Nigeria Tax Act 2025 Checker: What Applies to Your Business
Check how the Nigeria Tax Act 2025, in force since 1 January 2026, applies to your business. Enter your business type, turnover and fixed assets to see whether you pass the small company test, which taxes apply and what to do next, with sources. General guidance only: confirm your position with a qualified tax professional.
The Nigeria Tax Act 2025 is one of four tax reform laws that took effect in Nigeria on 1 January 2026. It sets personal income tax bands from 0% to 25%, a 0% company income tax rate for small companies, a 30% rate plus a 4% development levy for other companies, and keeps VAT at 7.5% with wider reliefs.
Nigeria Tax Act 2025: Key Rates at a Glance
The figures below come from the Presidential Fiscal Policy and Tax Reforms Committee and PwC’s Nigeria tax summary (reviewed 29 May 2026). The checker above applies them to your business type and turnover.
| Item | Rule from 1 January 2026 |
|---|---|
| Small company | Gross turnover of ₦100 million or less and total fixed assets of ₦250 million or less: 0% company income tax |
| Other companies | 30% company income tax. There is no separate medium-company rate |
| Development levy | 4% of assessable profit; small companies and non-resident companies are exempt |
| Chargeable (capital) gains of companies | Taxed at the company income tax rate, 30% |
| Minimum effective tax rate | 15% for companies with turnover of ₦50 billion or more, or in multinational groups with turnover of at least €750 million |
| VAT | 7.5% standard rate. Basic food, medical and pharmaceutical products, and books and educational materials are zero-rated. Small companies with turnover of ₦100 million or less are exempt from charging VAT |
| Personal income tax | 0% on the first ₦800,000 of taxable income, rising to 25% above ₦50 million |
| Rent relief | 20% of annual rent, up to ₦500,000 (replaces the consolidated relief allowance) |
Personal Income Tax Bands and a Worked Example
Sole proprietors, partners and employees are taxed under these bands (PwC). Employees earning the national minimum wage or less are exempt from PAYE.
| Annual taxable income | Rate | Tax on ₦5,000,000 of taxable income |
|---|---|---|
| First ₦800,000 | 0% | ₦0 |
| Next ₦2,200,000 | 15% | ₦330,000 |
| Next ₦9,000,000 | 18% | ₦360,000 (on the remaining ₦2,000,000) |
| Next ₦13,000,000 | 21% | — |
| Next ₦25,000,000 | 23% | — |
| Above ₦50,000,000 | 25% | — |
| Total | ₦690,000 (13.8% of taxable income) |
Small Company Test: ₦100 Million or ₦50 Million?
Two turnover figures are in circulation, and it matters if your turnover sits between them. The Presidential committee and PwC both state ₦100 million of turnover with ₦250 million of fixed assets. KPMG’s review of the first gazetted copy (August 2025) found a ₦50 million turnover limit in that copy, and noted that businesses providing professional services cannot be classified as small companies. The House of Representatives released gazetted copies of the four Acts in January 2026. This page uses ₦100 million and tells you when your turnover falls in the ₦50–100 million band, so you can confirm your status with the Nigeria Revenue Service or an adviser before filing at 0%.
What Changed from the Old Rules
| Before | Under the Nigeria Tax Act 2025 |
|---|---|
| Tertiary Education Tax (3%), NITDA levy (1%), NASENI levy (0.25%) and Police Trust Fund levy (0.005%) | One development levy of 4% of assessable profit |
| Consolidated relief allowance for individuals | Removed; rent relief of 20% of annual rent up to ₦500,000 |
| Input VAT on services and fixed assets not recoverable | Recoverable where tied to taxable supplies |
| Compensation for loss of office exempt up to ₦10 million | Exempt up to ₦50 million |
This checker gives general guidance. It does not replace advice from a qualified tax professional, and rates can be changed by later Finance Acts or orders.
Last updated: October 2026
Frequently Asked Questions
What are the main changes in the Nigeria Tax Act 2025?
From 1 January 2026 the Act sets a 0% company income tax rate for small companies (turnover of ₦100 million or less and fixed assets of ₦250 million or less), keeps the rate for other companies at 30%, and replaces several levies with a single 4% development levy. Personal income tax now starts at 0% on the first ₦800,000 of taxable income and rises to 25% above ₦50 million. VAT stays at 7.5%, with basic food, medical and educational items zero-rated and input VAT on services and fixed assets now recoverable.
Does the new tax act affect small businesses in Nigeria?
Yes, mostly in their favour. According to the Presidential Fiscal Policy and Tax Reforms Committee, small companies with turnover of not more than ₦100 million and total fixed assets of not more than ₦250 million pay 0% company income tax, are exempt from the 4% development levy and from withholding tax deductions, and are exempt from charging VAT. An earlier gazetted copy of the Act showed a ₦50 million turnover limit, so a business between ₦50 million and ₦100 million should confirm its status. Employers must still operate PAYE.
Has the VAT rate changed in Nigeria?
No. The standard VAT rate remains 7.5%. What changed is the relief around it: basic food items, medical and pharmaceutical products, and books and educational materials are zero-rated, input VAT on services and fixed assets used for taxable supplies can now be recovered, and small companies with turnover of ₦100 million or less are exempt from charging VAT. The Nigeria Revenue Service is also empowered to introduce electronic invoicing.
Do NGOs need to comply with the 2025 Tax Act?
Yes. The Presidential committee lists charities and religious institutions, for non-commercial activity, among those exempt from tax on chargeable gains, but that is not a blanket exemption. An organisation with staff must still operate PAYE under the new personal income tax bands, and income from trading or business activity may be taxable. Get advice that is specific to your organisation.
When should businesses start complying with the new Act?
Now. The Nigeria Tax Act 2025 and the other tax reform Acts took effect on 1 January 2026, so payroll, VAT and company tax computations for periods from that date should already use the new rules. Check which size category your company falls into, update PAYE to the new bands, and budget for the 4% development levy if you are not a small company.
What are the personal income tax rates under the Nigeria Tax Act 2025?
The annual bands are: first ₦800,000 of taxable income at 0%, next ₦2,200,000 at 15%, next ₦9,000,000 at 18%, next ₦13,000,000 at 21%, next ₦25,000,000 at 23%, and income above ₦50,000,000 at 25%. For example, ₦5,000,000 of taxable income gives tax of ₦690,000. The consolidated relief allowance has been removed and replaced by a rent relief of 20% of annual rent, up to ₦500,000.
What is the development levy in the Nigeria Tax Act 2025?
The development levy is a 4% charge on the assessable profits of Nigerian companies. It replaces the Tertiary Education Tax (3%), the NITDA information technology levy (1%), the NASENI levy (0.25%) and the Police Trust Fund levy (0.005%). Small companies and non-resident companies are exempt.