- Introduction
The saying, no man is an island applies to nations too. No country or nation of the world can stand alone. Even countries that are islands in the literal sense have interactions with other countries in terms of diplomacy and importantly, trade. A major pillar of which the maritime sector is. Shipping is a major tool of trade between jurisdictions all around the globe. This makes shipping operations unique and indispensable to cross border transactions. The new Nigerian tax act which will usher in the new tax regime on the 1st of January 2026 has made a lot of changes to tax collection from shipping countries in Nigeria.This paper provides a comprehensive examination and analysis of the new tax provisions as applicable to shipping companies, examines their relationship with other maritime levies, and assesses whether the overall effect amounts to double taxation, concluding with recommendations for stakeholders navigating this transformed fiscal environment.
- Legal Framework of Nigeria’s Tax Reforms
Nigerians and Nigerian trade companies and even non resident companies in Nigeria have suffered from the challenges posed by the duplicity of tax and levies in Nigeria. This has for years been a thorn in the side of investors. The 2025 tax reforms represent a very important restructuring of Nigeria’s fiscal architecture through four related legislative enactments these include:
The Nigeria Tax Act (NTA) 2025
The Nigeria Tax Administration Act (NTAA) 2025
The Nigeria Revenue Service (Establishment) Act (NRSA) 2025
Joint Revenue Board (Establishment) Act (JRBA) 2025
These are otherwise and popularly known as the tax reform acts. The main objective of the Nigeria Tax act is to streamline Nigeria’s tax collection system by reducing the number of taxes to a manageable single-digit figure. It is also aimed at enhancing revenue generation, simplifying compliance procedures, and addressing regional disparities in tax administration. Further, the Nigerian tax administration act introduces uniform modes for tax administration thereby ensuring consistent and efficient tax compliance with the end result being to optimize revenue generation. The Nigerian Revenue service establishment act on the other hand scraps the Federal inland revenue service and introduces the national revenue service with the objective of providing a legal, institutional and regulatory framework for the administration of taxes and revenues accruable to the government of the federation.
For both resident and non resident shipping operators, the reforms usher in an age of Nigeria’s assertion over its taxing rights over revenues derived from its jurisdiction. This aligns with global trends in combating base erosion and profit shifting, and ultimately towards generating more revenue for Nigeria. The retention and enhancement of the taxation on shipping companies shows an unrelenting focus on the maritime sector as a great source of revenue for Nigeria.
- Taxation of Shipping Companies Under the NTA 2025
Shipping companies in Nigeria can be categorised into two, namely:
Resident shipping companies
Non resident shipping companies
3.1 Substantive Provisions on Taxation of non resident shipping operators.
The cornerstone of resident shipping taxation under the new regime is Section 18 of the NTA 2025, which carries forward and expands upon the previous freight tax provisions from the repealed Companies Income Tax Act. This section establishes that the non-resident person is chargeable to tax on their profits in Nigeria. Tax payable by such non resident shipping companies for any year of assessment shall not be less than 2% of the gross revenue of such shipping company.The scope of taxable activities encompasses revenue generated from the transportation of passengers, mail, livestock, or goods that are either shipped from or loaded onto ships in Nigeria.
For non-resident shipping companies, the Act creates a different compliance pathway which mandates computation, assessment and payment of taxes monthly. These filings are due by the 21st day of the following month.3.2 Compliance and Documentation Requirements
The new regime introduces two potential approaches to documentary compliance:
- Providing a separate financial statement of Nigerian operations; or
- If no such statement is submitted, providing detailed gross revenue statements of Nigerian operations, certified by a director and external auditor, and supported by contract agreements.
A significant ambiguity arises from the fact that “the law does not specify exactly what a separate financial statement is nor how detailed it should be,” creating uncertainty for compliance planning. This is compounded by what appears to be “a contradiction between Section 21 of the NTAA which suggests a detailed gross revenue statement is required and section 18(7) of the NTA, which seems to offer the simpler financial statement of Nigeria operations route”.
Resident Shipping Companies
Resident Shipping Companies are taxed under section 6 of the Nigeria tax act.
3.3 Expanded Enforcement Powers
The NTA 2025 substantially enhances the enforcement capabilities of tax authorities. For instance Section 61 of the NTAA potentially allows the Nigeria Revenue Service to “detain vessels where the owner remains in default following an assessment,” a power that mirrors but may be more actively exercised than under previous legislation. Also, Section 18(9) of the NTA requires agencies such as the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA) to “demand tax evidence as a condition for issuing permits or approvals”
The narrowing of limitation periods through the replacement of the “fraud, wilful default or neglect” exception with “deliberate misstatement,” and the provision that “where an audit is commenced before the six-year limit expires, the limitation does not apply”
These enforcement provisions create a more rigorous compliance environment where “delay in obtaining requisite licence and permissions could cause serious operational disruption for non-compliant companies”.
4 Other Taxes and Levies on Shipping Operations
Beyond the specific shipping tax under the NTA, maritime operators in Nigeria remain subject to a multilayered framework of maritime-specific charges and levies imposed by various agencies and under different legislative instruments. This complex ecosystem of financial obligations creates the potential for overlapping fiscal burdens that must be examined when assessing double taxation concerns.
4.1 Cabotage Levies
The Coastal and Inland Shipping (Cabotage) Act 2003 establishes a distinct regulatory regime for vessels operating in Nigerian coastal waters, administered by the Nigerian Maritime Administration and Safety Agency (NIMASA). Under this framework, shipping companies are required to pay a 2% Cabotage levy on vessels engaged in domestic coastal trade.
NIMASA administrative fees for various regulatory services and oversight functions.
These levies exist alongside rather than being subsumed by the new tax reforms, creating a parallel fiscal structure for vessels in Nigerian waters.
4.2 Port and Harbour Dues
The Nigerian Ports Authority (NPA) maintains authority to impose various charges for port usage and services under its establishing legislation. These include:
- Port dues based on vessel size and type
- Harbour charges for navigation and berthing services
- Pilotage fees for vessel movement within port limits
- Wharfage charges on cargo moving through port facilities
These charges are conceptually framed as fees for specific services rather than taxes, though in practice they represent mandatory financial impositions on shipping operations.
4.3 Environmental and Safety Levies
The Merchant Shipping Act 2007, which domesticates several international maritime conventions, authorizes NIMASA to impose various levies related to environmental protection and safety. These include the Pollution prevention fees under the International Convention for the Prevention of Pollution from Ships (MARPOL), Wreck removal contributions as per the Nairobi International Convention on the Removal of Wrecks and Search and rescue service charges.
These levies give effect to Nigeria’s international obligations but nonetheless add to the cumulative financial burden on shipping companies.
5 Analysis of Double Taxation Issues
5.1 Conceptual Framework of Double Taxation
In international tax law, double taxation traditionally refers to the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical periods.However, in the context of domestic legislation, the concept expands to include situations where multiple fiscal impositions by different authorities within the same jurisdiction create overlapping tax burdens on the same economic activity or revenue stream. The critical question is whether these impositions target the same tax base without relief mechanisms.
5.2 Legal Assessment of Overlapping Provisions
When examining the interaction between the NTA 2025 shipping tax and other maritime levies, several aspects warrant consideration:
Different Legal Character: The Section 18 NTA tax is a direct tax on revenue from shipping activities, while many NIMASA and NPA charges are framed as regulatory fees or service charges. This distinction, while conceptually significant, may offer little practical relief to shipping companies as the financial impact is similar
Separate Administrative Regimes: The shipping tax under NTA is administered by the Nigeria Revenue Service, while maritime levies fall under NIMASA and NPA. This fragmented administration creates compliance complexity but does not necessarily constitute legal double
taxation if the impositions target different aspects of shipping operations
Cumulative Impact: The combination of 2% gross revenue tax under NTA, cabotage levies, port dues, and environmental charges may result in a substantial cumulative burden that affects the economic viability of Nigerian shipping routes, even if technically targeting different facets of operations
5.3 Specific Provisions Raising Double Taxation Concerns
Several specific aspects of the new regime create potential for overlapping taxation:
Ancillary Services Taxation: Under the expanded tax base, “payments for services from Nigeria, even if services are performed outside Nigeria” may be taxable. This could potentially capture services already subject to other levies
Regulatory Leverage: Section 18(9) of the NTA requiring agencies to “demand tax evidence as a condition for issuing permits or approvals” creates an interlocking compliance system where failure to satisfy one obligation impedes ability to operate, even if the underlying financial impositions are legally distinct
Withholding Tax Applications: Section 51 of the NTAA reinforces “withholding tax obligations to payments made to contractors, consultants, and service providers,” including “non-resident companies offering technical, consulting, professional, or management services within the transportation industry”. These payments are “subject to a 5% withholding tax, which serves as the final tax for non-residents,” potentially overlapping with other levies on the same service payments
5.4 Comparative International Practice
When assessed against international standards, the Nigerian approach appears particularly assertive. The OECD Model Tax Convention typically provides for exclusive taxation of shipping profits in the operator’s country of residence, with source country taxation limited to situations without treaty protection. Nigeria’s retention of source-based taxation on gross revenues, combined with additional sector-specific levies, creates a fiscal environment that may be disproportionately burdensome for international shipping operators, particularly those from jurisdictions with which Nigeria lacks comprehensive double tax agreements.
6 Conclusion and Recommendations
6.1 Summary of Findings
Nigeria’s 2025 tax reforms represent a transformative shift in the fiscal landscape for shipping companies, introducing streamlined but more rigorous compliance obligations alongside enhanced enforcement powers. The retention of the 2% gross revenue tax on shipping under Section 18 of the NTA 2025, coupled with its new monthly filing requirement and expanded documentation rules, creates a more administratively demanding environment for maritime operators. While the new shipping tax provisions do not explicitly create juridical double taxation in the technical sense, their cumulative effect alongside existing maritime levies administered by NIMASA, NPA, and other agencies results in a substantive economic burden that may constitute double taxation in practical effect.
The absence of a comprehensive mechanism for relief from the layered fiscal impositions, combined with the interlocking enforcement provisions that use compliance with one regime as leverage for others, creates a challenging operational environment for shipping companies loading from Nigeria. This situation is particularly concerning for occasional operators who may find the compliance costs disproportionate to their Nigerian operations.
6.2 Recommendations for Stakeholders
For shipping companies operating in Nigerian waters, the following strategic actions are recommended:
Immediate Compliance Preparation: Begin systems upgrades now to accommodate the monthly filing requirements under Section 18 NTA and Section 21 NTAA, well before the 1 January 2026 effective date
Comprehensive Tax Mapping: Conduct a thorough review of all fiscal impositions across operations to identify potential cumulative burdens and plan for efficient compliance
Strategic Engagement: Proactively engage with the Nigeria Revenue Service, NIMASA, and NPA to seek clarification on ambiguous provisions, particularly regarding documentation requirements under Section 18(7) NTA
Treaty Analysis: Review applicable double tax agreements for potential relief provisions, though their applicability to gross-based taxation may be limited
For policymakers and regulatory authorities, consideration should be given to:
Issuing Clarifying Guidelines: Providing detailed circulars on the implementation of Section 18 NTA, particularly regarding the “separate financial statement” option and its requirements
Creating Coordination Mechanisms: Establishing formal channels between NRS, NIMASA, and NPA to streamline compliance and reduce administrative overlaps
Reviewing Cumulative Impact: Assessing the collective effect of all fiscal impositions on shipping competitiveness with a view to optimizing rather than simply maximizing revenue
The coming months will be critical for all stakeholders as Nigeria implements these sweeping reforms. Through careful navigation, strategic compliance, and constructive engagement, shipping companies can potentially mitigate double taxation concerns while maintaining access to the important Nigerian maritime market.
7 Reference List
- Nigeria Tax Act, 2025 (NTA)
- Nigeria Tax Administration Act, 2025 (NTAA)
- Admiralty Jurisdiction Act (AJA)
- Merchant Shipping Act 2007 (MSA)
- Nigerian Maritime Administration and Safety Agency (NIMASA) Act
- Coastal and Inland Shipping (Cabotage) Act 2003
- Memorandum of Understanding on Port State Control for West and Central African Region (Abuja MoU)
- Constitution of the Federal Republic of Nigeria 1999 (as amended)