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
Under the Nigeria Tax Act 2025, effective from 1 January 2026, a small company is one with annual gross turnover of ₦100 million or less and total fixed assets not exceeding ₦250 million; businesses providing professional services are excluded. Small companies pay 0% company income tax, are exempt from capital gains tax and the 4% development levy, and are not required to charge VAT. They must still register for a Tax ID, keep records for at least six years and meet their filing obligations.
The test: three conditions
A company qualifies as small for tax purposes only if all three are true for the year:
- Annual gross turnover of ₦100 million or less. The previous threshold was ₦25 million. Turnover means total sales, not profit.
- Total fixed assets not exceeding ₦250 million. Equipment, vehicles, property and similar long-term assets count.
- It does not provide professional services. Consulting, legal, accounting and similar professional firms are excluded from the small company classification, whatever their size.
What a small company does not pay
| Tax or levy | Small company | Other companies |
|---|---|---|
| Company income tax | 0% | Standard rate applies |
| Development levy | Exempt | 4% of assessable profits |
| Capital gains tax | Exempt | Payable on chargeable gains |
| VAT | Not required to charge VAT or file VAT returns | Charge 7.5% on taxable supplies and file returns |
The development levy consolidates several older levies, including the tertiary education tax, IT levy, NASENI levy and Police Trust Fund levy, so small companies are also free of those.
What a small company still has to do
0% tax is not the same as no obligations. Under the Nigeria Tax Administration Act 2025:
- Register and hold a Tax ID. Every taxable person must. See how to get a Tax ID for your business.
- Keep books and records, whether or not tax is payable, in English, for at least six years after the year of assessment.
- File returns. A company that has been in business for more than 18 months files its company income tax return no later than six months after the end of its accounting year. The tax authority needs the return to see that you qualify.
- Operate PAYE for employees. The company's own 0% rate does not change the tax on your staff's salaries. See PAYE bands for 2026.
- Keep your CAC filings current. Annual returns are separate from tax; see CAC annual returns.
Penalties for not filing are higher under the reforms: ₦100,000 in the first month of failure and ₦50,000 for each further month.
Worked examples
Example 1: a mini-mart that qualifies
Example only. A mini-mart company has ₦82 million turnover, ₦9 million profit and ₦30 million of fixed assets (shelving, freezers, a van). It is not a professional services firm. All three tests are met, so its company income tax rate is 0% and it pays no development levy. It still files its return within six months of year end, keeps records, and deducts PAYE from its four staff.
Example 2: a growing business crosses the line
Example only. The same mini-mart opens a second branch and turnover reaches ₦118 million. It now fails the turnover test, so for that year it is not a small company. It pays company income tax at the standard rate and the 4% development levy on assessable profits, and must look at VAT. Owners close to ₦100 million should forecast early rather than discover the change at year end. Our cash flow guide helps with that.
Example 3: a consultancy
Example only. A two-person HR consultancy has ₦20 million turnover. Because it provides professional services, it does not qualify as a small company and is taxed at the standard company rate, despite its size.
Practical checks each year
- Add up total sales for the accounting year from your records and bank statements.
- List fixed assets at cost and confirm the total is within ₦250 million.
- Confirm your main activity is not professional services.
- If you qualify, file your return showing the position, keep the workings, and note that the result must be checked again next year.
- If you are close to a threshold, take advice before year end.
Business names do not use these rules at all; their profit is taxed as the owner's personal income. Compare structures in business name or limited company.
Records that prove you qualify
If the tax authority asks, you need to show turnover, fixed assets and the nature of your business. Keep the year's sales records and bank statements, a fixed asset register with purchase dates and costs, and a short description of your activities. These are the same records the Nigeria Tax Administration Act 2025 already requires you to keep for at least six years, so qualifying is mostly a matter of good bookkeeping rather than extra paperwork. See bookkeeping for small businesses.
If you are unsure whether an activity counts as professional services, or whether an asset is a fixed asset, ask the tax authority or a qualified adviser before you file, and keep a note of the answer with your records.
Where Pryme fits
Clean turnover figures come from clean accounts. A Pryme Business Account keeps business receipts in one place, and its Finance agent can prepare turnover summaries and flag when you are approaching a threshold, for a person to review and approve. Actions are recorded, which helps when you need to show your workings.
Questions people ask
What is a small company under the Nigeria Tax Act 2025?
A company with annual gross turnover of ₦100 million or less and total fixed assets not exceeding ₦250 million, excluding businesses that provide professional services.
Do small companies in Nigeria pay company income tax?
Qualifying small companies pay company income tax at 0% and are exempt from the 4% development levy and capital gains tax.
Do small companies still file tax returns in Nigeria?
Yes, they should. The law still requires registration, record keeping and returns; the return shows the authority that the company qualifies.
Are consultants small companies under the new tax law?
No. Businesses providing professional services are excluded from the small company definition regardless of turnover.
Sources
- PwC Nigeria: The Nigeria Tax Reform Acts, top 20 changes to know · accessed Oct 2026
- Govt highlights 50 tax reliefs and exemptions for low-income earners and SMEs (AllAfrica) · accessed Oct 2026
- Mondaq: Nigeria's 2025 tax laws and their benefits for SMEs · 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.