Do Small Businesses Pay Tax in Nigeria in 2026?
Many small companies now pay 0% Company Income Tax (CIT) if they meet turnover and asset thresholds, but you may still owe PAYE, VAT (if registered), WHT,.
Article details
Published
15 August 2024
Updated
15 August 2024
Category
Tax & Compliance
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Short answer: Many small companies now pay 0% Company Income Tax (CIT) if they meet turnover and asset thresholds, but you may still owe PAYE, VAT (if registered), WHT, and you must still file returns. Zero CIT is not "no tax at all."
Sound familiar?
You heard small companies might pay zero CIT now, but you are not sure if that applies to you or what you still owe on PAYE and VAT.
This is one of the most searched business tax questions after the Nigeria Tax Act 2026 changes.
Who qualifies as a small company (CIT purposes)?
Under the 2026 framework, a small company generally means turnover at or below about ₦100 million annually and fixed assets below about ₦250 million (verify exact figures in the current Act).
Benefit: 0% CIT on qualifying profits.
Catch: You still comply, file, and run payroll properly.
Taxes a small business may still pay
| Tax | Still applies when |
|---|---|
| PAYE | You have employees on salary |
| VAT | Turnover exceeds registration threshold (~₦50M) or you voluntarily register |
| WHT | You pay contractors, rent, or other withholdable items |
| Development Levy | Generally not for qualifying small companies |
| Personal income tax | Owner drawings taxed in owner's hands (structure-dependent) |
"0% CIT" does not mean "ignore TaxPro Max"
Registered companies typically must still:
- File annual CIT returns (even nil)
- Keep books and records
- Meet monthly PAYE/VAT/WHT deadlines where applicable
Missing filings attracts penalties that can exceed what CIT would have been.
VAT threshold doubled
VAT registration threshold moved to roughly ₦50 million turnover. Below that, many businesses do not charge VAT or file monthly VAT returns. Above it, registration and monthly filing kick in.
Owner paying themselves
If you are a sole proprietor, business profit may flow to your personal income tax, not CIT. If you are a limited company, salary vs dividend vs director loan each has different tax treatment. Structure matters more than software.
Practical checklist for 2026
- Confirm small company status with current thresholds
- Register or verify TIN
- Set calendar for PAYE (10th), VAT (21st), WHT (21 days)
- File annual CIT even at 0%
- Keep payroll records aligned with remittances
Common myths
| Myth | Reality |
|---|---|
| "Small biz pays no tax" | CIT may be 0%; other taxes may still apply |
| "No staff = no tax issues" | VAT/WHT may still apply to operations |
| "Cash business = invisible" | Audits and banking trails still exist |
Do this today
- Confirm small company status with current thresholds
- Register or verify TIN
- Set calendar for PAYE (10th), VAT (21st), WHT (21 days)
- File annual CIT even at 0%
- Keep payroll records aligned with remittances
When it clicks
Filing season feels like a calendar with paperwork attached, not a blind scramble.
A calmer way to handle this
Clean payroll makes PAYE remittance easier even when CIT is zero. Set up payroll before headcount grows.
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