The federal government has maintained the corporate income tax (CIT) rate at 30 percent for all companies excluding small businesses under the newly updated Nigerian Tax Act (NTA), which is set to come into effect from January 2026.
The revised tax law provides clarity on the classification and obligations of companies in Nigeria, preserving the zero percent tax rate for small businesses. These are defined as companies with an annual gross turnover of ₦50 million or less and total fixed assets not exceeding ₦250 million.
According to the NTA provisions, “Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of a small company, at 0%; and (b) any other company, at the rate of 30 percent from the commencement of this Act.”
However, the Act makes it clear that professional service providers are excluded from the small business category. The legislation defines “professional services” as those delivered by individuals or firms possessing specialized knowledge, skills, or certifications in fields such as consulting, strategic planning, and advisory roles. It explicitly excludes artisans and vocational service providers from this classification.
In a move aimed at curbing tax avoidance among large corporations, the law introduces a minimum effective tax rate. It states that any company with an effective tax rate below 15 percent in any year must recalculate and pay the difference to bring the effective rate up to 15 percent.
This provision applies to:
- Companies that are part of a Multinational Enterprise (MNE) group
- Other companies with an annual turnover of ₦20 billion or more
In a major shift, the federal government has also abolished the 10 percent Capital Gains Tax (CGT). With the repeal of the Capital Gains Tax Act through the enactment of the new NTA, capital gains are now absorbed into the CIT framework.
This development follows earlier proposals by the Presidential Committee on Fiscal Policy and Tax Reforms, led by Taiwo Oyedele. On June 4, 2024, Oyedele announced the committee’s recommendation to reduce the CIT rate by 5 percentage points, from 30 percent to 25 percent, to make Nigeria’s tax environment more attractive to investors and support business growth.
Before this, in October 2023, the National Assembly was already reviewing a bill to gradually reduce the CIT from 30 percent to 27.5 percent in 2025, and further to 25 percent by 2026.
As it stands, the latest NTA retains the 30 percent rate for non-exempt companies while simplifying and consolidating tax structures. Whether the government will implement the proposed rate reductions in future fiscal cycles remains to be seen.
