Company Income Tax Rates in Nigeria: 2025 Complete Guide

Company Income Tax (CIT) is the tax on corporate profits in Nigeria. Understanding the applicable rates, exemptions, and computations is essential for every business owner. This guide explains the current CIT framework, including the tiered rate system introduced in recent Finance Acts.

Overview of Company Income Tax

What is CIT?

Company Income Tax is levied on:

• Profits of Nigerian companies
• Profits of foreign companies from Nigerian operations
• Certain income deemed to be derived from Nigeria

CIT is administered by the Nigeria Revenue Service (NRS), formerly known as FIRS.

Who Pays CIT?

Entity Type	CIT Status
Private limited companies	Subject to CIT
Public limited companies	Subject to CIT
Foreign companies with Nigerian operations	Subject to CIT
Partnerships	Not subject (partners taxed individually)
Sole proprietors	Not subject (individual income tax applies)

Current CIT Rates

The Tiered Rate Structure

Nigeria introduced a tiered CIT rate system to support small and medium businesses:

Company Size	Annual Turnover	CIT Rate
Small	Below ₦25 million	0%
Medium	₦25 million - ₦100 million	20%
Large	Above ₦100 million	30%

Understanding the Thresholds

Small Company (0% CIT)

• Gross turnover: Less than ₦25 million
• Complete exemption from CIT
• Still required to file returns

Medium Company (20% CIT)

• Gross turnover: ₦25 million to ₦100 million
• Reduced rate of 20%
• Significant savings compared to standard rate

Large Company (30% CIT)

• Gross turnover: Above ₦100 million
• Standard rate of 30%
• Full CIT obligations

Important Notes

1. Turnover-based, not profit-based: Classification depends on turnover (revenue), not taxable profit
2. Annual determination: Status determined each year based on that year's turnover
3. Gross turnover: Total revenue before any deductions
4. Not optional: Cannot elect a different category

Calculating CIT

The Basic Formula

CIT = Taxable Profit × Applicable CIT Rate

But determining taxable profit requires several adjustments:

Step 1: Start with Accounting Profit

Your profit as per financial statements:

• Revenue
• Less: Cost of sales
• Less: Operating expenses
• = Profit before tax

Step 2: Add Back Non-Deductible Items

Items disallowed for tax purposes:

• Depreciation (replaced by capital allowances)
• Provisions and reserves
• Donations to non-approved bodies
• Penalties and fines
• Entertainment expenses (limited)
• Personal expenses

Step 3: Deduct Additional Allowances

Items allowed for tax but not in accounts:

• Capital allowances
• Loss relief (if applicable)
• Investment allowances
• Tax incentives

Step 4: Calculate Taxable Profit

Adjusted profit after all additions and deductions.

Step 5: Apply CIT Rate

Based on your turnover category.

Worked Example: Large Company

Item	Amount
Accounting profit before tax	₦50,000,000
Add: Depreciation	₦10,000,000
Add: Donations (non-approved)	₦500,000
Add: Penalties	₦200,000
Subtotal	₦60,700,000
Less: Capital allowances	(₦12,000,000)
Taxable profit	₦48,700,000
CIT @ 30%	₦14,610,000

Worked Example: Medium Company

Item	Amount
Turnover	₦80,000,000
Accounting profit before tax	₦15,000,000
Adjustments (net)	₦2,000,000
Taxable profit	₦17,000,000
CIT @ 20%	₦3,400,000

Worked Example: Small Company

Item	Amount
Turnover	₦20,000,000
Accounting profit before tax	₦5,000,000
Adjustments (net)	₦500,000
Taxable profit	₦5,500,000
CIT @ 0%	₦0

Minimum Tax

When Minimum Tax Applies

Even if your company has no taxable profit (or a loss), minimum tax may apply:

Minimum Tax = 0.5% of Gross Turnover

However, small companies (turnover below ₦25 million) are exempt from minimum tax.

Example

Company	Turnover	Taxable Profit	Regular CIT	Minimum Tax	CIT Payable
A	₦200M	₦10M	₦3M	₦1M	₦3M
B	₦200M	₦0	₦0	₦1M	₦1M
C	₦200M	Loss	₦0	₦1M	₦1M
D (Small)	₦20M	₦0	₦0	Exempt	₦0

You pay the higher of regular CIT or minimum tax.

Tertiary Education Tax

Additional Tax Obligation

In addition to CIT, companies pay Tertiary Education Tax (TET):

TET Rate: 2.5% of Assessable Profit

Company	Assessable Profit	TET @ 2.5%
Large Co	₦50,000,000	₦1,250,000
Medium Co	₦20,000,000	₦500,000
Small Co	₦5,000,000	₦125,000

Note: Even small companies with 0% CIT still pay TET.

Special Industry Rates

Petroleum Companies

Oil and gas companies have special rates:

• Upstream operations: 85% (onshore), 65.75% (offshore)
• Petroleum Profits Tax applies, not standard CIT

Pioneer Status

Companies with pioneer status may enjoy:

• 3-5 year tax holiday
• No CIT on pioneer profits
• Must apply and be approved

Free Trade Zones

Companies in designated Free Trade Zones may have:

• CIT exemptions
• Customs duty exemptions
• Subject to zone-specific rules

CIT Payment and Filing

Filing Deadline

CIT returns must be filed within 6 months after the accounting year-end.

Year-End	Filing Deadline
December 31	June 30
March 31	September 30
June 30	December 31

Payment Schedule

For companies above minimum tax threshold:

• File self-assessment return
• Pay CIT with return
• May pay in installments (quarterly)

Installment Payments

Large companies often pay quarterly:

Payment	Timing	Amount
1st Installment	3 months after year-end	25%
2nd Installment	6 months after year-end	25%
3rd Installment	9 months after year-end	25%
Final Payment	12 months after year-end	Balance

Loss Relief

Carrying Forward Losses

If your company makes a loss:

• Cannot create a CIT refund
• Carry forward to offset future profits
• No time limit on carry forward (for unrelieved losses)
• Relief capped at 50% of assessable profit per year

Example

Year	Profit/(Loss)	Loss B/F	Taxable Profit	CIT
2023	(₦10M)	-	Nil	Nil
2024	₦20M	₦10M	₦10M (50% relief)	₦3M
2025	₦15M	₦5M	₦10M	₦3M

Withholding Tax Credits

Offsetting WHT Against CIT

WHT deducted from your income becomes a credit:

Item	Amount
CIT liability	₦10,000,000
Less: WHT credits	(₦3,000,000)
Net CIT payable	₦7,000,000

Excess Credits

If WHT exceeds CIT:

• Carry forward to next year
• Apply for refund (process can be lengthy)

How Finora Calculates CIT

Automatic Computation

Finora automates your CIT calculation:

Throughout the Year:

• Tracks revenue for turnover classification
• Categorizes expenses (deductible vs non-deductible)
• Computes capital allowances
• Monitors WHT credits

At Year-End:

• Determines your company size category
• Applies correct CIT rate
• Calculates taxable profit with all adjustments
• Generates CIT computation schedule

Real-Time Visibility

See your projected CIT position:

• Estimated taxable profit
• Projected CIT liability
• WHT credits available
• Net CIT expected

Return Preparation

Generate NRS-compliant documents:

• CIT computation schedule
• Capital allowance schedule
• WHT credit summary
• Filing-ready format

Frequently Asked Questions

Can a company with high turnover but losses pay zero CIT?

No. Minimum tax (0.5% of turnover) applies to large and medium companies, even with losses. Only small companies are exempt from minimum tax.

Does the 0% rate for small companies mean no filing?

No. Small companies must still file annual returns. They pay zero CIT but must file to confirm their status.

What if my turnover changes between years?

Your classification is determined annually. A company can be "small" one year and "medium" the next if turnover increases.

Is Tertiary Education Tax deductible?

No. TET is not deductible when calculating taxable profit for CIT purposes.

How do I know which category I'm in mid-year?

Track your year-to-date revenue. Finora shows your projected classification based on current trajectory.

Conclusion

Understanding Nigeria's tiered CIT rates is essential for tax planning:

• Small companies (< ₦25M turnover): 0% CIT, exempt from minimum tax
• Medium companies (₦25M - ₦100M): 20% CIT
• Large companies (> ₦100M): 30% CIT

Beyond the headline rates, proper CIT compliance requires understanding taxable profit calculations, capital allowances, loss relief, and the interaction with WHT credits.

Finora automates the entire CIT process—from tracking your turnover classification to generating your annual computation schedule.

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