Nigeria’s New Tax Act: What Mining Companies Need to Know for 2026 

The Nigerian Tax Act that took effect on 1 January 2026 introduces wide-ranging reforms that will reshape the country’s fiscal landscape. While the mining sector is directly affected in a few specific areas, the broader reforms will also have significant day-to-day implications for mining operators.

What follows is a concise overview of the key points miners should keep in mind as they prepare for the new regime. I begin with the two areas where mining is specifically targeted.

Royalty Reform

Royalty rates will increase for most minerals, and in many cases the base on which they are calculated is also likely to rise. We have explored the details elsewhere, but in short:
higher rates + higher valuation base = materially higher royalty burdens for most operators.

With margins already under pressure, mining companies should be re-running their financial models now to quantify the impact.

Rehabilitation and Environmental Remediation

Mining activity inevitably leaves long-term environmental footprints. These do not simply disappear once operations cease. They typically include:

• Derelict structures and equipment: sometimes romantic relics decades later, but more often safety hazards or obstructions to future land use.

• Open excavations and shafts: dangerous if uncapped or unfilled.

• Waste material and slimes dams: often requiring treatment, removal, vegetation or permanent management.

• Soil contamination: which may require remediation, disposal, or containment.

These activities give rise to substantial end-of-life costs, which accounting standards require to be recognised over the life of the mine through provisioning.

However, a provision in the accounts does not automatically translate into a tax deduction. Tax deductibility depends on the law, not the balance sheet.

Countries such as Nigeria understandably seek to ensure that miners cannot simply walk away at the end of a project, leaving the environmental burden to the government and surrounding communities. Equally, allowing deductions only when the rehabilitation work is carried out is often ineffective, as many mines are no longer income-generating at that stage.

The New Deduction for Rehabilitation Contributions

The Nigerian Tax Act introduces a new deduction mechanism for rehabilitation expenditure. Contributions paid into an approved fund, scheme or arrangement will now be deductible when the payments are made, provided that:

1. The fund, scheme or arrangement is approved by the relevant authority;
2. Contributions are cash-backed; and
3. The money is invested in a dedicated account or trust, managed by independent trustees or fund managers.

Although the Act does not define the “relevant authority”, it is likely to be linked to the Environmental Protection and Rehabilitation Fund established for each mineral title under section 121 of the Nigerian Minerals and Mining Act, which must be managed by a reputable trustee institution.

In effect, once funds are paid into a properly approved and independently managed rehabilitation fund, the contribution should be tax deductible. This provides upfront relief to miners and strengthens protection for communities and the state at the end of a mine’s life.

VAT Reform: A More Neutral System for Miners

Mining companies will continue to charge VAT on domestic sales, and exports remain zero-rated. The significant change is that miners will now be entitled to claim input VAT on both operating and capital expenditure.

This removes the cascading effect previously embedded in the system and brings Nigeria closer to international best practice.

For exporters, the practical result is obvious: many miners will be in a near-permanent VAT refund position.

The Nigerian Tax Administration Act now provides clearer timelines: refund claims must be lodged within 12 months of the underlying transaction, and the FIRS must process valid claims within 30 days. While administration remains to be seen, the statutory framework is at least more robust.

Export Incentives and the New Top-Up Tax

Profits from the export of goods including mineral exports, will be exempt from income tax. This exemption is not time-limited and is considerably more generous than the current regime.

However, two important qualifications follow:

• Companies forming part of a multinational group with global turnover above EUR 750 million, or

• Companies with annual turnover of NGN 50 million or more, may still be subject to the top-up tax to bring their effective rate to 15%.

Even so, for many miners, a 15% rate remains materially more attractive than the standard 34% (including development levy).

In addition, where a company is wholly export-oriented, dividends will also be exempt from tax, meaning they are not subject to withholding tax. This further strengthens the incentive for export-facing projects.

Final Thoughts

The 2026 reforms reshape not only the fiscal obligations of the mining industry but also its long-term risk landscape. Miners should be assessing royalty impacts, reviewing rehabilitation provisioning structures, modelling VAT refund positions, and evaluating eligibility for export-related incentives well before the reforms take effect.

These changes bring both new compliance burdens and new opportunities. Getting ahead of them will be essential.

If you need help assessing how the 2026 reforms will affect your mining operations or require support with modelling, structuring or compliance our team at Regan van Rooy is ready to assist. Get in touch with us today to ensure your business is fully prepared for the new regime.