Section 10 Nigeria Tax Act 2025

Section 10 of the Nigeria Tax Act 2025 is about Certain undistributed profits may be treated as distributed. It provides as follows:

(1) Where a Nigerian company controlled by not more than five individuals has not distributed to its shareholders as dividend, profits made in any period for which accounts have been made up by such company, the Service may direct that the proportion of the profits of the company, which could have been distributed without detriment to the company’s business, be construed as distributed.

(2) The gross amount of profits construed as distributed under the provisions of subsection (1) shall constitute a taxable income in the hand of individual shareholders of the company in proportion to their shareholdings in the ordinary capital of the company on the day of the deemed distribution.

(3) Any direction by the Service under this section shall be made in writing, and be served on the company, and shall specify the –
(a) day to be taken for the purposes of this section;
(b) gross amount of those profits so deemed to be distributed;

(c) rate applied for the deduction at source, being the rate prescribed by Nigeria Tax Administration Act, 2025; and
(d) net amount after the deduction at source.

(4) For the purposes of this section, the Service may give notice to any company, which it has reason to believe is controlled by not more than five individuals, requiring it to supply, within such time as contained in such notice, full particulars of its shareholders.

(5) In the case of a limited liability partnership, all the profits of the partnership shall be deemed as distributed, and taxable income, proportionately, in the hands of the respective partners.

(6) Any direction by the Service under this section with respect to the profits of any accounting period of a company shall be made not later than three years after the receipt by the Service of the duly audited accounts of the company for that period.

(7) A company in respect of which a direction is made under this section, shall have a right of appeal in accordance with Chapter Two of Nigeria Tax Administration Act, 2025.

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