Nigeria taxes its companies' worldwide profits: what it means for founders expanding to Canada

By the Citi Sighs Intelligence Desk — Toronto, November 10, 2026

TORONTO — Nigeria now taxes its companies on profits earned anywhere in the world, whether or not the money ever comes home. The rule sits in section 6 of the Nigeria Tax Act, 2025, which took effect on January 1, 2026, and it reaches into foreign subsidiaries through a 15% minimum-tax top-up and a rule on profits a foreign subsidiary keeps.

For a Nigerian founder with a Canadian arm, or a Canadian firm whose West African business is held through a Lagos company, the question is no longer only what Canada charges. It is what Nigeria may charge on top, and how much of the Canadian tax counts as a credit. The rule is drawing attention in Nigerian business coverage, with holding companies and multinational groups named as most affected.

What the law says

Section 6(1) of the Act deems the profits of a Nigerian company to accrue in Nigeria wherever they arise. Three further pieces matter for groups with operations abroad:

• Who counts as Nigerian. Section 201 defines a Nigerian company as one formed or incorporated in Nigeria, or one whose central or effective place of management or control is in Nigeria. A company incorporated in Canada but run from Lagos can fall inside that definition.
• Profits kept abroad. Under section 6(2), where a foreign company controlled by a Nigerian company does not distribute profits in a year, the Nigerian company's share of profits that could be paid out without harming the foreign company's business can be treated as distributed and taxed in Nigeria. The text we read sets no control percentage; its definitions refer instead to the practical ability to control.
• A 15% floor on foreign subsidiaries. Under section 6(3), if the income tax of a non-resident subsidiary, or of another member of the Nigerian company's multinational group, falls below the minimum effective tax rate, which section 201 sets at 15%, the Nigerian parent must pay the difference.

Separately, section 57 requires large companies to top up their own effective tax rate to 15%. In the copy of the Act we read, it covers members of multinational groups with group turnover printed in that copy as £750 million and other companies with turnover of ₦50bn or more. Some earlier legal commentary, including EY and Punuka Attorneys, gives a ₦20bn threshold instead.

What it means in practice

The relief valve is the foreign tax credit. Section 119 of the Act lets tax paid abroad be credited against Nigerian tax, capped at the lower of the Nigerian tax on that income and the foreign tax actually paid. Section 121 applies the same cap where a tax treaty exists, and credit claims must be made within two years of the end of the year of assessment. Credit under section 121 is not available to a person who was not resident in Nigeria during the year.

This is where the Canada link helps. Canada and Nigeria signed a tax agreement in Abuja on August 4, 1992, which has been in force since November 16, 1999, and Finance Canada still lists it among treaties in force. Ghana does not appear on that list, so groups linking Ghana and Canada have no equivalent treaty. EY reads the new Act as giving tax treaties precedence where they apply; we could not confirm that reading in the Act's own text.

The Act also exempts dividends, interest, rent or royalties earned outside Nigeria and brought in through approved channels (section 162). How it interacts with section 6 is not settled by the text.

Context

The worldwide rule now sits alongside a rule on undistributed profits of controlled foreign companies, which EY describes as introduced by the 2025 Act, and a top-up for foreign subsidiaries taxed below 15%. The same Act sets a 0% rate for small companies with turnover of ₦50m or less and 30% for others, according to EY.

What to watch next

• Regulations or guidance from the Nigeria Revenue Service on how "control" is measured under section 6(2) and how the 15% top-up is computed.
• Which channels count as "approved" for the foreign-income exemption in section 162.
• Whether the ₦50bn threshold in section 57 is changed: the Act lets the Service prescribe a higher one.

The case for and against

The case for: supporters can argue the rule closes a gap that let profits sit offshore untaxed, and Nigeria, in our view, has reason to protect a revenue base that funds the services local firms rely on. For Nigerian groups expanding into Canada, the 1999 treaty and the credit cap mean tax paid in Canada should, in principle, reduce what is owed in Lagos rather than add to it.

The case against: the rule adds compliance work for young Nigerian companies just as they go abroad, and the open questions on control, dual residence and the dividend exemption create uncertainty. In our view, a Canadian subsidiary paying little tax in its early years is the kind of case where the top-up's effect is hardest to predict; nothing we read explains how loss years are treated. Canada's own rules for foreign-owned and foreign-affiliate companies, not covered here, add another layer.

What we could not verify

We read the Act in a gazette copy hosted by a third party, not on a Nigerian government website. We could not confirm whether the £ sign in section 57's group-turnover threshold is the intended currency, why some commentaries cite ₦20bn rather than ₦50bn, or how "control" is defined for section 6(2). We could not confirm EY's reading that treaties take precedence over the Act. We did not open the Canada–Nigeria treaty text, so we cannot say how its tie-breaker treats a company that is resident in both countries. We found no Nigeria Revenue Service guidance on applying section 6, and the Tribune report we cite carries no date in the version we read.

Disclosure: Citi Sighs has no commercial relationship with any company or institution named in this article. This article is general information, not tax, legal or investment advice.