Under sweeping reforms introduced in the Nigerian Tax Act (NTA), which takes effect in January 2026, the Federal Government has decided to retain the corporate income tax (CIT) rate at 30 percent for all companies, except small businesses.
The Act maintains a 0 percent CIT rate for small companies—defined as those with annual turnover below ₦25 million—while affirming a flat 30 percent rate for all other firms.
According to the Act:
“Tax shall be levied… at 0% for small companies and 30% for any other company from the commencement of this Act.”
A key innovation in the new law is the introduction of a minimum effective tax rule: large companies—especially members of multinational enterprise (MNE) groups—with annual revenue of ₦20 billion or more and an effective tax rate below 15 percent in any given year will be required to pay an additional levy to meet that threshold.
The Act also eliminates the existing 10 percent Capital Gains Tax (CGT), integrating it into the broader corporate tax structure and repealing the Capital Gains Tax Act entirely.
Scrapped Plans to Lower CIT
This decision follows prolonged discussions around tax competitiveness. In mid-2024, Taiwo Oyedele, chair of the Presidential Fiscal Policy and Tax Reforms Committee, proposed lowering the CIT to 25 percent to attract investment and stimulate economic activity. Similarly, a 2023 legislative bill aimed to reduce the rate to 27.5 percent in 2025 and 25 percent by 2026. However, both proposals have now been abandoned.
With these reforms, the government is signaling its intent to strengthen revenue collection while preserving targeted incentives for small businesses—striking a balance between fiscal responsibility and long-term economic growth as Nigeria works toward its $1 trillion economy goal.
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