Company Tax Rate In Nigeria (2026 Guide): Everything Businesses Need To Know
Many Nigerian business owners do not pay attention to company tax until a filing deadline approaches. That mistake can lead to penalties, incorrect tax calculations, and last-minute pressure that could have been avoided.
Understanding the company tax rate in Nigeria is no longer optional for businesses that want to remain compliant and manage their finances properly. Whether you run a small company, a growing enterprise, or an established business, knowing how Company Income Tax (CIT) works can help you make better financial decisions and avoid costly errors.
In this guide, you’ll learn the current company tax rates in Nigeria, how businesses are classified for tax purposes, how taxable profits are calculated, and the key filing requirements every company should know in 2026. If you’re looking for a simple explanation of company tax in Nigeria, you’ll find the answers here.
What Is Company Tax (Corporate Income Tax)
Company Income Tax (CIT) is a tax charged on the profit made by registered companies in Nigeria.
In simple terms:
If your business makes profit after deducting expenses, the government takes a percentage of that profit as tax.
This tax applies to:
- Limited liability companies
- Foreign companies operating in Nigeria
- Startups registered with CAC (once they start making profit)
It does NOT apply to individuals directly—that falls under Personal Income Tax.
Current Company Tax Rate In Nigeria (2026 Update)
As of 2026, Nigeria maintains a tiered Corporate Income Tax structure based on company size:
| Company Category | Annual Turnover | Company Income Tax Rate |
|---|---|---|
| Small Company | ₦25 million or less | 0% |
| Medium Company | ₦25 million – ₦100 million | 20% |
| Large Company | Above ₦100 million | 30% |
This structure was designed to support small businesses and encourage growth.
What Is The Minimum Company Tax Rate In Nigeria?
Even when a company makes little or no profit, the law may still require it to pay minimum tax.
Minimum Tax Rate
Minimum tax is generally 0.5% of gross turnover, minus franked investment income.
Minimum tax applies when:
- A company reports no profit
- The profit is too small
- The calculated tax is lower than minimum tax
Companies Exempt From Minimum Tax
- Companies in their first four years of operation
- Small companies (₦25m turnover or less)
- Agricultural and educational companies (under certain conditions)
When Does A New Company Start Paying Tax In Nigeria?
A newly registered company in Nigeria:
- Must register with FIRS immediately
- Must file tax returns within 18 months of incorporation or 6 months after its accounting year end, whichever comes first
Important Relief For New Companies
New companies enjoy a minimum tax exemption for their first four years, provided they are not part of an existing group restructuring.
Difference Between Income Tax And Company Tax
This is a common source of confusion.
Company Income Tax
- Paid by registered companies
- Based on company profits
- Paid to FIRS
Personal Income Tax
- Paid by individuals, sole traders, and partners
- Based on personal earnings
- Paid to State Internal Revenue Services
A company and its owner are treated as separate legal entities.
Do Small Businesses Pay Tax In Nigeria?
Yes, but it depends on the structure.
- Sole proprietors → Personal Income Tax
- Registered companies (Ltd) → Company Income Tax
- Small companies (≤ ₦25m turnover) → 0% CIT
Even if tax payable is zero, annual filing is mandatory.
Do Companies Pay Tax On Profit Or Revenue?
Companies pay tax on profit, not revenue.
Profit = Revenue – Allowable Expenses
Allowable expenses include:
- Salaries and wages
- Rent
- Utilities
- Business-related travel
- Depreciation (capital allowance)
How To Calculate Company Income Tax In Nigeria
Step-by-Step Example
Assumptions
- Annual Revenue: ₦50,000,000
- Allowable Expenses: ₦35,000,000
Profit ₦50,000,000 – ₦35,000,000 = ₦15,000,000
Applicable Tax Rate Medium company → 20%
Company Income Tax 20% of ₦15,000,000 = ₦3,000,000
How To Calculate Corporation Tax Formula
Corporation Tax Formula
Tax Payable = Adjusted Profit × Applicable Tax Rate
Where:
- Adjusted profit = profit after allowable deductions
- Tax rate depends on company size
Minimum Tax Computation For Companies In Nigeria
Minimum Tax Formula
Minimum Tax = 0.5% × Gross Turnover – Franked Investment Income
If the minimum tax is higher than normal tax, the company pays minimum tax instead.
List Of Income Exempted From Tax In Nigeria
Some income types are legally exempt from company income tax:
- Franked investment income (dividends already taxed)
- Interest on Nigerian government securities
- Export profits (non-oil)
- Profits from agricultural production
- Income of approved charitable organizations
- Profits of educational institutions (non-profit)
Do Companies Pay Tax On Dividends Received?
Usually, no.
Dividends received from Nigerian companies are classified as franked investment income, meaning:
- Tax has already been deducted at source
- It is not taxed again under company income tax
How Much Tax Do Directors Pay On Dividends?
Directors and shareholders pay Withholding Tax (WHT) on dividends.
Dividend Tax Rate
- 10% withholding tax
This tax is deducted before dividends are paid and is often considered final tax for individuals.
Do Companies Pay Tax On Dividends They Pay?
No.
- Dividends paid by a company are not an expense
- The company already paid company income tax on profits
- The shareholder pays withholding tax
How Much Tax Will I Pay As A Limited Company?
It depends on:
- Annual turnover
- Profit level
- Applicable tax band
Quick Summary
- ≤ ₦25m turnover → 0%
- ₦25m–₦100m → 20%
- Above ₦100m → 30%
Is Corporation Tax Based On Net Or Gross Profit?
Corporation tax is based on net (adjusted) profit, not gross profit.
Are Dividends Taxed At 40% In Nigeria?
No.
Dividends are taxed at 10% withholding tax, not 40%.
Do You Pay Both Corporation Tax And Income Tax?
- Companies → Company Income Tax
- Directors/Employees → Personal Income Tax on salaries
- Shareholders → Withholding tax on dividends
Yes, both can apply, but on different incomes and entities.
Penalties For Non-Compliance
Failure to comply with company tax laws can lead to:
- Heavy finesInterest charges on unpaid tax
- Business account restrictionsLegal prosecution
- Audits and investigations
The FIRS actively monitors compliance, especially for registered companies.
Frequent Asked Questions – FAQ
Do Small Businesses Pay Tax In Nigeria?
Yes, but small companies with turnover ≤ ₦25m pay 0% CIT, while sole traders pay personal income tax.
Do Companies Pay Tax On Dividends Received?
No, dividends received are usually tax-exempt as franked investment income.
Do Companies Pay Tax On Profit Or Revenue?
Companies pay tax on profit, not total revenue.
Is Corporation Tax Based On Ndt Or Gross Profit?
It is based on net (adjusted) profit.
Are Dividends Taxed At 40%?
No. Dividend tax is 10%.
Do You Pay Both Corporation Tax And Income Tax?
Yes, but they apply to different parties and income types.
