The federal government has officially retained the corporate income tax at 30% for all companies—except for small businesses—as part of the newly signed Nigerian Tax Act, which will take effect from January 2026.
According to the Act, businesses earning less than ₦25 million annually will continue to enjoy full exemption from corporate income tax.
“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of a small company, at 0 percent and any other company, at the rate of 30 percent from the commencement of this Act,” the legislation clearly states.
This move cements the federal government’s decision to maintain the current rate, despite earlier talks of a downward review to encourage business expansion and attract investment.
Minimum Effective Tax Threshold for Big Companies
The new law has also introduced a minimum effective tax rate requirement. Companies paying below 15% in effective tax will now be required to make up the difference.
“Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15 percent, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15 percent,” the law stipulates.
This new rule targets two categories of companies:
- Any business with ₦20 billion and above in yearly turnover
- Any company that is part of a Multinational Enterprise (MNE) Group
This measure is part of efforts to ensure fair contribution from high-earning companies and curb tax avoidance loopholes.
Capital Gains Tax Repealed, Integrated into Company Tax
In another sweeping change, the federal government has abolished the longstanding 10% Capital Gains Tax.
The Capital Gains Tax Act has now been repealed, and capital gains are to be taxed under the corporate income tax umbrella.
According to sources familiar with the law, this integration is expected to simplify the tax system and streamline compliance for companies, especially those with complex capital transactions.
This change is in line with the vision of the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Taiwo Oyedele.
Back in June 2024, Oyedele had announced that the committee was considering a 5% cut in corporate income tax—from 30% to 25%—to make Nigeria’s business environment more attractive.
That proposal, however, did not make it into the final version of the Act.
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