Company Income Tax in Nigeria Explained (2026 Guide)

Introduction

Company Income Tax (CIT) is the tax imposed on the profits of incorporated companies operating in Nigeria. Understanding CIT is essential for business owners, directors, and finance professionals to ensure compliance and optimize tax obligations.

This comprehensive guide covers CIT rates, who pays, filing requirements, allowable deductions, and compliance strategies for Nigerian companies in 2026.

For broader tax context, explore our [complete tax guide](/topics/cit).

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What is Company Income Tax (CIT)?

Definition

Company Income Tax is a direct tax levied on the profits of companies registered in Nigeria. It is governed by the Companies Income Tax Act (CITA) and administered by the Federal Inland Revenue Service (FIRS).

Key Characteristics

Tax base: Taxable profit (total profits minus allowable deductions)
Tax year: Same as company's accounting year
Filing: Annual (within 6 months of year-end)
Payment: Self-assessment system
Administrator: FIRS

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Current CIT Rates in Nigeria (2026)

Standard CIT Rate

30% of taxable profit for most companies

This rate applies to companies with annual turnover above ₦100 million.

Reduced CIT Rates (Finance Act 2025)

Nigeria operates a tiered CIT system based on annual turnover:

| Company Size | Annual Turnover | CIT Rate | |--------------|-----------------|----------| | Small | Less than ₦25 million | 0% (Exempt) | | Medium | ₦25 million - ₦100 million | 20% | | Large | Above ₦100 million | 30% |

Effective Date: January 1, 2025 (Finance Act 2025)

Example Calculation

Small Company:

Annual turnover: ₦20 million
Taxable profit: ₦5 million
CIT: ₦0 (exempt)

Medium Company:

Annual turnover: ₦80 million
Taxable profit: ₦15 million
CIT: ₦15 million × 20% = ₦3 million

Large Company:

Annual turnover: ₦500 million
Taxable profit: ₦100 million
CIT: ₦100 million × 30% = ₦30 million

Use our [CIT calculator](/calculators/cit) to compute your company's tax liability.

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Who Pays Company Income Tax?

Entities Subject to CIT

CIT applies to:

Nigerian Companies

Companies incorporated in Nigeria
Private limited companies (Ltd)
Public limited companies (Plc)

Foreign Companies with Nigerian Operations

Companies with permanent establishment in Nigeria
Companies deriving income from Nigeria

Unit Trusts

Authorized unit trust schemes

Statutory Bodies

Certain government corporations

Who is Exempt?

The following are NOT subject to CIT:

Unincorporated Businesses

Sole proprietorships (pay Personal Income Tax)
Partnerships (pay Personal Income Tax)

Non-Profit Organizations

Registered charities
Religious bodies
Educational institutions (primary purpose is education)
NGOs with approved exemption

Small Companies (from 2025)

Companies with turnover below ₦25 million

Determining Your Tax Status

Incorporated?

Yes → Pay CIT
No → Pay Personal Income Tax

Annual turnover?

< ₦25 million → CIT exempt (if incorporated)
₦25m - ₦100m → 20% CIT
> ₦100 million → 30% CIT

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How CIT is Calculated

Basic CIT Formula

Step-by-Step Calculation

Step 1: Determine Total Profits

Total profits include:

Trading income (sales revenue minus cost of sales)
Investment income (dividends, interest)
Capital gains (from disposal of assets)
Other business income

Step 2: Deduct Allowable Expenses

Allowable deductions include:

Salaries and wages
Rent and utilities
Depreciation (capital allowances)
Interest on business loans
Professional fees
Advertising and marketing
Repairs and maintenance (not capital improvements)

Step 3: Apply CIT Rate

Multiply taxable profit by applicable rate (0%, 20%, or 30%)

Example: Full CIT Calculation

ABC Nigeria Ltd (turnover: ₦200 million)

Income:

Revenue: ₦200,000,000
Other income: ₦10,000,000
Total income: ₦210,000,000

Expenses:

Cost of goods sold: ₦80,000,000
Salaries: ₦40,000,000
Rent: ₦12,000,000
Utilities: ₦5,000,000
Marketing: ₦8,000,000
Capital allowances: ₦10,000,000
Total expenses: ₦155,000,000

Taxable Profit:

₦210,000,000 - ₦155,000,000 = ₦55,000,000

CIT (30% rate - turnover > ₦100m):

₦55,000,000 × 0.30 = ₦16,500,000

For detailed calculation guidance, see our [how to calculate CIT guide](/articles/how-to-calculate-company-income-tax-nigeria).

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Allowable Deductions for CIT

Fully Deductible Expenses

These expenses are 100% deductible from taxable profit:

Staff Costs

Salaries and wages
Employee benefits
Pensions and gratuities
Staff training

Operating Expenses

Rent and rates
Utilities (electricity, water)
Insurance premiums
Repairs and maintenance

Business Expenses

Marketing and advertising
Professional fees (legal, accounting)
Bank charges and interest
Transportation and logistics

Depreciation (via Capital Allowances)

Plant and machinery
Buildings
Furniture and fittings
Motor vehicles

Learn more about [capital allowances](/articles/capital-allowances-nigeria-simple-guide).

Non-Deductible Expenses

These expenses cannot be deducted:

Capital Expenditure

Purchase of fixed assets (deduct via capital allowances instead)
Building construction costs

Personal Expenses

Directors' personal expenses
Non-business entertainment

Provisions

General provisions for bad debts (must be specific)
Contingent liabilities

Penalties and Fines

Tax penalties
FIRS fines
Regulatory penalties

Certain Interest

Interest above specified limits
Interest to non-residents without withholding tax

Political Donations

Donations to political parties

Special Deductions and Reliefs

Research & Development

20% additional deduction on qualifying R&D expenses

Export Processing Zones

100% capital allowance in first year

Gas Utilization

Additional deductions for gas utilization projects

Rural Investment

Extra deductions for investments in rural areas

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CIT Filing Requirements

Filing Deadline

Within 6 months of the company's financial year-end

Examples:

Year-end: December 31 → File by June 30
Year-end: March 31 → File by September 30
Year-end: June 30 → File by December 31

Required Documents

To file CIT, prepare:

Audited Financial Statements

Statement of profit or loss
Statement of financial position
Cash flow statement
Notes to accounts

Tax Computation

Detailed calculation of taxable profit
Schedule of adjustments (add-backs and deductions)
Capital allowance computation

CIT Returns Form

FIRS approved CIT return form
All sections completed accurately

Supporting Schedules

Withholding tax credits
Foreign tax credits
Loss relief claims

Evidence of Payment

Receipts for quarterly installments
Bank payment confirmations

Where to File

Online: TaxPro-Max portal ([https://taxpro-max.firs.gov.ng](https://taxpro-max.firs.gov.ng)) In-Person: FIRS offices (if online not possible)

For step-by-step filing guidance, see our [how to file CIT guide](/articles/how-to-file-company-income-tax-nigeria).

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CIT Payment System

Quarterly Installment Payments

Companies must pay CIT in quarterly installments based on estimated profits:

Payment Schedule:

Q1: Due end of Q2 (e.g., April for Jan-Mar)
Q2: Due end of Q3 (e.g., July for Apr-Jun)
Q3: Due end of Q4 (e.g., October for Jul-Sep)
Q4: Due at year-end (e.g., December for Oct-Dec)

Amount: Based on estimated profit for the year (self-assessment)

Final Assessment

After filing annual return:

If quarterly payments exceed actual liability → Carry forward to next year
If quarterly payments fall short → Pay balance within 2 months of filing

Minimum Tax

Even if no profit, companies may owe minimum tax:

Minimum Tax Rate: 0.5% of gross turnover

When it applies:

Company has no taxable profit, or
Taxable profit is very low

Formula:

Example:

Turnover: ₦100 million
Taxable profit: ₦0 (loss-making)
Minimum tax: ₦100m × 0.005 = ₦500,000

Exceptions: Small companies (turnover < ₦25 million) are exempt from minimum tax.

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Education Tax

What is Education Tax?

An additional 2.5% tax on assessable profits of companies operating in Nigeria.

Purpose: Fund education initiatives

Rate: 2.5% of assessable profit

Who pays?: All companies liable for CIT (except those with turnover < ₦25 million)

Calculation

Example:

Assessable profit: ₦50 million
Education tax: ₦50m × 0.025 = ₦1,250,000

Total tax burden:

CIT (30%): ₦15 million
Education tax (2.5%): ₦1.25 million
Total: ₦16.25 million

Filing: Education tax is filed separately from CIT on the Education Tax return form.

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CIT Compliance Checklist

Ensure your company meets all CIT obligations:

At Start of Accounting Year:

[ ] Estimate taxable profit for the year
[ ] Calculate quarterly CIT installments
[ ] Set payment reminders

Quarterly:

[ ] Pay quarterly CIT installment by deadline
[ ] Keep payment receipts

At Year-End:

[ ] Prepare audited financial statements
[ ] Compute taxable profit
[ ] Calculate final CIT liability
[ ] Prepare CIT return form
[ ] File return within 6 months
[ ] Pay balance (if any) within 2 months of filing
[ ] File education tax return

Ongoing:

[ ] Maintain proper accounting records
[ ] Keep all receipts and invoices
[ ] Track allowable deductions
[ ] Monitor turnover (affects CIT rate)
[ ] Respond to FIRS queries promptly

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CIT Penalties and Consequences

Late Filing Penalty

₦25,000 for first month + ₦5,000 for each subsequent month

Late Payment Interest

10% per annum on outstanding CIT

Under-Assessment Penalty

If FIRS assesses higher tax than you filed:

10% penalty on additional tax due

Failure to Pay Installments

Penalties and interest apply to each missed installment.

For comprehensive penalty information, see our [VAT penalties guide](/articles/vat-penalties-nigeria-what-businesses-should-know) (similar principles apply to CIT).

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CIT Incentives and Exemptions

Pioneer Status

100% tax holiday for 3-5 years for companies in pioneer industries

Qualifying sectors:

Manufacturing
Technology
Solid minerals
Tourism

Export Processing Zones

Companies operating in EPZs enjoy:

0% CIT for first 10 years
50% CIT reduction thereafter

Small Company Exemption

Companies with turnover < ₦25 million:

0% CIT (effective 2025)

Others

Rural investment allowances
Gas utilization incentives
R&D tax credits

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Automate CIT Compliance

Simplify company income tax with [Taxable.ng](https://taxable.ng):

✅ Automatic taxable profit calculation ✅ CIT rate determination (based on turnover) ✅ Quarterly installment reminders ✅ Capital allowance computation ✅ Education tax calculation ✅ Direct FIRS filing

[Start Free Trial →](https://taxable.ng)

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Frequently Asked Questions

1. What is the current CIT rate in Nigeria?

The standard CIT rate is 30% for companies with turnover above ₦100 million. Medium companies (₦25m-₦100m) pay 20%, while small companies (below ₦25 million) are exempt (0%).

2. When is CIT due in Nigeria?

CIT returns must be filed within 6 months of the company's financial year-end. Payment is made quarterly during the year based on estimated profit.

3. Do all companies pay CIT?

No. Only incorporated companies pay CIT. Sole proprietorships and partnerships pay Personal Income Tax instead. Small companies (turnover < ₦25 million) are exempt from CIT.

4. What is minimum tax?

Minimum tax is a 0.5% tax on gross turnover that applies when a company has no taxable profit or very low profit. It ensures all companies contribute some tax.

5. Can I deduct all business expenses from CIT?

No. Only allowable expenses can be deducted. Capital expenditure, personal expenses, penalties, and certain provisions are not deductible. Depreciation is claimed via capital allowances.

6. What is education tax?

Education tax is an additional 2.5% tax on assessable profits paid by all companies (except those with turnover < ₦25 million). It's filed separately from CIT.

7. How do I file CIT in Nigeria?

File online through the FIRS TaxPro-Max portal within 6 months of your financial year-end. You'll need audited financial statements, tax computation, and supporting documents.

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Conclusion

Company Income Tax is a significant obligation for Nigerian businesses. Understanding the rates, filing requirements, allowable deductions, and compliance deadlines is essential for avoiding penalties and optimizing tax obligations.

Key Points to Remember:

CIT rates: 0% (small), 20% (medium), 30% (large companies)
File within 6 months of year-end
Pay quarterly installments
Minimum tax applies if no profit (0.5% of turnover)
Education tax is 2.5% additional
Keep records for 6 years

Simplify CIT compliance with [taxable.ng](https://taxable.ng) - automated calculations, filing, and reminders.

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Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Consult with a qualified tax professional for advice specific to your situation.

Last Updated: March 10, 2026 Word Count: ~2,200 words Version: 1.0

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