an up-to-date structure chart. Show every entity, its country, ownership percentage, activity, and tax residence.
2. Confirm the purpose of each entity. An entity with no clear commercial role invites questions and may add cost without benefit.
3. Measure group revenue and local turnover. Compare them with the thresholds that apply, including the €750 million group test and the ₦20 billion turnover test.
4. Calculate effective tax rates by jurisdiction. Identify where the rate is below 15 percent and why.
5. List intra-group transactions. Include management fees, loans, royalties, guarantees, and sales of goods, with the agreement that supports each.
6. Review transfer pricing documentation. Confirm that prices are supported by a written analysis and that the documents match what actually happens.
7. Review funding and distributions. Consider interest deductibility, dividend flows, and the withholding tax that applies to payments to foreign shareholders.
8. Test the data process. Check whether local accounts, tax computations, and supporting schedules can be produced on the group’s timetable.
9. Assign responsibility. Decide who owns tax governance in each entity and how the group tax function and local finance teams communicate.
10. Take advice before any restructuring. Moves such as merging entities, transferring assets, or changing financing should be reviewed for Nigerian tax consequences before they are carried out.

Why This Matters to Nigerian Taxpayers

A Nigerian entity that cannot produce reliable data on request may delay its group’s reporting, and an entity with weak transfer pricing support may face adjustments in Nigeria or elsewhere. A readiness review brings these issues to light while there is time to address them.

Tax Implications

• Related-party transactions should be priced and documented in line with Nigeria’s transfer pricing rules.
• Dividends to foreign shareholders are subject to withholding tax, and NIPC guidance states that transfer abroad is subject to evidence of tax compliance.
• Restructuring steps can have tax consequences for the entities involved, including on transfers of assets and shares.
• The advance ruling mechanism under the Nigeria Tax Administration Act allows a taxpayer to request binding written clarification before a proposed transaction is carried out.
• Late filing penalties are reported as ₦100,000 in the first month and ₦50,000 for each subsequent month.

Why Every Business Should Comply with Tax Regulation

Compliance supports access to finance, investment, and contracts. The Nigeria Tax Administration Act also reports a ₦5 million penalty for awarding contracts to unregistered taxpayers, which makes counterparties more attentive to the registration and filing status of the businesses they deal with.

Tips on Credits and Opportunities

• Review whether planned capital expenditure may qualify for the Economic Development Tax Incentive, and consider the effect on the group’s effective tax rate.
• Keep research and development records separate and complete, since NIPC guidance provides for enhanced deductions on qualifying spending in Nigeria.
• Use the advance ruling mechanism where a structural change is significant, and its tax treatment is uncertain.

The Advantage of Professional Guidance

A readiness review draws on tax, accounting, and legal knowledge. A professional consulting firm can help prepare the structure chart, test the data process, review transfer pricing support, and identify areas that need attention. Businesses may wish to confirm that their adviser is accredited under the Nigeria Tax Administration Act.

PRUDENTIAL CONSULTING LIMITED supports Nigerian businesses and groups in reviewing their structures and preparing tax records for changing requirements.

Relevant Tax Law

• Nigeria Tax Act, 2025.
• Nigeria Tax Administration Act, 2025.
• Nigeria Revenue Service (Establishment) Act, 2025.
• Nigeria’s transfer pricing regulations.

Frequently Asked Questions

Is a small group affected by these changes?

Often not by the Pillar Two rules directly, because they apply above a high revenue threshold. Transfer pricing, withholding tax, and filing rules still apply to groups of any size.

How often should a group structure be reviewed?

At least once a year, and before any significant change in ownership, financing, or activity.

Can we ask the NRS for certainty before restructuring?

The Nigeria Tax Administration Act provides an advance ruling mechanism for this purpose. Whether it is suitable depends on the transaction.

Where can I get further assistance?

Contact Professional Tax Consulting Firm in Lagos, Nigeria on:

WhatsApp: 08056219998

Email: info@prudentialconsulting.com.ng

Website: https://www.prudentialconsulting.com.ng