0% Corporate Tax for Small Companies: What Qualifies

A Game-Changer for Small Businesses

One of the most impactful provisions of the Nigeria Tax Act 2025 is the complete CIT exemption for small companies. If your annual turnover is below ₦50 million, you pay zero corporate income tax.

The New CIT Structure

What Counts as Turnover?

Turnover means gross revenue - the total amount billed to customers before deducting any expenses. This includes:

• Sales of goods
• Service fees
• Commission income
• Any other business income

What's NOT Included

• Investment income (dividends, interest)
• Capital gains
• One-time asset sales

How to Qualify

To benefit from the 0% rate:

1. Be a registered company (Ltd, PLC, etc.)

2. Have turnover under ₦50 million for the tax year

3. File your annual returns on time

4. Maintain proper books of accounts

Important Considerations

You Still Need to File

Even with 0% tax, you must still:

• File annual CIT returns
• Submit audited accounts (if required)
• Maintain tax clearance certificate

Other Taxes Still Apply

The CIT exemption doesn't cover:

• **VAT**: Still 7.5% if you're VAT-registered
• **Withholding Tax**: Deducted on applicable payments
• **PAYE**: For employee salaries

Growth Considerations

If you're near the ₦50M threshold, plan ahead. Growing past ₦50M means:

• 20% CIT on **all** profits (not just the excess)
• Need for more sophisticated tax planning

Maximizing the Benefit

1. Track Turnover Carefully

Know where you stand throughout the year. Unexpected contracts could push you over the threshold.

2. Consider Timing

If a December contract would push you over ₦50M, consider whether it can be invoiced in January.

3. Reinvest Savings

The 0% rate gives you extra capital. Use it wisely - hire, invest in equipment, or build reserves.

Conclusion

The small company CIT exemption is a massive opportunity for Nigerian entrepreneurs. If you qualify, take full advantage - and plan carefully as you grow.

Use our CIT Calculator to model different scenarios.