Nigeria Startup Act in 2026: The Startup Label and the Shift to the Economic Development Tax Incentive

The Nigeria Startup Act (NSA) introduces the Startup Label, issued by the National Information Technology Development Agency (NITDA), which is a prerequisite for accessing the Act's incentives.

To qualify for the Startup Label, a business must:

• Be registered as a limited liability company with the Corporate Affairs Commission (CAC).
• Have been in operation for less than 10 years.
• Have objects focused on the innovation, development, production or improvement of a digital product, service or process.
• Have at least 33% of its shares held by a Nigerian founder or co‑founder.

• Tax holidays and investment tax credits.
• Capital gains tax exemptions for qualifying investors.
• Research and development deductions.
• Under Section 163(1)(m) of the Nigeria Tax Act, gains from the disposal of assets by an angel investor, venture capitalist, private equity fund, accelerator or incubator in respect of a labelled startup are tax‑exempt, provided the assets were held in Nigeria for at least 24 months.

Historically, labelled startups could apply for the Pioneer Status Incentive (PSI) — an initial three‑year tax holiday, extendable by a further two years. That route is closing: the Nigerian Investment Promotion Commission (NIPC) stopped accepting new PSI applications from 10 November 2025, in preparation for the Economic Development Tax Incentive (EDTI) scheme, which takes effect from 1 January 2026 alongside the wider 2025 Tax Reform Acts.

If you already hold PSI, clarify your transitional treatment. If you were planning to apply for PSI, you'll now need to look at qualifying under the EDTI framework instead.

1. Confirm your CAC registration and cap table meet the 33% Nigerian‑founder threshold before applying for the Startup Label.
2. Apply for the NITDA Startup Label if you haven't already — it's the gateway to every other incentive.
3. If you hold PSI, get advice on your transitional position under the new EDTI scheme.
4. If you were planning a PSI application, redirect that effort toward the EDTI framework instead.
5. Angel investors, VCs, PE funds, accelerators and incubators should track the 24‑month holding period for any startup assets to preserve the CGT exemption under s.163(1)(m) NTA.