Company Income Tax in Nigeria: A Complete Guide for Businesses

Company Income Tax (CIT) is a crucial part of the Nigerian tax system, serving as a major revenue source for the government and a critical compliance responsibility for companies operating in the country. Understanding the scope, rate, compliance procedures, exemptions, and penalties related to CIT can help businesses avoid legal trouble and manage their finances effectively.

 

In this comprehensive guide, we’ll cover everything you need to know about Company Income Tax in Nigeria, including:

 

What is Company Income Tax?

 

Legal Framework Governing CIT

 

Who Should Pay Company Income Tax?

 

Company Income Tax Rates in Nigeria

 

CIT Filing and Payment Procedures

 

Due Dates for Filing CIT

 

Allowable Deductions and Tax Reliefs

 

Penalties for Non-Compliance

 

CIT Exemptions and Tax Holidays

 

Recent Developments in Company Income Tax

 

FAQs about Company Income Tax in Nigeria

 

 

 

What is Company Income Tax in Nigeria?

 

Company Income Tax (CIT) is a tax imposed on the profits of registered companies in Nigeria, excluding those engaged in petroleum operations. It is levied by the Federal Inland Revenue Service (FIRS) in accordance with the Companies Income Tax Act (CITA) Cap C21 LFN 2004 (as amended).

 

This tax is payable by both resident and non-resident companies that earn income from Nigeria.

 

 

 

Legal Framework Governing CIT in Nigeria

 

The main legislation regulating CIT is the Companies Income Tax Act (CITA). The FIRS is the agency responsible for the administration, assessment, collection, and enforcement of Company Income Tax.

 

Other relevant laws include:

 

Finance Acts (2019 to date)

 

Federal Inland Revenue Service (Establishment) Act

 

Tax Administration (Self-Assessment) Regulations

 

 

 

Who is Liable to Pay Company Income Tax?

 

The following categories of companies are liable to pay Company Income Tax in Nigeria:

 

1. Resident Companies – Companies incorporated in Nigeria are taxed on their worldwide income.

 

2. Non-Resident Companies – Foreign companies that derive income from Nigeria are taxed on the income derived from Nigeria only.

 

 

Note: Sole proprietorships and partnerships are taxed under Personal Income Tax, not CIT.

 

 

 

Company Income Tax Rates in Nigeria

 

As of the latest Finance Act amendments, the CIT rates in Nigeria are structured as follows:

Annual Turnover	CIT Rate
Below ₦25 million	0% (Small Companies)
₦25 million – ₦100 million	20% (Medium-Sized Companies)
Above ₦100 million	30% (Large Companies)

 

Minimum Tax:

 

Where a company makes no taxable profit, it may be subject to minimum tax, which is generally 0.5% of gross turnover, with some exceptions.

 

 

 

CIT Filing and Payment Procedures

 

Companies are required to file self-assessment tax returns using the FIRS TaxProMax platform. The steps include:

 

1. Prepare financial statements (audited for active companies).

 

 

2. Calculate taxable profit using allowable deductions and adjustments.

 

 

3. Complete CIT forms online via FIRS TaxProMax portal.

 

 

4. Pay applicable CIT through approved banks or online platforms.

 

 

5. Submit returns including:

 

• Financial statements
• Tax computations
• Evidence of payment
• Capital allowances schedule

 

 

 

Due Dates for Filing Company Income Tax

 

Newly Incorporated Companies: Within 18 months from the date of incorporation or 6 months after the end of the first accounting year—whichever comes earlier.

 

Established Companies: Within 6 months after the end of the accounting year.

 

 

Late filing attracts penalties and interest.

 

 

 

Allowable Deductions and Tax Reliefs

 

To arrive at the taxable profit, companies can deduct the following expenses:

 

Salaries and wages

 

Rent and utility expenses

 

Depreciation (via capital allowances)

 

Interest on business loans

 

Advertising and marketing costs

 

Bad debts (under certain conditions)

 

 

Tax reliefs may also be available through:

 

• Pioneer Status Incentive (PSI): 3–5 years tax holiday

 

• Investment Tax Credit

 

• Export Expansion Grant (EEG)

 

 

 

Penalties for Non-Compliance

 

The FIRS imposes penalties for failure to comply with Company Income Tax regulations:

 

Late filing: ₦25,000 for the first month and ₦5,000 for each subsequent month of default.

 

Late payment: 10% penalty plus interest at the Central Bank of Nigeria’s minimum rediscount rate.

 

Failure to deduct or remit withholding tax (WHT) can also attract serious penalties.

 

 

 

CIT Exemptions and Tax Holidays

 

Some organizations and sectors are exempted or partially exempted from paying CIT:

 

1. Small Companies (annual turnover < ₦25 million)

 

 

2. Companies engaged in agriculture (exemption for first 4 years, renewable for 2 years)

 

 

3. Pioneer Companies under PSI

 

 

4. Non-profit organizations (if profits are not derived from trade or business)

 

 

 

Recent Developments in Company Income Tax

 

The Nigerian tax landscape is evolving. Key recent updates include:

 

Introduction of e-filing through TaxPro Max

 

Adjustments to CIT thresholds and rates in the Finance Acts

 

Improved enforcement by FIRS

 

Encouragement of Voluntary Assets and Income Declaration Scheme (VAIDS) for tax regularization

 

 

 

FAQs About Company Income Tax in Nigeria

 

1. Is Company Income Tax the same as VAT?

 

No. CIT is tax on profits; VAT is a consumption tax on goods and services.

 

2. Do I need to pay CIT if my company made no profit?

 

Yes, you may be subject to minimum tax, except if you’re a small company or fall under specific exemptions.

 

3. What happens if I don’t pay CIT?

 

The FIRS can impose penalties, interest, or legal action, including sealing of business premises.

 

4. Can I file my tax returns manually?

 

No. All CIT filings must now be done electronically via FIRS TaxPro Max.

 

5. How do I get help with Company Income Tax filing?

 

You can consult a chartered accountant or tax consultant, or contact FIRS for guidance.

 

 

 

Conclusion

 

Company Income Tax is an essential part of doing business in Nigeria. Compliance not only prevents penalties but also builds credibility with regulatory bodies, partners, and investors. With the advent of digital filing systems and changes in tax legislation, staying informed and working with professionals is more important than ever.

 

Whether you’re a startup, SME, or multinational, understanding and properly handling your CIT obligations ensures your business stays on the right side of the law and contributes meaningfully to national development.

 

 

 

Need Help Filing Your Company Income Tax?

 

At Adebayo Oluwole & Associates, we help Nigerian companies calculate, file, and remit their CIT accurately and on time. Whether you’re a small startup or a growing enterprise, our experts are here to support your tax compliance journey.

 

 Contact us today via 08155554892