Key Tax Thresholds for Small Businesses
Under the Nigeria Tax Act 2025 (NTA 2025), businesses are categorized by annual turnover for tax purposes. The thresholds have been updated significantly.
| Tax Type | Old Threshold | 2026 Threshold | Rate |
|---|---|---|---|
| VAT Exemption | ā¦25M | ā¦25M | 0% (exempt) |
| CIT - Small Company | ā¦25M | ā¦100M | 0% (exempt) |
| CIT - Medium Company | N/A | ā¦100M - ā¦250M | 20% |
| CIT - Large Company | >ā¦25M | >ā¦250M | 30% |
Great News for Small Businesses!
If your annual turnover is under ā¦100 million, you're now exempt from Company Income Tax (CIT). That's a 4x increase from the previous ā¦25M threshold!
1. Value Added Tax (VAT)
The VAT exemption threshold remains unchanged at ā¦25 million annual turnover.
- Below ā¦25M: Exempt from VAT collection and remittance
- Above ā¦25M: Must register for VAT and charge 7.5% on invoices
Important Note
Even if you're exempt from CIT (under ā¦100M), you may still need to register for VAT if your turnover exceeds ā¦25M. These are separate thresholds.
2. Company Income Tax (CIT)
The NTA 2025 significantly increased the small business exemption threshold:
Small Companies (ā¤ā¦100M turnover)
0% CIT
Completely exempt from Company Income Tax
Medium Companies (ā¦100M - ā¦250M turnover)
20% CIT
Reduced rate for medium-sized businesses
Large Companies (>ā¦250M turnover)
30% CIT
Standard corporate rate
Example: Medium Company Tax Calculation
Company with ā¦150 million annual turnover and ā¦30 million profit:
CIT = ā¦30,000,000 Ć 20% = ā¦6,000,000
3. Personal Income Tax (PIT)
If you're a freelancer or sole proprietor (not a registered company), you pay Personal Income Tax using the new progressive bands under NTA 2025:
| Annual Taxable Income | Tax Rate |
|---|---|
| First ā¦800,000 | 0% (Tax-free) |
| ā¦800,001 - ā¦3,000,000 | 15% |
| ā¦3,000,001 - ā¦12,000,000 | 18% |
| ā¦12,000,001 - ā¦25,000,000 | 21% |
| ā¦25,000,001 - ā¦50,000,000 | 23% |
| Above ā¦50,000,000 | 25% |
Key change: The first ā¦800,000 is now completely tax-free, up from the previous Consolidated Relief Allowance system.
What Still Applies (Even If Exempt)
Even if your business is exempt from CIT and VAT, you must still:
- Register for tax: Obtain a Tax Identification Number (TIN)
- Keep accurate records: Maintain proper financial records
- File tax returns: Submit annual returns (even if you owe ā¦0)
- Maintain documentation: Keep invoices and receipts for 6 years
How Suoops Helps
Suoops helps you track your revenue so you know where you stand:
- Dashboard overview: See your total revenue month by month
- Analytics: View your revenue trends and totals
- Invoice history: All your invoices in one place for easy tracking
- Export reports: Download your invoice data for tax filing
Key Thresholds to Watch
- ā¦25M: VAT registration required
- ā¦100M: No longer CIT exempt, pay 20% CIT
- ā¦250M: Large company rate (30% CIT)
Common Questions
What's the difference between CIT and PIT?
Company Income Tax (CIT) applies to registered companies.Personal Income Tax (PIT) applies to individuals, freelancers, and sole proprietors. Most Nigerian small business owners pay PIT.
Do I need to register my business to benefit?
You need a TIN (Tax Identification Number) regardless of your business structure. However, you can operate as a sole proprietor without formal CAC registration and still benefit from the tax exemptions.
Is it based on revenue or profit?
Thresholds (ā¦25M, ā¦100M) are based on gross turnover/revenue.Tax calculation is based on profit (revenue minus expenses).
Do I need to file returns even if exempt?
Yes! Even if you owe ā¦0 in tax, you must file annual returns. This keeps you compliant and creates a clean record for future growth.
Filing Deadlines
- Personal Income Tax: File by March 31 each year
- Company Income Tax: File within 6 months of financial year-end
- VAT Returns: File monthly by the 21st of the following month
Resources
- FIRS (Federal Inland Revenue Service): www.firs.gov.ng
- Apply for TIN: taxid.firs.gov.ng
- CAC (Corporate Affairs Commission): www.cac.gov.ng
Final Thoughts
The Nigeria Tax Act 2025 is great news for small businesses! With the CIT exemption threshold raised to ā¦100 million, more businesses can now focus on growth without the burden of corporate income tax.
Focus on building your business ā Suoops will help you track the numbers. And when you do cross those thresholds, celebrate! It means your business is thriving.