Company Income Tax (CIT) in Nigeria: A Beginner's Complete Guide
You Registered a Company — Now What About Taxes?
Congratulations — you registered your business with the Corporate Affairs Commission (CAC), collected your certificate of incorporation, and opened a business bank account. You are officially a company director in Nigeria. But then someone mentions "CIT" and suddenly the excitement fades into confusion.
What exactly is CIT? Is it the same as VAT? Does your small startup even need to worry about it? What happens if you ignore it?
These are exactly the questions this guide will answer. Company Income Tax is one of the most important tax obligations for any registered company in Nigeria — and unfortunately, one of the most misunderstood. Many business owners either panic unnecessarily or, worse, ignore it completely until penalties arrive.
The good news is this: CIT is not as complicated as it sounds. Once you understand the basics — what it is, who pays it, how it is calculated, and when it is due — you will be in a strong position to stay compliant and focus on growing your business.
What Exactly Is Company Income Tax (CIT)?
Company Income Tax (CIT) is a direct tax imposed on the profits that a registered company earns from its business activities in Nigeria. Think of it as the government's share of your company's success.
It is currently governed by the Nigeria Tax Act (NTA) 2025 and the Companies Income Tax Act (CITA), and it is administered by the Nigeria Revenue Service (NRS) — the federal tax authority formerly known as the Federal Inland Revenue Service (FIRS). The Nigeria Tax Act (NTA) 2025 is the current primary legislation governing CIT in Nigeria. The earlier Companies Income Tax Act (CITA) remains a reference point for specific provisions, but the NTA 2025 now takes precedence.
The key word here is profit. CIT is not charged on everything your company earns (that is your turnover or revenue). It is charged on what remains after you subtract your allowable business expenses from your income. That remaining figure is called your chargeable profit — and that is what the NRS taxes.
CIT Is NOT the Same as VAT
This is one of the most common points of confusion. Let us clear it up immediately:
- CIT (Company Income Tax) is a tax on your company's profits. It is paid by the company to the federal government once a year.
- VAT (Value Added Tax) is a tax on goods and services. It is collected from your customers at the point of sale and remitted to the NRS monthly.
They are completely separate taxes with different calculations, different deadlines, and different rules. Your company may be required to pay both — but they are never the same thing.
CIT Is NOT the Same as Personal Income Tax (PIT)
If you run a registered company (a limited liability company), your business pays CIT. However, if you operate as a sole trader or self-employed individual without a registered company, you pay Personal Income Tax (PIT) instead — not CIT.
The moment you incorporate a company with the CAC, that company becomes a separate legal entity with its own tax obligations. That is where CIT comes in.
Which Companies Must Pay CIT?
The simple answer: almost every company registered in Nigeria.
Under Nigerian tax law, the following are required to comply with CIT obligations:
- Nigerian companies — any company incorporated under the Companies and Allied Matters Act (CAMA), regardless of size
- Foreign companies — companies based outside Nigeria but operating here through a fixed office, branch, or agency, or earning income from Nigerian sources
This means a small fashion business registered as a limited liability company has the same legal obligation to file CIT returns as a major oil company. The amount of tax will be very different — but the obligation to comply is the same.
Are Any Companies Exempt from CIT?
Yes, some organisations are legally exempt from paying CIT. These include:
- Ecclesiastical, charitable, and educational institutions of a public character — provided their profits are used solely for those charitable purposes and not distributed to members
- Cooperative societies registered under cooperative laws
- Statutory bodies established by an Act of the National Assembly for public purposes
- Companies granted Pioneer Status by the Nigerian Investment Promotion Commission (NIPC) — these businesses enjoy a tax holiday of 3 to 5 years on qualifying activities
Important: Even exempt organisations are generally required to file CIT returns. Exemption from paying tax does not automatically mean exemption from filing.
What Income Is Subject to CIT?
CIT applies to income your company earns from various sources, including:
- Trade or business income — money earned from selling goods or providing services
- Dividends — income received from shares held in other companies
- Interest income — earnings from bank deposits or loans extended
- Rent — income from leasing property
- Royalties — payments received for use of intellectual property
- Management and consultancy fees
- Commissions received for services rendered
In short, if your company earns money from a Nigerian source, that income is likely subject to CIT.
What Can You Deduct? (Reducing Your Tax Bill Legally)
Here is a piece of good news: you do not pay CIT on every naira your company receives. You are allowed to deduct certain allowable business expenses before calculating your tax.
Common expenses you can deduct include:
- Salaries and wages paid to employees
- Rent for your business premises
- Utilities used for business operations
- Professional fees — accountant, legal, and audit fees
- Advertising and marketing costs
- Insurance premiums for business coverage
- Interest on business loans
- Capital allowances — the tax equivalent of depreciation on business assets like equipment and vehicles
What You CANNOT Deduct:
- Personal expenses (anything not related to your business)
- Capital expenditure paid upfront (you claim these gradually through capital allowances instead)
- Fines and penalties paid to government agencies
- Donations that do not qualify under tax law
The rule of thumb from CITA Section 24: an expense must be wholly, reasonably, and exclusively incurred in the production of your company's income to be deductible.
How Much CIT Does Your Company Pay? The CIT Rate Nigeria 2025 Three-Tier System
Nigeria does not apply a single CIT rate to all companies. Instead, the law uses a three-tier structure based on your company's annual gross turnover (that is your total revenue before any deductions). This structure was introduced to protect small and growing businesses from heavy tax burdens. This framework was formally introduced on January 1, 2020, through the Finance Act 2020, and further refined by the Companies Income Tax (Amendment) Act 2021.
Here is how the CIT rate Nigeria 2025 structure works:
- Small Company (annual gross turnover of ₦25 million or less): 0% CIT — you pay nothing in company income tax
- Medium-Sized Company (annual gross turnover above ₦25 million but not more than ₦100 million): 20% CIT on chargeable profit
- Large Company (annual gross turnover above ₦100 million): 30% CIT on chargeable profit
What About the Minimum Tax?
The minimum tax rule exists to prevent companies from using deductions to wipe out their tax bill entirely. If your CIT liability works out to less than 0.5% of your gross turnover, you must pay the minimum tax amount instead.
For example, if your company has a gross turnover of ₦80 million, the minimum tax would be ₦80,000,000 × 0.5% = ₦400,000. If your calculated CIT is less than ₦400,000, you pay ₦400,000.
Who is exempt from minimum tax?
- Small companies (turnover of ₦25 million or less)
- Companies in their first four years of business
- Companies in the agricultural sector
Do Not Forget Education Tax
Alongside CIT, every registered Nigerian company must also pay Education Tax (EDT) at a rate of 2% of assessable profits. Education Tax is collected and administered by the Nigeria Revenue Service (NRS). Companies pay the NRS directly — not TETFund. The NRS then directs the funds to the Tertiary Education Trust Fund (TETFund). EDT is filed and paid alongside your CIT return through the NRS portal.
How to Calculate Company Income Tax Nigeria: Real-World Examples
Example 1 — StyleHub Nigeria Ltd (Small Company)
Chioma registered StyleHub Nigeria Ltd, a Lagos-based fashion retail business, in 2023. For the 2024 financial year, the company recorded:
- Gross turnover: ₦18,000,000
- Allowable expenses: ₦12,000,000
- Chargeable profit: ₦6,000,000
Step 1 — Determine company size: Turnover of ₦18 million is below ₦25 million → Small Company
Step 2 — Apply CIT rate: Small company rate = 0%
Step 3 — Calculate CIT: ₦6,000,000 × 0% = ₦0 CIT
Step 4 — Minimum tax check: Small companies are exempt from minimum tax.
Step 5 — Education Tax: ₦6,000,000 × 2% = ₦120,000
Total Tax Payable: ₦120,000
Chioma's company pays zero in Company Income Tax — but still owes ₦120,000 in Education Tax. Her filing deadline (for a December 31 year-end) is June 30, 2025.
Example 2 — TechBridge Solutions Ltd (Medium-Sized Company)
Adebayo runs TechBridge Solutions Ltd, a software development company in Abuja. For the 2024 financial year:
- Gross turnover: ₦75,000,000
- Allowable deductions: ₦48,000,000
- Chargeable profit: ₦27,000,000
Step 1 — Determine company size: Turnover of ₦75 million is between ₦25 million and ₦100 million → Medium-Sized Company
Step 2 — Apply CIT rate: Medium company rate = 20%
Step 3 — Calculate CIT: ₦27,000,000 × 20% = ₦5,400,000
Step 4 — Minimum tax check: ₦75,000,000 × 0.5% = ₦375,000. Since CIT (₦5,400,000) is higher, pay the CIT amount.
Step 5 — Education Tax: ₦27,000,000 × 2% = ₦540,000
Total Tax Payable: ₦5,940,000
Adebayo must file TechBridge's return and pay ₦5,940,000 by June 30, 2025 to avoid penalties.
Example 3 — What Happens When You File Late?
TradePlus Nigeria Ltd, a large company with a CIT liability of ₦30,000,000, missed its June 30, 2025 deadline and filed on October 15, 2025 — about 3.5 months late.
Late filing penalty calculation:
- First month of default (July): ₦25,000
- Second month (August): ₦5,000
- Third month (September): ₦5,000
- Partial fourth month (October 1–15): ₦5,000
- Total late filing penalty: ₦40,000
Interest on unpaid tax: Interest is charged at the CBN Monetary Policy Rate plus 10% per annum. At an assumed rate of 34% annually, the interest on ₦30,000,000 for 108 days works out to approximately ₦3,013,699.
Note: This example uses a total interest rate of 34% (CBN MPR of 24% plus 10%). The CBN MPR changes periodically — verify the current rate with the NRS at the time of any non-compliance to calculate the exact interest charge.
Total cost of filing late: ₦30,000,000 (tax owed) + ₦40,000 (penalty) + ₦3,013,699 (interest) = ₦33,053,699
TradePlus paid over ₦3 million extra — simply for filing 3.5 months late. This is the real cost of ignoring your CIT deadline.
CIT Filing Deadline Nigeria: When Must You File and Pay?
Standard Annual Filing Deadline
Every company must file its annual CIT return within 6 months after the end of its accounting year. Meeting your CIT filing deadline Nigeria is one of the most critical compliance obligations your company has.
For example:
- If your accounting year ends on December 31, 2024, your filing deadline is June 30, 2025
- If your accounting year ends on March 31, 2025, your filing deadline is September 30, 2025
Newly Incorporated Companies
If your company was just registered, your first CIT return is due at whichever comes earlier:
- 18 months from your date of incorporation, OR
- 6 months from the end of your first accounting year
So if you incorporated on March 15, 2024, with a December 31 year-end:
- 18 months from incorporation = September 15, 2025
- 6 months from year-end = June 30, 2025
- The earlier date is June 30, 2025 — that is your deadline.
What You Must Submit When Filing
When you file your CIT return, you must include:
- Audited financial statements for the year
- Tax computation showing how you arrived at your chargeable profit
- Self-assessment form (you compute your own tax — the NRS does not do it for you)
- Education Tax computation
- Payment of the full tax amount due
Penalties for Non-Compliance
Ignoring your CIT obligations is an expensive mistake. Here is what the law prescribes:
- Late filing penalty: ₦25,000 for the first month of default, plus ₦5,000 for every month the failure continues
- Interest on unpaid tax: Charged at the CBN lending rate plus 10% per annum
- Tax audits: The NRS can investigate your records going back up to 6 years
- Loss of Tax Clearance Certificate (TCC): Without a TCC, your company cannot bid for government contracts, obtain certain business licences, or process large foreign exchange transactions
- Prosecution: In serious cases, company directors and officers can face legal action
A Tax Clearance Certificate confirms that your company has met all its tax obligations for the past three years. It is one of the most important documents a Nigerian company can hold — and you cannot get one if you are not CIT-compliant.
Records You Must Keep
Nigerian tax law requires companies to maintain records for a minimum of 6 years. These include:
- Audited annual financial statements
- Invoices and receipts for all income and expenses
- Payroll records and PAYE documentation
- Bank statements
- VAT returns and records
- Contracts and business agreements
- All correspondence with the NRS
Good record-keeping is not just a legal requirement — it is your best protection in the event of a tax audit.
Common Misconceptions About CIT — Busted
"CIT only applies to big companies." False. Every company registered with the CAC must comply with CIT obligations, regardless of size. Small companies may pay 0% in CIT, but they must still file returns.
"CIT and VAT are the same thing." False. CIT is a tax on company profits. VAT is a consumption tax on goods and services. They are entirely separate.
"If my company made a loss, I don't need to file CIT." False. Filing is mandatory even if your company made a loss. You simply report the loss — which may be carried forward to offset future profits.
"CIT is calculated on my total sales revenue." False. CIT is calculated on your chargeable profit — revenue minus allowable expenses. Turnover only determines which CIT rate applies to you.
"All companies pay the same CIT rate." False. Nigeria's three-tier system applies 0%, 20%, or 30% depending on your company's annual gross turnover.
What to Do Next: Your Action Checklist
If your company is not yet fully CIT-compliant, here is what to do right away:
- Register with the NRS immediately after CAC incorporation — obtain your Tax Identification Number (TIN) as soon as possible
- Determine your company's accounting year-end and calculate your CIT filing deadline
- Engage a qualified accountant or tax consultant to prepare your audited financial statements and tax computation
- Start maintaining proper financial records now — every invoice, receipt, and bank statement matters
- Check your company size — calculate your gross turnover to know whether you fall under the small (0%), medium (20%), or large (30%) CIT bracket
- Do not forget Education Tax — budget for 2% of your assessable profits alongside your CIT payment
- File on time, even if you cannot pay in full — a partial payment reduces the interest you owe, and the filing penalty is far smaller than the interest on unpaid tax
- Apply for your Tax Clearance Certificate once you are up to date — you will need it for contracts, licences, and regulatory approvals
Key Takeaways
- CIT is a tax on your company's profits, not your total revenue. It is separate from VAT (which is on sales) and PIT (which is for individuals).
- Every registered Nigerian company must comply with CIT — filing is mandatory even in a loss year, even for small companies that owe zero tax.
- Nigeria uses a three-tier CIT rate: 0% for small companies (turnover ≤ ₦25 million), 20% for medium companies (₦25–₦100 million), and 30% for large companies (turnover above ₦100 million). This structure was introduced through the Finance Act 2020.
- Your CIT filing deadline Nigeria is 6 months after your accounting year-end — for a December year-end, that means June 30 of the following year. Newly incorporated companies have special rules.
- Late filing is very expensive — penalties and interest can add millions of naira to your tax bill. Filing on time, even without full payment, is always the smarter choice.
- A Tax Clearance Certificate (TCC) is essential for government contracts and business growth — and you can only get one if you are CIT-compliant.