Nigeria Tax Act, 2025 · NTA s.21
Spend you may not deduct
Private spend, capital spend, depreciation, fines and tax borne for someone else are all outside the profit computation.
Who this lands on: Every trade, business, profession or vocation.
Not deductible (NTA s.21): capital expenditure; domestic or private expenses, and spend on assets not used for the business; sums recoverable under insurance or an indemnity; income taxes levied in Nigeria or elsewhere; payments to an unapproved pension or retirement scheme; depreciation, impairment and unrealised exchange differences.
Also outside: any penalty or fine imposed under any law; any tax or penalty borne on behalf of another person; expenses incurred in earning income that is itself exempt; and payments to a connected person that do not follow the transfer pricing rules.
One that catches ordinary businesses: expenditure on which VAT was due but not charged — or an import on which the duty or levy was not paid — is not deductible at all (NTA s.21(p)). Buying off-invoice costs the deduction as well as the input VAT.
Capital spend is not lost — it comes back as capital allowances instead of as a deduction.