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The short answer
A private school run for profit in Nigeria pays tax on its profit: company income tax if it is a company (0% if small, 30% plus 4% development levy otherwise) or personal income tax if owned by an individual. Tuition from nursery to tertiary is zero-rated for VAT under the Nigeria Tax Act 2025, the income-tax exemption for educational bodies applies only to activities of a public character whose profits do not come from a trade or business, and the school must run PAYE on teachers' pay.
Is a private school exempt from income tax?
Not automatically. Section 163(1)(a)(iii) of the Nigeria Tax Act 2025 (NTA) exempts the profits of persons "engaged in educational, religious or charitable activities of a public character", but only "where the profits or gains are not derived from a trade or business carried on by such person".
Most private schools in Nigeria are owned by proprietors or companies and charge fees to make a profit. That looks like a trade or business, so the exemption is unlikely to apply. A school run by a registered trust, mission or charity that reinvests surpluses in education and serves the public is in a different position, but it should be ready to show its legal form, its objects and where its money goes. When in doubt, ask the tax authority for a written view.
Income tax by structure
| Who owns the school | Tax on profit | Paid to |
|---|---|---|
| Proprietor in own name or business name | Personal income tax, 0% to 25% | State IRS where proprietor lives |
| Limited company, small | 0% company income tax, no development levy | NRS (file return regardless) |
| Limited company, not small | 30% company income tax plus 4% development levy | NRS |
| Trust or charity meeting s.163 test | Exempt on non-trading income | File what the authority requires |
PwC (reviewed May 2026) defines a small company as one with annual gross turnover of ₦100 million or less and total fixed assets not exceeding ₦250 million. Many schools own land and buildings, so the fixed-asset test can push a school with modest fees out of the small category. The 4% development levy replaced the former tertiary education tax and other levies, and does not apply to small companies.
Every company must file an annual self-assessment return whether or not it owes tax, within six months of its accounting year end (Nigeria Tax Administration Act 2025, or NTAA, s.11).
VAT on school fees
A Mondaq review of the NTA's VAT provisions (May 2026) lists tuition from nursery to tertiary and educational books among zero-rated supplies under section 187, and plays and performances by educational institutions among exempt supplies under section 186. That means:
- Tuition: 0% VAT. Parents are not charged VAT on school fees.
- Textbooks the school sells: 0% if they are educational books.
- School plays and performances: exempt.
- Other things a school sells, such as uniforms, branded items, snacks or bus services, need checking item by item; items not covered by a relief carry the standard 7.5%.
A school whose turnover is ₦100 million or less with fixed assets of ₦250 million or less is a small business under the NTAA and exempt from VAT registration and returns. A larger school that is VAT-registered can generally recover input VAT on costs linked to its zero-rated tuition, because zero-rated supplies are taxable at 0%.
PAYE for teachers and staff
Teachers, administrators, drivers and cleaners are employees, and the school deducts PAYE from their pay at the NTA bands: 0% on the first ₦800,000 a year, then 15%, 18%, 21%, 23% and 25% on higher slices (DLA Piper Africa, August 2026). Staff earning the national minimum wage or less are exempt. Deductions such as rent relief, pension and NHF contributions reduce taxable pay.
The school remits PAYE monthly to the state IRS where each employee lives and files the annual return of emoluments by 31 January (NTAA s.14). The monthly due date has been reported as the 10th by PwC and the 21st under the NTAA penalty provision; pay by the 10th while you confirm with your state IRS.
Long vacation pay
Teachers paid through the long vacation are still on PAYE for those months. Planning the cash for that period is covered in paying teachers in the long vacation.
Records a school should keep
- Fee schedules, invoices and receipts issued to parents.
- Bank statements and fee collection reports.
- Payroll, PAYE schedules and remittance receipts.
- Purchase invoices for books, equipment and building works.
- Fixed asset register (land, buildings, buses).
Keep them at least six years after the year of assessment (NTAA s.31).
What to check first
- Your legal form: proprietor, business name, company or registered trust. It decides which tax and which office.
- Turnover and fixed assets against the small-company and small-business tests.
- Which items you sell beyond tuition, and their VAT treatment.
- Your PAYE registration with the state IRS and the monthly remittance routine.
- Your Tax ID, which counterparties and banks may now ask for.
- The date of your company's tax return: six months after your accounting year end.
Where Pryme fits
Schools are a sector in Spaces, where parents may use Loans on Spaces lent by Solid Allianze MFB to pay fees to member schools. Payroll on a Pryme Business Account handles staff pay, and receipts can be issued as verifiable documents through VerifyDoc.ai. See setting private school fees. This article is information, not tax advice.
Questions people ask
Do private schools pay tax in Nigeria?
Yes, on profit, if run as a business: company income tax for companies (0% if small) or personal income tax for proprietors. The NTA s.163 exemption covers only public-character educational activities not carried on as a trade or business.
Is there VAT on school fees in Nigeria?
No. Tuition from nursery to tertiary is zero-rated under section 187 of the Nigeria Tax Act 2025, per the Mondaq review.
Do schools deduct PAYE from teachers' salaries?
Yes. The school deducts PAYE at the NTA 2025 bands, remits monthly to the state IRS and files the annual employer return by 31 January.
Is a private school a small company for tax?
Only if turnover is ₦100 million or less and fixed assets do not exceed ₦250 million. School buildings count towards fixed assets.
Sources
- LawGlobalHub: Section 163, Nigeria Tax Act 2025 · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, taxes on corporate income (reviewed 29 May 2026) · accessed Oct 2026
- Mondaq: Examination of the VAT provisions under the Nigeria Tax Act 2025 (28 May 2026) · accessed Oct 2026
- 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 tax administration (reviewed 29 May 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025, ss.22 and 147 (NRS-published text, edited 1 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.