IP and the new tax regime in Nigeria: Why valuation is now a strategic requirement

In 2026, when the new Tax Act (2025) of Nigeria became effective, attention was paid to the capital gains tax, digital assets, and compliance reforms. Beneath those headlines is a more radical transformation: intellectual property (IP) is no more a free, intangible, and unrefutable good but an asset to pay taxes on, charge for, and audit.

This action is at least the formal recognition of the fact that in the modern economy, wealth is becoming less and less tangible. In the case of both entertainment and fintech businesses, their assets have become their most valuable properties, which are now under the Federal Inland Revenue Service (FIRS) scanner. Sections 4(b) and 4(j) respectively referred to royalty and transactions on digital and virtual assets, which are comparable with intellectual properties.

Section 4 of the new law broadens the definition of the term ‘chargeable assets’ to include intangible property, incorporeal rights, and digital assets. Capital Gains Tax (CGT) that had before been applied to physical and financial assets is now applied to IP sales, transfers, and assignments.

To businesses, CGT may be up to 30 per cent, which matches the corporate income tax. The broadened framework applies to royalties and licensing fees, as well as software rights, which are all subject to taxation. In other words, innovation is now taxable.

Section 45 of the new law referred to the foundations of valuation, and this is currently the centre of valuation computation. It is rather significant that parties should know the real value of their assets in question, yet performing a transaction, whether to sell, transfer, or license the value attached to that asset, is a determining factor of taxable gain or royalty income.

Read also: Inside Nigeria’s new Tax Reform Law: Relief, risks, and realities

Having a weak or no valuation may put companies at great risk, including being undervalued, which results in audits, adjustments, and fines, or overvalued, which could result in inflated taxable income and balance sheet misstatements. Lack of consistency in valuation may completely breach the transfer pricing and be subject to scrutiny.

It is based on credible, defensible IP valuation: fair market value of CGT, arm’s-length pricing of transfers in accordance with transfer pricing requirements, fair computation of capital allowance, and defence of audit and documentation integrity.

Chasing of codes, brands, trademarks, industrial design, copyrights, and patents that yield real money are no longer considered as tangible assets like land and factories, plants and equipment, but are included in the chasing of assets by the FIRS.

Most Nigerian companies continue to consider IP merely as an expense they incurred or a consideration they have not received. That can no longer be maintained under the new law. FIRS is now entitled to require valuation of royalty deals, IP disposal, or group restructuring.

There is maximum exposure on multinational companies having internal brand licensing or technology sharing arrangements. In the absence of arm-length valuations, intragroup royalties are subject to repricing, and penalties are to be backdated.

Indirect transfer provisions are now applicable in even offshore share transfers of companies whose main value is the Nigerian IP.

Read also: Nigerians to feel impact of new tax laws beginning January 2026 – Oyedele

The sectoral effects that will be involved in operation with this new regime will include: Creative and Technology: record labels, film studios, and software firms will need to appreciate their IP portfolios to calculate the royalty income and CGT exposure. Manufacturing and Pharmaceutical: trademarks and formula licensing agreements would need to be re-evaluated on reasonable royalty rates. Financial Institutions: IP-based collateral can now be recognised on the condition of professional valuation. Professional Services: The alignment of methodologies by valuers, accountants, and tax advisers with international IP valuation standards should be undertaken.

The incorporation of IP into Nigeria’s tax regime requires further efforts to develop capacity. The Nigerian Institution of Estate Surveyors and Valuers (NIESV) should intensify its efforts in training and retraining on IVS 210 and IFRS 13, respectively.

The regulator, the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON), should promote total adherence to international practice in the jurisdiction where the institution operates. There should be close cooperation between the regulators, including NOTAP, FIRS, FRC, and other professional bodies, to bring about consistency of standards.

The boards of the companies should not consider IP valuation as an additional task to incorporate into their tax governance strategy. In IP-intensive businesses, valuation is to be done at acquisition, at least once every year, to be audited, and whenever there is any transfer or licensing or restructuring.

The 2025 Tax Act passed in Nigeria has left one thing clear: it is time to put an end to the unmeasured intangibles. The intellectual property has become a taxable, auditable, and fundable asset.

The difference between compliance and exposure, and opportunity and liability, is accurate valuation. Early-adopting companies will win the confidence of investors, capital will be more efficient, and it will not create a conflict with the regulations.

In the modern economy, the measurable cannot be defended and can definitely not be taxed appropriately.

Akinwumi, a registered estate surveyor and valuer, who specialises in intellectual property valuation, writes from Lagos.