AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A consulting or professional services company in Nigeria does not qualify as a small company under the 2025 tax reforms, however low its turnover, so it pays company income tax at 30% and the 4% development levy on assessable profits. Clients deduct withholding tax from its fees (5% for resident payees under the 2024 Regulations, as summarised by PwC), and it must register for, charge and file VAT at 7.5%.
Accountants, lawyers, engineers, management consultants, architects and IT consultants all sell expertise rather than goods. The 2025 tax reforms treat them differently from other small firms, and many owners only find out when a client asks for a VAT invoice or deducts tax from a payment.
The professional services exclusion
Under the Nigeria Tax Act 2025, a small company pays company income tax (CIT) at 0% (section 56(a)) and is outside the 4% development levy (section 59(1)). Forvis Mazars (March 2026) and Techpoint Africa (May 2026) both describe a small company as one with turnover of ₦100 million or less and fixed assets below ₦250 million, and both note that professional service providers are excluded from that definition.
The practical effect: a two-person consultancy turning over ₦15 million a year is taxed like a large company. It does not get the 0% rate, it pays the development levy, and it is not exempt from VAT. If you are deciding how to set up, see business name or company for a consulting practice.
| Tax | Ordinary small company | Professional services company |
|---|---|---|
| Company income tax | 0% | 30% (s.56(b)) |
| Development levy | Exempt | 4% of assessable profits (s.59) |
| VAT | Exempt from registering, charging and filing | Register, charge 7.5%, file monthly |
| Annual return | Required | Required |
Withholding tax on your fees
When a company or government body pays your invoice, it usually deducts withholding tax (WHT) and pays it to the tax authority. PwC's highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 give these rates for consultancy, technical, management and professional fees:
- 5% where the payee is resident in Nigeria (corporate or individual).
- 10% where the payee is non-resident, and PwC describes this as a final tax for non-residents.
- Double the rate where the payee has no valid Tax ID.
Many older guides still quote 10% for resident consultants. Check the deduction on each remittance advice against the current regulations, and ask the NRS if the rates have changed under the 2025 Acts; this guide could not confirm a newer schedule. The WHT is not lost: the client issues a receipt for the tax deducted, and you use it as a credit against your CIT. Our guide on getting WHT credit notes back explains how.
VAT on professional fees
Because professional firms are outside the small business definition, the VAT exemption that protects other small firms does not apply. You register for VAT, add 7.5% to fees for Nigerian clients, and file a return by the 21st of the following month under section 22(1) of the Nigeria Tax Administration Act 2025. Forvis Mazars notes that, from 1 January 2026, input VAT on services and fixed assets used for taxable supplies can be claimed, so VAT on your rent, software and laptops may now be recoverable.
Large clients are moving to the NRS e-invoicing system (the Merchant Buyer Solution). Forvis Mazars reports it is being phased in from large taxpayers, so expect big clients to ask for invoices that carry a valid invoice reference.
Worked example: one invoice, one year
Example only, using simplified figures. Ngozi Advisory Ltd, a resident consultancy, bills a Lagos manufacturer ₦2,000,000 for a review.
| Line | Amount |
|---|---|
| Fee | ₦2,000,000 |
| VAT at 7.5% | ₦150,000 |
| Invoice total | ₦2,150,000 |
| WHT deducted by client at 5% of the fee (assumed base) | ₦100,000 |
| Cash received | ₦2,050,000 |
Ngozi pays the ₦150,000 VAT to the NRS (less any input VAT) and keeps the ₦100,000 WHT receipt. Over the year, suppose the company's assessable profit is ₦10,000,000 and it collected ₦600,000 of WHT receipts. CIT at 30% is ₦3,000,000; the development levy at 4% is ₦400,000. After using the ₦600,000 WHT credit against CIT, ₦2,400,000 of CIT remains to pay, plus the ₦400,000 levy: ₦2,800,000 in total. Whether WHT is computed on the fee alone or on the VAT-inclusive amount should be checked with the client and the regulations; the example assumes the fee alone.
Other duties for consulting firms
- File the annual CIT return within six months of year end (NTAA s.11(5)(a)); new companies have 18 months from incorporation.
- Run PAYE on staff salaries and pay it to the state IRS.
- Deduct WHT when you pay subcontractors, landlords and other suppliers, if the regulations require it.
- Keep books for at least six years (NTAA s.31).
If you consult as an individual or business name
A sole consultant trading under a business name is not a company, so CIT and the development levy do not apply. Profit is taxed as personal income by the State Internal Revenue Service where you live, using the 2025 bands: 0% on the first ₦800,000, then 15% to 25%, as BusinessDay's January 2026 explainer sets out. Clients still deduct WHT, and the receipts count against your personal tax. See how a freelancer files tax for the steps.
Where Pryme fits
A Pryme Business Account includes invoicing and a Finance agent that can match part-payments to invoices and flag the WHT gap for you to chase the receipt. Firms with foreign clients can receive USD, GBP or EUR to local account details through business multicurrency.
Questions people ask
Can a consulting firm be a small company in Nigeria?
Not for the 0% CIT rate. Forvis Mazars and Techpoint both note that professional service providers are excluded from the small company definition under the 2025 reforms.
What is WHT on consultancy fees in Nigeria?
PwC's summary of the 2024 Regulations gives 5% for resident payees and 10% for non-residents, doubled where the payee has no Tax ID. Confirm the current rate with the NRS.
Do consultants charge VAT in Nigeria?
Yes. Professional services are outside the small business VAT exemption, so a consulting firm registers, charges 7.5% and files by the 21st of each month.
Do I lose the WHT my client deducted?
No. Keep the receipt the client issues; it is a credit against your company income tax for the year.
Sources
- Forvis Mazars: VAT and Nigeria's 2025 tax reforms, key business changes (16 Mar 2026) · accessed Oct 2026
- Techpoint Africa: Guide to the Nigerian tax reform Acts (5 May 2026) · accessed Oct 2026
- Nigeria Tax Act 2025 (assented 26 Jun 2025), sections 8, 20, 21, 55, 56 and 59 · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- BusinessDay: Nigeria Tax Act 2025 personal income tax explainer (12 Jan 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.