CIT exemption for small companies in Nigeria - the new ₦50m rule explained

A quick win for SMEs

Nigeria’s 2025 tax reforms introduced a major benefit for small businesses: a 0% Company Income Tax (CIT) rate for companies that meet the new definition of “small.” It’s a huge cash‑flow advantage, but only if you understand the rules and stay compliant.

Who qualifies as a small company?

To enjoy the exemption, your business must meet both conditions:

• Turnover: ₦50 million or less

• Fixed Assets: Not more than ₦250 million.

Professional service firms (law, accounting, medical, architecture) do not qualify, even if they fall under the threshold. The old “medium‑sized company” category has been removed.

 

What you’re exempt from

If you qualify, you get relief from:

• CIT (0%)

• Capital gains tax (CGT)

• The new 4% development levy.

A strong incentive for small businesses to reinvest and grow.

The compliance rules you can’t ignore

• You must have a valid tax identification number (TIN). No TIN, no exemption

• You must still file annual returns. “No tax due” does not mean “no filing.

• Missing filings can cost you the exemption and attract penalties.

 

Smart tips for SME owners

• Keep clean records - Your turnover and asset values determine your status.

• Watch your withholding tax (WHT) - You don’t deduct WHT as a small company, but if customers withhold from you, collect the credit certificate, you’ll need it if you grow out of the exempt bracket.

• Plan for growth - Don’t hold your business back to stay under ₦50m. Just factor future tax obligations into your projections.

In summary, the CIT exemption is a powerful boost for Nigerian SMEs, but it’s not automatic. Know the thresholds, file your returns, keep strong records, and use this tax‑free period to strengthen your business for the next stage of growth.

If you need help understanding the new tax regime, please email us at: enquiries@ovacgroup.com for a free consultation with our team specialists.