Section 163 Nigeria Tax Act 2025

Section 163 of the Nigeria Tax Act 2025 is about Income tax exemption. It provides as follows:

(1) There is exempt from tax under chapter two of this Act –

(a) the profits accruing to, or gains from disposal of assets of any person
being –
(i) a statutory or registered friendly society, where the profits or gains are not derived from a trade or business carried on by such society,

(ii) a co-operative society registered under any enactment or law relating to co-operative societies, not being profits or gains from any
trade or business carried on by that society,
(iii) engaged in educational, religious or charitable activities of a public character where the profits or gains are not derived from a trade or business carried on by such person,

(iv) a trade union registered under the Trade Unions Act where the profits or gains are not derived from a trade or business carried on by such trade union,

(v) a Federal, State or Local Government in Nigeria, their Ministries, Departments and Agencies and other public institutions, other than profits or gains derived from trade or business or any instrumentality established for the purpose of trade or business, and

(vi) a government purchasing authority established by an enactment and empowered to acquire any commodity for export or redistribution;

(b) dividend distributed by authorised collective investment scheme;

(c) dividend or rental income received by a real estate investment company on behalf of its shareholders, where not less than 75% of the dividend or rental income is distributed within 12 months after the end of the financial year in which the dividend or rental income was earned, provided that nothing in this subsection shall be construed to exempt a –
(i) shareholder from tax on the dividend or rental income received from a real estate investment company,
(ii) real estate investment company from tax on management fee, profits or any other income earned for and on its own account, and
(iii) real estate investment company from tax on dividend or rental income if it does not meet the conditions stipulated in this paragraph.

(d) compensating payments, which qualify as dividends under section 4 of this Act, received by a lender from its approved agent or a borrower in a regulated securities lending transaction;

(e) compensating payments, which qualify as dividends or interest under
section 4 of this Act, received by an approved agent from a borrower or lender on behalf of a lender or borrower in a regulated securities lending
transaction;

(f) consular fees received on behalf of a foreign State, or by a consular officer on behalf of the State, and the employment income of such officer, other than income in respect of any trade, business, profession or vocation carried on by the officer or in respect of any other employment exercised by him in Nigeria:

Provided that this exemption shall not apply to the income of an employee
engaged in domestic duties, or where the officer or employee ordinarily resides in Nigeria and is not a national of the foreign State;

(g) an income in respect of which tax is remitted or exempt under the provisions of the Diplomatic Immunities and Privileges Act or of any enactment, order or notice continued in force or effected by that Act;

(h) pension funds and assets created pursuant to the Pension Reform Act;
(i) pension, gratuity or any retirement benefits granted in accordance with the Pension Reform Act;
(j) wound and disability pensions granted to members of the armed forces or of any recognised national defence organisation, or to a person injured as a result of enemy action;