Stakeholders in Nigeria’s Integrated Marketing Communications (IMC) industry have begun weighing the far-reaching implications of the country’s sweeping tax reforms, with industry leaders warning that agencies must urgently strengthen compliance systems as the new regime takes effect.

The conversation took centre stage at a strategic webinar convened by the Advertising Regulatory Council of Nigeria (ARCON), where regulators, tax experts and agency executives gathered to analyse how the new fiscal framework could reshape pricing models, profitability and operational processes across the sector.

The virtual session, themed “The New Tax Regime: Implications for the Integrated Marketing Communications Industry,” brought together stakeholders across advertising, media, public relations and digital marketing to unpack emerging fiscal policies and their impact on agency operations, compliance obligations and sector growth.

Speaking at the session, ARCON Director-General Olalekan Fadolapo said the webinar was designed to deepen industry understanding of the evolving tax framework and ensure practitioners remain compliant.

“This is why we have brought in experts to have this conversation with us. Where are we currently? What is the implication of the tax? Can we approach the National Revenue Service to say that based on the new tax regime and the operationalisation of the industry, can we have an understanding?” he said.

He added that ARCON is committed to sustained engagement with stakeholders to address operational concerns arising from the reforms.

“We want a situation whereby our industry will be tax compliant; we want a situation whereby our industry operators will not have issues with the tax organisations. That is the purpose of this webinar,” Fadolapo said.

Delivering the keynote address, Femi Olarinde, Head of the Fiscal and Tax Reforms Implementation Division at the Nigeria Revenue Service (NRS), explained that the reforms are part of a broader effort to reduce Nigeria’s dependence on oil revenue and strengthen fiscal resilience.

According to him, the reforms emerged from the work of the Presidential Fiscal Policy and Tax Reforms Committee established in 2023 by President Bola Tinubu to overhaul the country’s tax system.

“The tax reform is designed to build a fair, transparent and growth driven tax system; one that taxes prosperity and not poverty, a tax system that taxes the fruit and not the seed,” he said.

Olarinde explained that a key feature of the reform is the consolidation of multiple tax laws into a unified framework known as the Nigerian Tax Act, aimed at simplifying compliance and harmonising tax administration across all levels of government.

He also highlighted new classifications for companies based on turnover.

“Small businesses with turnover below ₦100 million will pay zero per cent company income tax, while larger businesses will pay 30 per cent, which is expected to reduce to 25 per cent in the near future,” he said.

Among other changes, the reform abolishes the minimum tax previously paid by loss-making companies and introduces provisions affecting value-added tax, withholding tax and digital economy taxation.

For the IMC industry, Olarinde said agencies must pay closer attention to documentation, tax planning and compliance.

“Advertising agencies, media buying firms, PR consultancies and digital marketing companies play a critical role in the economy. But these taxes will directly affect pricing, margins and compliance costs, so firms must pay close attention to proper documentation and tax planning,” he noted.

One major change welcomed by service-based businesses is the ability to reclaim input VAT, which was previously unavailable to many service industries.

“Service industries previously could not claim input VAT. Under the new regime, they can now offset input VAT against output VAT, and where there is excess, the tax authority is expected to refund within thirty days,” Olarinde said.

Industry executives also shared perspectives on how the reforms could affect agency operations.

Tunji Adeyinka, Group Managing Director of The Republican Group, emphasised the importance of strong accounting systems and proper financial documentation.

“Compliance will be critical under the new regime, and it begins with sound record-keeping. If an organisation does not have a robust accounting system capable of capturing its financial records properly, it will run into serious issues,” Adeyinka said.

He added that the ability to reclaim VAT offers a significant advantage for agencies but requires accurate documentation.

“One of the advantages this law offers our industry is that we can reclaim input VAT. But if you do not have proper record keeping, you cannot reclaim the VAT you have already paid,” he said.

Adeyinka also drew attention to a longstanding industry challenge regarding agency turnover.

“What you have as turnover is not the same as your income. Agencies handle high pass-through costs for clients, and tax authorities must recognise that not everything passing through an agency’s books belongs to the agency,” he explained.

Similarly, Obinna Aniche, Group President of Red Slate Group Ltd, described the reform as both timely and transformative for the communications industry.

“The tax reform is timely and important. Beyond the fiscal issue, it is also an economic design issue that will affect how we employ people, how we invest and how we price our services,” Aniche said.

He noted that the IMC sector has evolved into a complex ecosystem spanning digital marketing, content production, influencer networks and cross-border media platforms.

“If implemented thoughtfully with the sector, this reform can formalise creative businesses that currently sit outside the tax radar and improve transparency, which will ultimately strengthen investor confidence,” he said.

Operational challenges were also raised by Jehoshaphat Akinadewo, Regional Head of Quality Control at Omnicom Media Group WeCA, who highlighted concerns about electronic invoicing requirements and withholding tax thresholds.

“Electronic invoicing may require agencies to connect their accounting systems to the government platform, but the advertising industry raises multiple types of invoices during campaign execution. The question becomes: which invoice should be uploaded to the platform?” he asked.

Akinadewo also warned that smaller agencies could face liquidity constraints despite tax exemptions.

“A business with turnover below ₦100 million may be exempt from company income tax but still face withholding tax deductions, which could tie up operational cash in tax credit notes,” he said.

Responding to the concerns, Olarinde reiterated that proper financial documentation remains essential for accurate tax assessment.

“If your records clearly show what constitutes your income and what belongs to clients, the tax authority will only tax the actual income. Proper documentation and invoice clarity are key,” he said.

Closing the session, Fadolapo described the webinar as the beginning of deeper engagement between regulators and industry players.

“This is a continuous conversation. There are still many definitions, classifications and industry nuances that we must work through together,” he said.

He added that ARCON has set up a tax committee comprising representatives from sectoral groups to further examine the reform’s impact on the industry and engage relevant authorities.

“Our role as regulator is to lead advocacy for the industry. We will engage the tax authorities and ensure the sector takes maximum benefit from this new tax framework,” he concluded.