Is Your Business a 'Small Company' Under the Nigeria Tax Act 2025?

The Nigeria Tax Act 2025 took effect in 2026 and changed how small businesses are taxed. The headline for SMEs is the small company exemption: a company that qualifies pays no company income tax, no capital gains tax and none of the new development levy.

It is a generous rule, but the test is specific, and qualifying does not mean you can stop keeping records.

The two-part test

A company is a small company when both of these are true for the year:

• Its gross turnover is ₦100 million or less.
• Its total fixed assets are ₦250 million or less.

Both conditions must hold at the same time. A company with ₦80 million turnover but ₦300 million of equipment does not qualify.

Who is excluded

Businesses providing professional services are excluded however small they are. Reported examples include legal, accounting and audit, medical and consulting work. If your business mainly sells expertise, confirm your position with your tax adviser before assuming the exemption.

What a small company is exempt from

• Company income tax.
• Capital gains tax.
• The 4% development levy on assessable profits, which replaced several older levies.

What you still have to do

The exemption is about what you pay, not whether you keep records. You still need to register with the tax authorities, file your returns, and be able to prove your turnover and fixed assets if asked. The only way to prove turnover is a clean record of every invoice and payment.

VAT is a separate question. Some guides say qualifying small companies are also relieved of charging VAT, but published summaries disagree on the thresholds, so confirm with the NRS or your adviser before you stop charging it.

Watch your growth too. A good year that takes turnover over ₦100 million takes you out of the exemption, so track revenue through the year rather than finding out at year end.

How Billif helps

Billif keeps every invoice, payment and expense in one place, so your turnover figure is a report, not a reconstruction from bank statements. The reporting dashboard shows revenue against expenses over time, and two-way sync with QuickBooks Online and Zoho Books gives your accountant the same records.