This is a new anti-avoidance measure. Nigerian parent companies will now be taxed on the undistributed profits of their offshore subsidiaries.
- Scenario: If “Nigerian Co A” owns “Dubai Co B,” and the Dubai subsidiary is holding onto ₦5 billion in profits without declaring a dividend, the Nigerian parent company will immediately be liable for tax on that profit in Nigeria, which could amount to ₦1.5 billion. This prevents companies from indefinitely deferring tax by parking profits offshore.
