Minimum Tax in Nigeria Explained: What It Is, Who Pays It & How to Calculate It (2026)

Many Nigerian companies believe that if they make a loss, they owe no tax. That is not always true. Under the Nigeria Tax Act (NTA) 2026, even a company that makes no profit — or makes a loss — can still owe a minimum tax.

This guide explains what minimum tax is, who pays it, the current rates, who is exempt, and exactly how to calculate it. If you run a company in Nigeria, this is one of the most misunderstood taxes on your books — and one of the easiest to get wrong.

What Is Minimum Tax in Nigeria?

Minimum tax is a floor tax. It is the least amount of Company Income Tax (CIT) a company must pay in a year, regardless of whether it made a profit.

It exists for a simple reason: to stop companies from escaping tax entirely by reporting losses or very low profits year after year. Without a minimum tax, a company could legally report a loss every single year and never pay a kobo of corporate tax.

Under the old law, minimum tax was calculated on gross profit. Under NTA 2026, it is calculated on gross turnover. That is a significant change — and it means more companies now fall into the minimum tax net.

Who Pays Minimum Tax?

Minimum tax applies to companies that:

• •Made a loss in the year
• •Made a profit, but less than the minimum tax amount
• •Have no taxable profit after deductions and capital allowances

In short: if your computed CIT is less than the minimum tax, you pay the minimum tax instead. You pay whichever is higher — your regular CIT or the minimum tax.

The 2026 Minimum Tax Rates

Under NTA 2026, the minimum tax is charged on gross turnover (less franked investment income):

• •0.5% of gross turnover for companies with annual turnover up to ₦100 million
• •0.75% of gross turnover for companies with annual turnover above ₦100 million

Franked investment income — dividends and interest that have already suffered withholding tax at source — is excluded from the base. You do not pay minimum tax on income that has already been taxed.

Who Is Exempt from Minimum Tax?

Not every company pays minimum tax. The key exemptions include:

• •Small companies with annual turnover of ₦25 million or less
• •Companies in their first four years of business (in certain cases)
• •Agricultural businesses engaged in primary production
• •Companies that earn only franked investment income
• •Companies in the year of commencement or cessation of business

The small company exemption is the one that matters most for most Nigerian businesses. If your turnover is ₦25 million or below, you are outside the minimum tax net entirely. But the moment your turnover crosses that line, minimum tax becomes a real obligation — even in a loss year.

How to Calculate Minimum Tax: A Worked Example

Let us walk through two scenarios to make it concrete.

Scenario 1 — A loss-making company:

XYZ Ltd has gross turnover of ₦80 million and made a loss of ₦5 million this year.

• •Step 1 — Determine gross turnover: ₦80,000,000
• •Step 2 — Identify the rate: turnover is below ₦100 million, so the rate is 0.5%
• •Step 3 — Calculate: 0.5% × ₦80,000,000 = ₦400,000

Even though XYZ made a loss, it owes ₦400,000 in minimum tax.

Scenario 2 — A low-profit company:

ABC Ltd has gross turnover of ₦150 million and a taxable profit of ₦2 million.

• •Computed CIT at 30%: 30% × ₦2,000,000 = ₦600,000
• •Minimum tax at 0.75%: 0.75% × ₦150,000,000 = ₦1,125,000
• •Since the minimum tax (₦1,125,000) exceeds the computed CIT (₦600,000), ABC pays ₦1,125,000

This is the trap. ABC made a real profit, but because its profit was thin relative to its turnover, the minimum tax — not the regular CIT — is what it actually owes.

Minimum Tax vs Regular CIT

• •Regular CIT is a percentage of your taxable profit: 0% for small companies, 20% for medium, 30% for large
• •Minimum tax is a percentage of your gross turnover: 0.5% or 0.75%
• •You pay whichever is higher
• •If your taxable profit is healthy, regular CIT applies
• •If your profit is low, or you made a loss, minimum tax kicks in

The key difference: regular CIT rewards efficiency (higher profit = more tax), while minimum tax is a flat charge on your revenue regardless of how well you did.

Why Minimum Tax Matters for Your Business

• •You cannot avoid tax just by reporting a loss. The minimum tax floor still applies.
• •It is calculated on turnover, not profit. Even loss-making companies with high revenue owe it.
• •It affects cash flow planning. Budget for it even in bad years — it will not go away just because you struggled.
• •It is separate from VAT, WHT, and PAYE. Those are still due regardless of your profit position.

Common Mistakes Companies Make

• •Assuming a loss means zero tax. The minimum tax floor still applies to most companies.
• •Forgetting it is on turnover, not profit. This is the most common miscalculation.
• •Not excluding franked investment income from the minimum tax base.
• •Small companies assuming they are exempt when their turnover has crossed ₦25 million.
• •Not filing at all. Failure to file attracts penalties even if your minimum tax is zero — a nil return is your shield.

How to Stay Compliant

1. •Know your turnover and your company size. This determines your rate and whether you are exempt.
2. •Track franked investment income separately. It is excluded from the minimum tax base.
3. •Budget for minimum tax even in loss years. It is a real, predictable cost.
4. •File your annual CIT return on time. Filing is not optional, even at zero tax.
5. •Model your liability before you file. Know whether you owe regular CIT or minimum tax before you submit.

Frequently Asked Questions

Q: Do I pay minimum tax if my company made a loss? A: Usually yes. If your company has turnover above ₦25 million, you are subject to the minimum tax floor even in a year when you report a loss. It is calculated on your gross turnover, not on whether you made a profit.

Q: What is the difference between minimum tax and CIT? A: CIT is a percentage of your taxable profit (0%, 20%, or 30% depending on size). Minimum tax is a percentage of your gross turnover (0.5% or 0.75%). You pay whichever is higher.

Q: Are small companies exempt from minimum tax? A: Yes. Companies with annual turnover of ₦25 million or less are exempt from minimum tax under NTA 2026. But if your turnover crosses that line, the obligation starts — even in a loss year.

Q: Is minimum tax calculated on turnover or profit? A: Turnover. Under NTA 2026, the minimum tax base is gross turnover (less franked investment income), not profit. This is a change from the old regime, which used gross profit.

Q: Can I carry forward losses against minimum tax? A: Losses can be carried forward to reduce future taxable profits, but the minimum tax floor still applies each year you are within its scope. Always model your position before filing.

Know Your Number First

The fastest way to stop guessing is to run your real figures. Enter your turnover and expenses, and instantly see whether you owe regular CIT or minimum tax — and exactly how much.

Calculate your company tax now →

Taxee handles the NTA 2026 CIT bands, the minimum tax rules, and your deductions automatically — so you always know what you owe before you file, and you never walk into a surprise assessment.

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This guide is based on the Nigeria Tax Act 2026 and current NRS practices. Minimum tax rules can vary with your company's specific circumstances. For complex situations, consult a qualified tax adviser. Official guidance: nrs.gov.ng.