AI agents for business finance: what they can and can't do
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The short answer
A Nigerian company pays 0% companies income tax, and no CGT or development levy, only while its annual turnover is ₦100 million or less and its fixed assets are no more than ₦250 million. Professional services firms are excluded at any size, and the company must still file a return every year.
Since 1 January 2026 a Nigerian company that counts as a small company pays 0% companies income tax, and is also outside capital gains tax and the new 4% development levy. That is a large saving, but it is not a status you register for once and keep. It is a test the company passes or fails each year on its own figures, and some businesses are shut out however small they are. This guide sets out the conditions, the one that catches most people, and what changes the year you cross the line.
The two money tests
PwC's Nigeria tax summary (reviewed 29 May 2026) states that the companies income tax rate is 0% for companies with an annual gross turnover of ₦100 million or less and total fixed assets not exceeding ₦250 million. PwC's June 2025 note on the reform Acts describes the same thresholds and confirms that small companies are exempt from CIT, capital gains tax and the development levy.
| Test | Limit | What counts |
|---|---|---|
| Gross turnover | ₦100 million or less a year | Total sales or fees for the accounting year, before expenses |
| Total fixed assets | Not more than ₦250 million | Property, plant, equipment, vehicles and similar long-term assets |
| Type of business | Not a professional services provider | See the exclusion below |
Both money tests must be met together. A trading company with ₦80 million turnover but ₦300 million of buildings and machinery fails the asset test and is taxed as a larger company. One PwC page uses "or" in one sentence and "and" in another when describing the thresholds, so if your company sits near either limit, read the definition in the Nigeria Tax Act 2025 itself or ask a chartered tax adviser before relying on the exemption.
The professional services exclusion
This is the condition that surprises most founders. Forvis Mazars (16 March 2026) and Techpoint Africa (5 May 2026) both report that businesses providing professional services are excluded from small company treatment, whatever their turnover. The Nigeria Tax Administration Act 2025 uses the same wording in its definition of a small business: "any business providing professional services shall not be classified as a small business".
The Acts we read do not give a full list of what counts as professional services. In ordinary usage the term covers firms such as law, accounting, audit, tax advisory, engineering consultancy, architecture and management consultancy. If your company sells advice or regulated professional work, assume you may be excluded and get a written view from an adviser rather than claiming 0% and hoping it is not challenged. Our guide to tax for consulting firms covers that position in more detail.
Conditions that do not go away
A 0% rate is not the same as being outside the system. The Nigeria Tax Administration Act 2025 keeps several duties in place for small companies:
- Annual return. Section 11(1) requires every company to file a self-assessment return at least once a year whether or not it is liable to pay tax. The proviso lets a small company file a statement of accounts attested by the taxpayer instead of audited financial statements.
- Filing deadline. Section 11(5) sets six months after the end of the accounting year for an established company, and for a new company the earlier of 18 months from incorporation or six months after its first accounting period.
- Tax ID. Section 4 requires every taxable person to register and hold a Tax ID.
- Books and records. Section 31 requires records sufficient to work out tax liability, kept for at least six years.
- Taxes you collect for others. PAYE on staff salaries and any withholding tax you are required to deduct are not covered by your own exemption.
Missing a return costs ₦100,000 for the first month and ₦50,000 for each month after under section 101, even if the tax due is nil. Our article on the first-year filing deadline walks through the dates.
VAT uses its own definition
Do not assume that being a small company for income tax also means you are outside VAT. The interpretation section of the Nigeria Tax Administration Act 2025 (s.147) defines a small business for VAT purposes separately. In the NRS-published text the limits are gross turnover of ₦100 million or less a year and total fixed assets of not more than ₦250 million, and professional services are excluded. The June 2025 gazette print said ₦50 million, and some commentaries (KPMG, August 2025) still quote it, so keep records that show where you stand against both figures. Section 22(6) says a business that stops being a small business must file monthly VAT returns from then on. See whether a small business must charge VAT.
What happens when you cross the line
Growth is the normal way companies lose the exemption. Once turnover goes over ₦100 million or fixed assets go over ₦250 million, the company is taxed as a larger company:
- Companies income tax at 30% of taxable profit (PwC).
- The 4% development levy on assessable profits, which PwC says applies to all Nigerian companies except small and non-resident companies.
- Chargeable gains taxed as part of profit at the 30% rate.
- Audited financial statements with the return, since the attested-accounts proviso is for small companies.
Worked example (illustrative figures)
A Lagos distribution company had turnover of ₦92 million last year and owns ₦40 million of vans and equipment. It meets both tests and is not a professional services firm, so its CIT rate is 0%. This year turnover reaches ₦118 million and taxable profit is ₦12 million, with assessable profit for the levy also ₦12 million for simplicity. Its companies income tax becomes 30% × ₦12,000,000 = ₦3,600,000 and the development levy 4% × ₦12,000,000 = ₦480,000, a total of ₦4,080,000 that did not exist the year before. Real computations adjust profit for capital allowances and other items, so the levy and CIT bases are rarely identical.
What to check first
- Run the turnover and fixed-asset figures from your management accounts every quarter, not only at year end.
- Decide in writing whether any of your income is professional services; mixed businesses should get advice.
- Keep filing the annual return on time, with attested accounts if you rely on the small company proviso.
- Budget for 30% CIT plus the 4% levy in the year you expect to cross ₦100 million.
- Track the separate VAT threshold so you register and file when required.
Where Pryme fits
A Pryme Business Account comes with a Finance agent that can prepare monthly turnover summaries from your account activity so you see the ₦100 million line coming; a person still reviews and approves. The Compliance agent can keep your filing dates in view. Neither replaces a tax adviser's view on the professional services question.
Questions people ask
Is a small company in Nigeria still required to file tax returns?
Yes. Section 11(1) of the Nigeria Tax Administration Act 2025 requires every company to file a self-assessment return each year whether or not tax is payable. A small company may attach a statement of accounts attested by the company instead of audited accounts.
What is the turnover limit for small company tax exemption in 2026?
Gross turnover of ₦100 million or less, together with total fixed assets of no more than ₦250 million, according to PwC's tax summary reviewed in May 2026. Professional services firms are excluded.
Are law firms and consultants small companies?
Commentaries on the 2025 Acts say businesses providing professional services cannot be small companies regardless of size. Firms selling legal, accounting or consulting services should take advice before claiming the 0% rate.
Does small company status remove VAT?
Not automatically. VAT uses a separate small business definition in the Nigeria Tax Administration Act 2025: turnover of ₦100 million or less and fixed assets of ₦250 million or less in the NRS-published text, with professional services excluded.
Sources
- PwC Worldwide Tax Summaries: Nigeria taxes on corporate income (reviewed 29 May 2026) · accessed Oct 2026
- PwC Nigeria: The Nigerian Tax Reform Acts, top 20 changes (June 2025) · accessed Oct 2026
- Forvis Mazars: 2025 NTA VAT key business changes (16 Mar 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- Techpoint Africa: Nigerian tax reform acts guide (5 May 2026) · accessed Oct 2026
- Companies and Allied Matters Act 2020 (full text) · 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.