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 partnership in Nigeria is not taxed as a single individual: the Nigeria Tax Administration Act 2025 excludes partnerships from the definition of "individual" and fixes each partner's tax residence separately, so each partner is assessed to personal income tax on their own share of the profit by the state where they are resident. The partnership itself must keep books, register its particulars and notify changes in partners within 30 days.
The principle: the partners pay, not the partnership
Many Nigerian firms of accountants, lawyers, consultants and traders run as partnerships, usually registered with the CAC as a business name with two or more owners, or as a limited liability partnership (LLP) under CAMA 2020. For income tax, the question is who is charged.
The Nigeria Tax Administration Act 2025 (NTAA) gives the framework. Its definition of "individual" "does not include a company, partnership, community, family, trustee or executor". The First Schedule then fixes the "principal place of residence" of each individual who is a partner in a Nigerian partnership:
- an active partner is resident in the state where the office is from which he or she performs the partnership's duties;
- a dormant partner is resident where he or she usually lives; and
- a dormant partner who does not live in Nigeria is dealt with under the federal provision for non-residents.
That structure only makes sense if each partner is taxed in his or her own right. The partnership computes its profit; the profit is shared under the partnership agreement; and each partner reports their share, alongside any other income, on a personal return to the state IRS of residence. Confirm the detailed allocation rules of the Nigeria Tax Act 2025 with your state IRS or adviser, as the summaries we reviewed do not set them out section by section.
What the partnership itself must do
Being outside the individual definition does not make a partnership invisible.
- Register and hold a Tax ID. Section 4 of the NTAA requires every taxable person to register. The partnership's CAC registration is the base for its Tax ID.
- Notify changes in partners. Section 9 requires a taxable person to tell the authority of changes in particulars within 30 days, and for a partnership this expressly includes "the full identity, address and other contact details of all the partners".
- Keep books. Section 31 requires every person to keep records sufficient to work out tax for at least six years after the year of assessment.
- Operate PAYE on staff. Employees of the partnership are taxed through PAYE like any employer's staff, and the annual employer return is due by 31 January (s.14).
- VAT and WHT. These turn on what the firm supplies. Professional service providers are excluded from the small-business VAT exemption, so a professional partnership should assume it has VAT duties.
Worked example
| Partner A (60%) | Partner B (40%) | |
|---|---|---|
| Share of profit | ₦18,000,000 | ₦12,000,000 |
| First ₦800,000 at 0% | ₦0 | ₦0 |
| Next ₦2,200,000 at 15% | ₦330,000 | ₦330,000 |
| Next ₦9,000,000 at 18% | ₦1,620,000 | ₦1,620,000 |
| Next ₦6,000,000 at 21% (A only) | ₦1,260,000 | – |
| Tax on share | ₦3,210,000 | ₦1,950,000 |
Bands are those of the Nigeria Tax Act 2025 as summarised by DLA Piper Africa. Each partner then subtracts personal reliefs they qualify for, such as rent relief of 20% of rent paid on their home capped at ₦500,000, and any withholding tax credits attributable to their share. If Partner A lives in Lagos and Partner B in Ogun, each pays to a different state.
Withholding tax credits
Clients that are companies deduct withholding tax from fees paid to the firm; under the 2024 Withholding Regulations, as summarised by PwC, professional and consultancy fees attract 5% for residents. The credit notes are issued in the firm's name. Agree in the partnership deed how credits are split (normally in the profit-sharing ratio) and keep a schedule, so each partner can claim their portion on their return.
Partnership vs company: the tax trade-off
| Partnership | Limited company | |
|---|---|---|
| Who pays income tax | Each partner, at 0% to 25% | The company, 0% (small) or 30% |
| Development levy | Not applicable | 4% unless small |
| Tax on taking money out | None beyond the partner's own tax | Salary via PAYE; dividends taxed separately |
| Small-company 0% rate | Not applicable | Not for professional services |
For a professional firm, the small-company 0% rate is not available, so the comparison is between partners' personal rates and 30% plus 4% plus tax on extraction. See choosing a structure for a consulting firm and director salary vs dividends.
CAC filings
PwC's guide to CAMA 2020 compliance lists annual returns for LLPs and LPs within 60 days after the end of the financial year, and for business names (including those with several owners) an annual return with financial statements by 30 June each year. These are separate from tax returns.
When a partner joins or leaves
A change of partners is a change of particulars that must be notified to the tax authority within 30 days (NTAA s.9). Update the partnership deed with the new profit-sharing ratio and the date it starts, and split the year's profit between the periods before and after the change, so each partner reports only the share that belongs to them. A leaving partner should take copies of the schedules and WHT credit allocations for the years they were in the firm, since they must keep their own records for six years.
Where Pryme fits
A Pryme multi-account setup lets a firm keep a client-receipts account and a partners' drawings account apart, which makes the profit-share computation easier to evidence. This article is information, not tax advice.
Questions people ask
Is a partnership taxed in Nigeria?
Not as an individual. The NTAA 2025 excludes partnerships from the definition of individual and sets each partner's residence, so each partner pays personal income tax on their share.
Which state do partners pay tax to?
An active partner is resident in the state of the office where they perform partnership duties; a dormant partner where they usually live (NTAA First Schedule).
Does a partnership need a Tax ID?
Yes. Every taxable person must register under NTAA s.4, and changes in partners must be notified within 30 days under s.9.
How are partners taxed on profit share?
Each partner adds their share to other income and is taxed at the NTA 2025 bands, 0% on the first ₦800,000 rising to 25% above ₦50 million.
Sources
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- DLA Piper Africa: FAQs on payroll taxes and employer liability (28 Aug 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, individual deductions (reviewed 29 May 2026) · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- PwC Nigeria: Key compliance obligations under CAMA 2020 (Apr 2021) · accessed Oct 2026
- Forvis Mazars: 2025 NTA VAT key business changes (16 Mar 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.