Company Income Tax (CIT) Nigeria 2026: The Definitive Guide

Company Income Tax (CIT) is the primary direct tax on corporate profits in Nigeria. With the full implementation of the Nigeria Tax Act 2026 (NTA 2026) , the CIT landscape has undergone significant transformation — from graduated rate structures to digital compliance mandates. Whether you operate a Lagos-based fintech startup or a manufacturing plant in Ogun State, understanding CIT is non-negotiable for every Nigerian business.

What Is Company Income Tax?

CIT is a tax levied on the profits of companies registered in Nigeria and on the Nigerian-source profits of foreign companies operating in Nigeria. Under Section 9 of the NTA 2026, a "company" includes any body corporate or unincorporated entity — including limited liability companies, public companies, and certain partnerships — but excludes sole proprietorships (which are taxed under the Personal Income Tax Act).

The tax base is the taxable profit, calculated as the company's total profits from all sources, less allowable deductions and tax-exempt income, adjusted for disallowable expenses.

CIT Rates Under NTA 2026: The Graduated Structure

The most significant reform introduced by the NTA 2026 is the graduated CIT rate system, replacing the former flat rate structure. The current rates are:

Who Qualifies as a Small Company?

To qualify for the 0% CIT rate (complete exemption), a company must meet all three of the following criteria:

1. •Annual gross turnover does not exceed ₦25,000,000
2. •The company is not a subsidiary of another company
3. •The company does not carry on business in banking, insurance, oil and gas, or any regulated financial services sector

This exemption is designed to foster startup growth and formalise micro-enterprises by removing tax barriers at the earliest stages.

Computing Taxable Profits: Allowable and Disallowable Deductions

Allowable Deductions

The NTA 2026 permits deductions of expenses that are wholly, exclusively, and necessarily incurred in the production of the company's income. Key allowable deductions include:

• •Cost of goods sold: Direct cost of inventory, raw materials, and production inputs
• •Staff costs: Salaries, wages, bonuses, and employee benefits
• •Pension contributions: Contributions to approved pension schemes, deductible up to the statutory limit
• •Rent and lease payments: Premises rent and equipment leases
• •Interest on borrowings: Interest on loans used for business purposes (subject to thin capitalisation rules)
• •Depreciation: Capital allowances on qualifying capital expenditure, computed under the rates prescribed in the Second Schedule to the NTA 2026
• •Research and development (R&D) expenditure: Now deductible at 150% of actual spending (a new incentive under NTA 2026 to spur innovation)
• •Donations: Donations to approved charitable organisations, subject to a cap of 10% of assessable profits
• •Bad debts: Specific bad debts that have become irrecoverable and have been written off in the accounts

Disallowable Expenses

The following expenses are specifically disallowed:

• •Depreciation charged in the accounts (replaced by capital allowances)
• •Fines, penalties, and any sum paid as a sanction for an offence
• •Entertainment expenses exceeding ₦2,000,000 per year
• •Management fees paid to non-residents without proper transfer pricing documentation
• •Tax provisions and tax payments (CIT, VAT, WHT, and tertiary education tax)
• •Expenses of a capital nature (which are dealt with through capital allowances)
• •Club subscriptions and personal expenses of directors

Practical CIT Calculation: A Nigerian Business Example

Scenario: GreenFields Agro Processing Ltd is a Nigerian company with an annual turnover of ₦85,000,000 (medium company — 20% CIT rate). Its unaudited financial statements for the year ended 31 December 2026 show:

• •Gross turnover: ₦85,000,000
• •Cost of sales: ₦38,000,000
• •Gross profit: ₦47,000,000
• •Operating expenses: ₦22,000,000 (includes depreciation of ₦3,500,000, entertainment of ₦2,800,000, and a tax penalty of ₦500,000)
• •Net profit per accounts: ₦25,000,000

Step 1: Add Back Disallowable Expenses

• •Depreciation (disallowed — replaced by capital allowances): ₦3,500,000
• •Excess entertainment (₦2,800,000 − ₦2,000,000): ₦800,000
• •Tax penalty: ₦500,000
• •Total add-backs: ₦4,800,000

Step 2: Adjusted Profit Before Capital Allowances

• •Net profit: ₦25,000,000 + ₦4,800,000 = ₦29,800,000

Step 3: Deduct Capital Allowances

• •Assume capital allowances computed under the Second Schedule amount to: ₦4,200,000
• •Taxable profit: ₦29,800,000 − ₦4,200,000 = ₦25,600,000

Step 4: Apply CIT Rate

• •CIT at 20%: ₦25,600,000 × 20% = ₦5,120,000

GreenFields Agro Processing Ltd must pay ₦5,120,000 as its Company Income Tax for the 2026 year of assessment.

Filing Deadlines and Digital Compliance

Annual CIT Returns

Every company must file a self-assessment CIT return with the NRS within 6 months after the end of its accounting year. For a company with a 31 December year-end, the filing deadline is 30 June of the following year.

The NTA 2026 mandates electronic filing through the NRS Integrated Tax Administration System (ITAS). Paper returns are no longer accepted.

Instalment Tax Payments

Large companies (turnover above ₦100 million) are also required to make quarterly instalment tax payments, computed at 25% of the preceding year's tax liability, with a true-up filed at year-end. The instalment payment deadlines are:

• •First instalment: 31 March
• •Second instalment: 30 June
• •Third instalment: 30 September
• •Fourth instalment: 31 December

Failure to pay instalments on time attracts interest at the CBN Monetary Policy Rate plus 10%.

Minimum Tax

Where a company has no taxable profits (or where taxable profits are less than the minimum tax threshold), the NTA 2026 imposes a minimum tax of:

• •0.5% of gross turnover (less franked investment income) for companies with turnover up to ₦100 million
• •0.75% of gross turnover for companies with turnover above ₦100 million

Small companies (≤ ₦25 million turnover) are exempt from minimum tax.

Capital Allowances: The Nigerian Depreciation System

Capital allowances replace accounting depreciation for tax purposes. The NTA 2026 Second Schedule prescribes the following annual allowance rates:

• •Plant and machinery: 25% (initial allowance: 20%; annual allowance: 25% on reducing balance)
• •Industrial buildings: 10% (initial allowance: 15% in the year of first use)
• •Non-industrial buildings: 5%
• •Motor vehicles: 25%
• •Furniture and fittings: 20%
• •Computers and IT equipment: 40%

An investment allowance of 10% is available for qualifying manufacturing plant and machinery, in addition to the normal capital allowance rates.

Key Takeaways for Nigerian Companies

• •CIT rates are now graduated: 0% (small), 20% (medium), 30% (large)
• •Small companies with turnover ≤ ₦25 million are fully exempt
• •Deductions must be wholly, exclusively, and necessarily incurred for business purposes
• •Electronic filing via ITAS is mandatory; paper returns are obsolete
• •R&D expenditure receives an enhanced 150% deduction
• •Quarterly instalments apply to large companies
• •Capital allowances replace accounting depreciation; rates vary from 5% to 40%

Tax compliance is rapidly digitising in Nigeria. Taxee equips businesses with automated CIT computation, ITAS filing integration, and real-time compliance monitoring. File accurately, pay promptly, and grow your business with confidence.