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
Partly. Section 163(1)(p) of the Nigeria Tax Act 2025 exempts income of companies engaged in agricultural businesses, including crop production, livestock, aquaculture, forestry and dairy, for the first five years after the business commences. After that, the company is taxed like any other (0% if small, otherwise 30% plus the 4% development levy), and an individual farmer outside a company is taxed under personal income tax.
Government has long used tax to pull investment into farming. The Nigeria Tax Act 2025, in force from 1 January 2026, keeps a clear incentive for agricultural companies, and several farm inputs and foods are zero-rated for VAT. None of this means farming is permanently tax free, and the conditions are worth reading closely before you plan around them.
The five-year exemption
Section 163(1)(p) exempts from income tax "income generated by companies engaged in agricultural businesses including crop production, livestock, aquaculture, forestry, dairy and such other businesses as described in the Thirteenth Schedule to this Act, for the first five years upon commencement of business".
- Who
- Companies. The words used are "companies engaged in agricultural businesses".
- What
- Crop production, livestock, aquaculture (fish farming), forestry, dairy, plus anything listed in the Thirteenth Schedule.
- How long
- The first five years from when the business commenced.
- What it covers
- Income tax under Chapter Two of the Act.
Processing businesses, such as a rice mill, a cassava flour plant or a feed mill, may or may not fall inside "agricultural businesses" depending on the Thirteenth Schedule. This guide did not read that schedule, so check it, or ask the NRS, before assuming a processor qualifies. It is also unclear from the text how the five years apply to a company that started farming before 2026; take advice.
What the exemption does not cover
- Individual farmers. A farmer trading in his or her own name or as a business name is not a company. Profit is personal income, taxed by the State Internal Revenue Service at the 2025 bands (0% on the first ₦800,000, then 15% to 25%, per BusinessDay, January 2026).
- Year six onwards. From the sixth year, the company pays CIT at 30% (section 56(b)) or 0% if it is a small company (section 56(a)), and the 4% development levy on assessable profits unless it is small (section 59).
- Filing. Exempt companies still file. Section 11(1) of the Nigeria Tax Administration Act 2025 requires every company to file a return each year whether or not tax is payable.
- Staff tax. PAYE still applies to farm managers, vets and clerks. Workers on the national minimum wage or less are exempt from tax on that employment under section 163(1)(t).
- Other businesses in the same company. A farm company that also runs a haulage fleet or a restaurant should not assume that income is exempt.
VAT on farm goods and inputs
Mondaq's May 2026 review of the VAT provisions lists these under the 2025 Act:
| Treatment | Items (as listed) | Section |
|---|---|---|
| Zero-rated | Basic food items; fertilisers; locally produced agricultural chemicals; locally produced veterinary medicine; locally produced animal feeds; live cattle, goats, sheep and poultry; agricultural seeds and seedlings | s.187 |
| Exempt | Purchase, hire, rental or lease of tractors, ploughs and other equipment used for agricultural purposes | s.186 |
The difference matters. A zero-rated supplier charges 0% VAT but can reclaim the input VAT on what it bought to produce those goods, often through a refund. An exempt supply carries no VAT, and the input VAT on producing it cannot be reclaimed, as Mondaq notes. A poultry farm selling live birds is zero-rated; a farm that hires out its tractor is making an exempt supply.
Capital allowances for farm assets
PwC's May 2026 summary of the new capital allowance rules puts agricultural assets in two classes: Class 1 at 10% a year (including buildings and agricultural assets) and Class 2 at 20% a year (including agricultural equipment). During the exempt years these allowances have little immediate value, but keeping the asset register from day one means the allowances are ready once the company becomes taxable. See capital allowances explained.
Worked example
Example only, simplified. Oyo Layers Ltd starts its poultry business in March 2026.
- Years one to five (from March 2026): income is exempt under section 163(1)(p). The company files a return each year showing the exemption.
- Year six: turnover is ₦300,000,000 and assessable profit is ₦50,000,000, so it is not a small company.
- CIT at 30%: ₦15,000,000. Development levy at 4%: ₦2,000,000. Total: ₦17,000,000 (assuming the same base for both).
- If turnover had stayed at ₦90,000,000 with fixed assets under ₦250,000,000, it would be a small company: 0% CIT and no levy, but still a return to file.
What to check first
- Is the farm run through a company? If not, the five-year exemption does not apply.
- Write down the date the business commenced; the five years run from it.
- Check the Thirteenth Schedule if you process, pack or trade rather than grow or rear.
- Keep records for at least six years (NTAA s.31), including in exempt years.
- Information only; ask a tax adviser about your own case.
Where Pryme fits
A farm company can take payment from buyers with bank-transfer checkout (free) and keep its asset purchases and sales in one record for the accountant. The Compliance agent can hold the yearly filing date and the date the exemption ends, and prepare reminders for a person to approve.
Questions people ask
Do farmers pay tax in Nigeria?
Agricultural companies are exempt from income tax for their first five years under section 163(1)(p) of the Nigeria Tax Act 2025. Individual farmers and companies after year five are taxed normally.
Is poultry farming tax free in Nigeria?
A poultry company's income is exempt for its first five years, and live poultry is zero-rated for VAT. After five years, CIT applies unless it is a small company.
Does an exempt farm company still file returns?
Yes. Every company files a return each year under section 11(1) of the Nigeria Tax Administration Act 2025.
Is fertiliser VAT free in Nigeria?
Fertilisers are zero-rated under section 187 of the 2025 Act, according to Mondaq's review, so VAT is charged at 0%.
Sources
- Nigeria Tax Act 2025, section 163 (Income tax exemption), LawGlobal Hub text, 25 Dec 2025 · accessed Oct 2026
- Nigeria Tax Act 2025 (assented 26 Jun 2025), sections 8, 20, 21, 55, 56 and 59 · accessed Oct 2026
- Mondaq: Examination of the VAT provisions under the Nigeria Tax Act 2025 (28 May 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate deductions (reviewed 29 May 2026) · accessed Oct 2026
- BusinessDay: Nigeria Tax Act 2025 personal income tax explainer (12 Jan 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · 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.