Very good question.
And to be very honest with you, this is one of the reasons why many people don’t understand how powerful holding companies and group structures work in business.

Now let me break this down in the simplest way possible so that even Mama Ngozi that sells tomatoes in the village will understand.

In Nigeria, tax is usually calculated based on EACH company separately…
not the group collectively.
Meaning…
Even if you have:
– 10 subsidiaries
– under 1 holding company

The FIRS now NRS will still treat each subsidiary as an independent legal entity for tax purposes.

Now let me explain with a simple example.
Imagine you own:
– Fokona Media Ltd
– Fokona Properties Ltd
– Fokona Logistics Ltd
Then all of them are owned by:
Fokona Holdings Ltd.

Now…
Even though all these companies belong to one group…
FIRS will still ask each company to:
– file its own tax
– prepare its own financial statement
– declare its own profit
– pay its own Company Income Tax (CIT)
– pay its own VAT obligations
Why?
Because legally…
each subsidiary is treated as a separate company.

Now here is where many people get confused.
A HOLDING COMPANY is not the same thing as one business account.
No.
A holding company is more like a parent.
While the subsidiaries are separate children.
Each child can:
– make profit
– make loss
– owe debt
– own assets
– pay tax independently

Now let me even shock you.
This structure is one of the smartest structures big businesses use globally.
Why?
Because it helps:
– risk management
– asset protection
– tax planning
– easier investment raising
– operational control

For Example…
Let’s assume:
Your logistics company enters serious debt.
If structured properly…
that debt may not automatically destroy your media company or property company.
Why?
Because they are separate legal entities.
That is one major advantage of group structure.

Now as your Financial Literacy Advocate…
Let me tell you another thing many people don’t know…
Even though subsidiaries are taxed separately…
there are still situations where group financial statements are prepared collectively.

This is what we called: “Consolidated Financial Statements.” in Accounting.
Meaning:
The group can prepare one combined report to show:
– total assets
– total liabilities
– total revenue
– total performance of the entire group

But that DOES NOT automatically mean tax is paid collectively.
That is the difference many people don’t understand.

Now as an Accountant and investment Strategist let me also add this…
If transactions are happening between subsidiaries…
The FIRS can still monitor those transactions carefully.
Why?
Because some companies try to shift profit around subsidiaries to reduce tax exposure.
That is why there are rules around:
– transfer pricing
– related party transactions
– intercompany transactions
Especially for large corporations.

Now let me even say something honestly…
Understanding structure is one thing that separates small business owners from real business empires.
Because…
Most small businesses in Nigeria only think about:
“Make money today.”

But wealthy people think about:
– structure
– governance
– sustainability
– taxation
– succession
– asset protection
That is why financial literacy is very important.
Because business is not only about making money.
It is about understanding HOW money, law, structure, and systems work together.

My Name is Iking Ferry,
A Financial Literacy Advocate and Investment Strategist on a mission to build 10 million financially free Nigerians and Africans through Fokona with the right knowledge.