With the rollout of Nigeria’s 2025 Tax Act set for 2026, the nation is witnessing transformative changes, especially in areas like capital gains tax, digital asset regulation, and compliance standards. Beyond these prominent updates lies a fundamental redefinition: intellectual property (IP) is no longer an abstract, intangible concept but is now officially recognized as a taxable, reportable, and auditable asset.
This legislative shift reflects the changing landscape of wealth creation, where intangible assets increasingly eclipse physical ones. Sectors such as entertainment and fintech now regard intellectual property as their core asset, subject to rigorous oversight by the Federal Inland Revenue Service (FIRS). Notably, Sections 4(b) and 4(j) explicitly incorporate royalties and dealings with digital and virtual assets under the umbrella of intellectual property taxation.
Section 4 broadens the scope of ‘chargeable assets’ to include intangible properties, incorporeal rights, and digital holdings. As a result, Capital Gains Tax (CGT), once limited to tangible and financial assets, now applies to the sale, transfer, or assignment of intellectual property rights.
Businesses should note that CGT rates may reach as high as 30%, mirroring corporate income tax rates. This expanded tax regime encompasses royalties, licensing fees, and software rights, effectively positioning innovation as a taxable commodity within Nigeria’s fiscal framework.
Asset valuation principles, detailed in Section 45, are pivotal in calculating taxable gains or royalty income during transactions such as sales, transfers, or licensing deals. Precise valuation is critical, as it directly impacts the tax burden.
Failure to conduct proper valuations exposes companies to considerable risks. Undervaluing assets can lead to audits, reassessments, and penalties, while overvaluation may inflate taxable income and misrepresent financial health. Additionally, inconsistent valuations risk breaching transfer pricing rules, triggering further regulatory scrutiny.
Robust intellectual property valuation underpins the establishment of fair market value for CGT purposes, ensures arm’s-length pricing in related-party transactions, facilitates accurate capital allowance calculations, and supports audit transparency and documentation integrity.
Assets such as trademarks, patents, copyrights, industrial designs, and brand identities-once overlooked as intangible-are now squarely within FIRS’s purview for asset monitoring and taxation, akin to physical assets like real estate and machinery.
Historically, many Nigerian companies have treated IP as mere expenses or uncollected receivables. This practice is no longer sustainable under the new law, as FIRS now possesses the authority to demand valuations for royalty contracts, IP disposals, and corporate reorganizations.
Multinational firms with internal brand licensing or technology-sharing arrangements face increased scrutiny. Without arm’s-length valuations, intra-group royalty payments risk retroactive adjustments and associated penalties.
Moreover, indirect transfer provisions now extend to offshore share transactions involving entities whose principal value is derived from Nigerian intellectual property.
The implications of this tax framework cut across various industries: Creative and technology sectors-including music labels, film studios, and software companies-must evaluate their IP assets to determine royalty income and CGT liabilities. Manufacturing and pharmaceutical firms need to reassess trademark and formula licensing agreements to establish appropriate royalty rates. Financial institutions can now leverage IP as collateral, contingent on professional valuation. Meanwhile, professional service providers must align their valuation approaches with international IP valuation standards.
To facilitate this transition, capacity building is essential. The Nigerian Institution of Estate Surveyors and Valuers (NIESV) should intensify training focused on IVS 210 and IFRS 13 valuation standards. Similarly, the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) must enforce strict compliance with global best practices. Coordination among regulatory bodies such as NOTAP, FIRS, FRC, and relevant professional associations is vital to maintain uniform standards.
Corporate boards, particularly in IP-heavy industries, should embed IP valuation within their tax governance frameworks. Valuations ought to be conducted at acquisition, on an annual basis, and whenever transfers, licensing, or restructuring events occur to ensure compliance and transparency.
The 2025 Tax Act decisively ends the era of unquantified intangible assets. Intellectual property has evolved into a taxable, auditable, and financeable asset class.
Accurate valuation is the key differentiator between regulatory compliance and exposure to risk, turning potential tax liabilities into strategic advantages. Early adopters of rigorous IP valuation practices will enhance investor confidence, improve capital efficiency, and mitigate regulatory challenges.
In the modern economy, assets that cannot be precisely measured cannot be effectively protected or fairly taxed.