Nigeria Corporate Tax Guide 2026

Overview — Corporate Taxation in Nigeria

Corporate income tax in Nigeria is governed by the Companies Income Tax Act (CITA) Cap C21 LFN 2004 (as amended). The Federal Inland Revenue Service (FIRS) administers the tax. Nigeria uses a territorial tax system — only Nigerian-source income is taxable. Companies resident in Nigeria (incorporated or effectively managed in Nigeria) are taxed on Nigerian-source income. Non-resident companies are taxed only on Nigerian-source income attributable to a permanent establishment. The tax year is the company's accounting year, typically 1 January to 31 December.

Corporate Tax Rates

Two CIT rates apply in Nigeria from 2023 onwards: a reduced rate of 20% for small companies (gross turnover below NGN 100 million) and the standard rate of 30% for medium and large companies (gross turnover of NGN 100 million or more). Medium-sized companies (turnover between NGN 100 million and NGN 1 billion) also pay 30%. The reduced SME rate is designed to encourage business formalization and reduce the tax burden on smaller enterprises.

Minimum Tax

Companies that have no taxable profits or whose tax liability is below the minimum threshold are subject to minimum tax. The minimum tax is calculated as the highest of: 0.5% of gross turnover for companies with turnover below NGN 100 million, 1% of gross turnover for companies with turnover of NGN 100 million or more, or 0.5% of gross turnover for companies engaged in agriculture, mining, or exporting. Minimum tax does not apply to companies in the first five calendar years of incorporation or to companies with at least 25% imported equity capital.

Capital Allowances

Capital allowances replace depreciation for tax purposes in Nigeria. They are computed on the cost of qualifying capital expenditures. The main rates are: 10% annual allowance for plant and machinery (straight-line), 50% initial allowance + 25% annual for plant in manufacturing, 10% for furniture and fittings, 10% for motor vehicles, and 2% for buildings (10% initial + 2% annual). Capital allowances cannot create or increase a tax loss. Unutilized capital allowances may be carried forward indefinitely.

Withholding Tax

Withholding tax (WHT) is deducted at source on certain payments. The standard rates are: dividends 10%, interest 10%, royalties 10%, rent 10% (individuals) / 15% (companies), consultancy fees 5% (individuals) / 10% (companies), and directors' fees 10%. For resident recipients, WHT is an advance payment of tax (creditable against final liability). For non-resident recipients, WHT is the final tax. Reduced rates may apply under double tax treaties.

Tax Filing and Compliance

Companies must file their annual income tax return within six months of the end of the accounting year. Tax is payable in three instalments: the first instalment due within three months of the start of the accounting year, the second due within six months, and a final balancing payment upon filing. Estimated tax must be at least the previous year's tax liability. Non-compliance penalties include NGN 25,000 per month of delay plus 10% per annum interest on unpaid tax. FIRS may impose additional penalties for false or incomplete returns.

FAQs

What is the definition of an SME for CIT purposes?

An SME for the reduced 20% rate is a company with gross turnover below NGN 100 million in the relevant tax year.

Is Nigeria a territorial or worldwide tax system?

Nigeria operates a territorial tax system — only income derived from or accrued in Nigeria is taxable. Foreign-source income of resident companies is generally exempt, subject to certain conditions.

Are there tax incentives for new businesses?

Yes. Pioneer Status Incentive (PSI) offers a 3-5 year tax holiday for qualifying industries. There are also incentives for agriculture, manufacturing, and export-oriented businesses.

Disclaimer

This guide provides general information about corporate taxation in Nigeria for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Nigerian tax advisor or FIRS directly for advice specific to your situation. InvestmentKit does not provide tax advice.