Key Points
- But here’s the real issue: most Nigerian entrepreneurs don’t fully understand how company income tax works, when it applies, or how to reduce what they owe legally
- Internal Linking Suggestions: How to Get Your TIN in Nigeria New Tax Reform 2026: What Freelancers and SMEs Should Know Best Finance & Accounting Apps for Nigerian Businesses
- As the 2026 tax reform kicks in, registering your business and understanding your tax obligations will save you stress, and money
- When and How to Pay Company Income Tax in Nigeria Every registered company must: File an annual tax return with the FIRS
- But once you incorporate your business, you’ll move into the CIT category, and gain access to more opportunities (grants, contracts, partnerships)
If you run a registered company in Nigeria, Company Income Tax (CIT) isn’t optional; it’s the price of playing in the formal economy. Whether you’re a small startup, a digital agency, or an import business, the Federal Inland Revenue Service (FIRS) expects you to declare your profits and pay your share.
And if you’re a sole proprietor or freelancer, the same rule applies under Personal Income Tax (PIT) where you still have to account for what you earn and pay accordingly. (Learn more about how Personal Income Tax works in Nigeria.
But here’s the real issue: most Nigerian entrepreneurs don’t fully understand how company income tax works, when it applies, or how to reduce what they owe legally.
This guide breaks it all down, from tax rates and deadlines to how your company can stay compliant and still keep more money in your pocket.
What Is Company Income Tax (CIT)?
Company Income Tax is the tax Nigerian companies pay on their profits.
Think of it as the government’s cut from your business income, after deducting legitimate expenses.
It’s regulated by the Federal Inland Revenue Service (FIRS) under the Company Income Tax Act (CITA).
So, if your business is registered with the Corporate Affairs Commission (CAC) as a Limited Liability Company (LTD) or Public Limited Company (PLC), this tax applies to you.
Simply put: If your business earns money in Nigeria and it’s registered as a company, you’re expected to pay Company Income Tax.
Who Should Pay Company Income Tax?
CIT is not for individuals or business names. It’s specifically for companies and incorporated entities.
You fall under CIT if you operate as:
- A Limited Liability Company (LTD)
- A Public Limited Company (PLC)
- Any foreign company doing business in Nigeria
- Any registered company making profits in or from Nigeria
If you run a freelance business, influencer brand, or online store and you’re still operating with your personal bank account, you’re not yet under CIT, but under Personal Income Tax (PIT) instead.
However, once you register your business as a company, you’ll start filing for CIT yearly, even if your profit is small.
Current Company Income Tax Rates in Nigeria (as of 2025)
The government uses a tiered tax rate system, so smaller companies pay less (or none at all).
| Company Type | Annual Turnover | CIT Rate |
|---|---|---|
| Small Companies | ₦25 million or less | 0% (exempted) |
| Medium Companies | ₦25m – ₦100m | 20% |
| Large Companies | Over ₦100m | 30% |
✅ Small companies don’t pay CIT, but they must still file annual returns. That’s where most freelancers and SMEs miss it. Filing zero tax is still a legal filing.
What Exactly Is Taxed?
Company Income Tax is charged on your net profit, not your total revenue.
Here’s a simple breakdown:
Revenue (₦10,000,000) – Business expenses (₦4,000,000) = Net Profit (₦6,000,000)
If you’re a medium-sized company (20% CIT), your payable tax is ₦1,200,000 (that’s 20% of ₦6,000,000).
The problem is that most small businesses don’t keep proper records, so the FIRS taxes them on gross income, which is far higher.
That’s why record keeping and accounting apps (like Luca Africa) are crucial if you want to pay only what’s fair.
Read more for more Account Apps you can try.
When and How to Pay Company Income Tax in Nigeria
Every registered company must:
- File an annual tax return with the FIRS.
- Newly registered companies: within 18 months of incorporation or 6 months after their first accounting year — whichever comes later.
- Existing companies: within 6 months after the end of their financial year.
- Pay the tax based on declared profits.
- Payments are made through approved banks or the FIRS TaxPro Max portal (https://taxpromax.firs.gov.ng).
- Keep all supporting documents (invoices, receipts, payroll records) in case of audit.
Failure to file or pay attracts penalties and interest, and may even affect your ability to get government contracts or loans.
Why It Matters Now (Ahead of the 2026 Reform)
The 2026 tax reform aims to tighten compliance especially for digital and informal businesses.
If you’re planning to grow beyond being a “side hustle,” this is the time to structure up.
And this is why:
- Banks and payment platforms will soon link accounts to Tax Identification Numbers (TINs).
- Unregistered businesses may face withholding taxes or be cut off from government incentives.
- CIT filing will become a digital, traceable process under the new FIRS framework.
In short: get formal now, not later.
Quick Comparison: CIT vs Personal Income Tax (PIT)
| Feature | Company Income Tax (CIT) | Personal Income Tax (PIT) |
|---|---|---|
| Applies To | Limited companies (LTD/PLC) | Individuals, freelancers, business names |
| Tax Rate | 0–30% (based on company size) | 7–24% (progressive) |
| Tax Authority | FIRS | State IRS |
| Filing Frequency | Yearly | Yearly |
| Typical Payer | Registered SMEs, startups | Freelancers, informal businesses |
If you’re still a freelancer or influencer using your personal account, you’ll start under PIT.
But once you incorporate your business, you’ll move into the CIT category, and gain access to more opportunities (grants, contracts, partnerships).
Bottom Line
Company Income Tax isn’t just another government charge, it’s proof your business is legitimate and profitable.
It’s also the foundation for getting funding, tenders, and investor confidence.
As the 2026 tax reform kicks in, registering your business and understanding your tax obligations will save you stress, and money.
Final Tip: “The smartest entrepreneurs don’t wait for FIRS to call them. They set up their tax system early.”
Need help registering your company, getting your TIN, or setting up your tax filings? Contact Qrafteq we’ll help you stay fully compliant, fast.
Internal Linking Suggestions:
- How to Get Your TIN in Nigeria
- New Tax Reform 2026: What Freelancers and SMEs Should Know
- Best Finance & Accounting Apps for Nigerian Businesses
