When Does a Gratuity Qualify for Tax Exemption Under Nigeria’s Tax Regime?
The enactment of the Nigeria Tax Act, 2025 (“NTA”) has introduced a unified framework for several tax rules previously dispersed across multiple statutes. Among the provisions attracting increasing attention from employers, employees, tax advisers and retirement scheme administrators is the exemption granted to pensions, gratuities and other retirement benefits.
At first glance, the position appears straightforward. Section 162 of the NTA exempts certain retirement-related benefits, including gratuities, from tax. The immediate assumption for many readers is therefore simple: if a payment is described as a gratuity, it should automatically enjoy tax exemption.
The reality may be more nuanced.
