Is your business a 'small company'? The NTA 2025 tax exemption explained

If you run a growing Nigerian business, one line in the Nigeria Tax Act 2025 (NTA 2025) could wipe out your corporate tax bill entirely. From 1 January 2026, a company that meets the "small company" test pays 0% Company Income Tax and is also exempt from Capital Gains Tax and the new Development Levy. This guide explains the exact test, what the exemption does and does not cover, an honest note on a threshold that the law itself is inconsistent about, and a worked example. It sits alongside our deeper dive on CIT and the Development Levy under NTA 2025.

At a glance: the small company test and what it covers

Sources: Nigeria Revenue Service (nrs.gov.ng) · EY — Nigeria Tax Act 2025 highlights · PwC — The Nigerian Tax Reform Acts · TheCable — turnover-cap contradiction · Nigeria Tax Act 2025.

1. The two-part test

The small company definition under NTA 2025 rests on two conditions that must both be true:

Turnover: gross turnover of ₦50,000,000 or less in the year of assessment. Fixed assets: total fixed assets not exceeding ₦250,000,000.

The word to underline is AND. A trading company turning over ₦40M but sitting on ₦300M of property and plant is not a small company — it fails the assets test. Equally, a lean consultancy with ₦20M of assets but ₦70M of turnover fails the turnover test. Both gates have to be clear in the same year.

The test is applied year by year. Cross either threshold and you lose the exemption for that year of assessment, then requalify in a later year if you fall back under both limits. There is no averaging.

2. What the exemption removes

A qualifying small company is exempt from three charges that a larger company pays:

1. Company Income Tax — the standard 30% on assessable profits drops to 0% for a small company. This is the headline saving.
2. Capital Gains Tax — corporate CGT (now 30%, harmonised with CIT, up from 10% under the Finance Act 2020) does not apply to a small company's chargeable disposals.
3. Development Levy — the new 4% of assessable profits levy (which consolidates the former TET, NITDA, NASENI and PTF levies) does not apply.

Put together, a profitable small company can legally carry a corporate-tax bill of zero. That is the point of the relief: to keep compliance cheap and encourage small firms to formalise and file.

3. What still applies anyway

This is where businesses get caught. "Small company" status exempts the company from CIT/CGT/Development Levy. It does not turn off the taxes you collect or bear on behalf of others:

• PAYE. You still deduct Pay-As-You-Earn from every employee's salary under NTA 2025 and remit it to your State Internal Revenue Service. See our PAYE guide and the CRA-abolished explainer.
• VAT. You still charge and remit 7.5% VAT on standard-rated supplies, and file monthly, unless you are below the VAT registration/exemption threshold for your supplies.
• Withholding Tax. You still deduct WHT on qualifying vendor payments (e.g. 5% on professional services, 10% on directors'/management fees) and remit it. See WHT on vendor payments under NTA 2025.
• Pension. If you have the minimum number of employees, you still remit pension contributions under the Pension Reform Act 2014 within 7 working days of paying salaries. See the pension contribution guide.
• NSITF and ITF. Employee-compensation (NSITF, 1% of payroll) and industrial-training (ITF, 1% of payroll where 5+ staff or ₦50M+ turnover) obligations are separate from CIT and can still apply. See NSITF and ITF employer obligations.

The mental model: the exemption is on your own profit tax, not on the taxes you administer for the government and your staff.

4. The professional-services carve-out

NTA 2025 explicitly excludes companies providing professional services from small-company classification, regardless of turnover. Law firms, accountancy practices, consultancies and similar professional-service providers do not get the 0% CIT treatment even if they turn over under ₦50M. If your business is service-professional in nature, assume you are outside the exemption and confirm the precise scope of "professional services" with your tax adviser before relying on it.

5. An honest note on the threshold (₦50M vs ₦100M)

Here is a genuine wrinkle you should know about. The Nigeria Tax Act 2025 defines a "small company" using the ₦50 million turnover figure (with the ₦250M fixed-asset cap). But the companion Nigeria Tax Administration Act (NTAA) describes a "small business" with a turnover of ₦100 million or less. Commentators — including TheCable — have flagged this as a live inconsistency between the two Acts.

The product's canonical position, and the conservative one, is the ₦50M threshold from the NTA 2025 itself. But because the two statutes disagree, do not treat ₦50M–₦100M turnover as automatically exempt without professional advice. If your turnover sits in that band, confirm your status with a Nigerian tax adviser or the Nigeria Revenue Service before filing on the basis of exemption — the difference between "exempt" and "30% CIT" is too large to guess.

6. Worked example

Bluebridge Traders Ltd — a Lagos retailer, year to 31 December 2026:

• Gross turnover: ₦42,000,000
• Total fixed assets (shop fit-out, delivery van, equipment): ₦180,000,000
• Assessable profit: ₦8,000,000
• Not a professional-services company.

Test: turnover ₦42M ≤ ₦50M ✅ and fixed assets ₦180M ≤ ₦250M ✅ → small company.

Bluebridge still runs PAYE on its staff, charges VAT on sales, withholds WHT on its accountant's fees and remits pension — but its own profit-tax bill is zero, a ₦2,720,000 saving versus a non-small company on the same profit.

Now change one fact: the van and a new warehouse push fixed assets to ₦260,000,000. Turnover is still ₦42M, but the assets test fails — Bluebridge is no longer a small company for that year and owes the full ₦2,720,000. This is why the AND matters.

Common mistakes

1. Treating either condition as sufficient. You need turnover ≤ ₦50M and assets ≤ ₦250M in the same year.
2. Assuming exemption cancels PAYE/VAT/WHT/pension. It does not — those remain fully due.
3. Relying on the ₦100M figure. That comes from the NTAA and conflicts with the NTA's ₦50M; get advice before banking on it.
4. Forgetting the professional-services exclusion. A consultancy under ₦50M is still outside the relief.
5. Not filing because you're exempt. Exemption from tax is not exemption from filing — you still submit returns to claim and evidence small-company status.

Does AnooreHR handle this?

AnooreHR tracks turnover and fixed-asset balances from your own ledgers, so the small-company test is evaluated against real figures rather than a manual guess, and it flags when you are approaching either threshold. CIT, CGT and Development Levy engines read the qualifying status from your profile and apply 0% where the test is met — while PAYE, VAT, WHT and pension keep running as normal, because those never switch off. Given the ₦50M/₦100M ambiguity, the platform surfaces the conservative NTA 2025 threshold and leaves the advisory sign-off to your accountant. To see it against your books, book a demo or sign up free.

Frequently asked questions

Related: Nigerian CIT and Development Levy under NTA 2025 · CRA abolished: NTA 2025 and take-home pay · See pricing