Nigeria Company Income Tax & Development Levy Calculator

About the Nigeria Company Income Tax & Development Levy Calculator

Work out a Nigerian company's income tax for a year of assessment under the Nigeria Tax Act. A small company — gross turnover of ₦100,000,000 or less and total fixed assets of ₦250,000,000 or less — pays 0% and no development levy. Every other company pays company income tax of 30% on its total profits and, unless it is non-resident, the 4% development levy on its assessable profits; the very largest also check the 15% minimum effective tax rate.

Enter turnover, fixed assets and the assessable profit of the year, with any capital allowances, losses brought forward and the 50% additional deduction for wage awards and new staff. The calculator runs the small company test, works out total profits, the tax and the levy, carries forward what is not used and, given your year end, the date the return is due. Nothing you type leaves your browser.

Who is a small company

The Act defines a small company as a business that earns gross turnover of ₦100,000,000 or less a year with total fixed assets not exceeding ₦250,000,000 (Nigeria Tax Act, section 201). Both tests must be met. Gross turnover is the gross inflow from operating activities: sales of goods, services, interest, rents, royalties and dividends, but not money from the owners. The Nigeria Tax Administration Act's own "small business", used for its value added tax returns, has the same limits but never includes a business providing professional services (section 147 of that Act).

A small company pays company income tax at 0% (section 56) and no development levy (section 59). It still files a self-assessment return every year, and may file a statement of accounts it attests itself instead of audited financial statements (Nigeria Tax Administration Act, section 11). The Presidential Fiscal Policy and Tax Reforms Committee also lists small companies as exempt from withholding tax deduction on their income.

From assessable profit to total profits

Assessable profit is the year's profit after the Act's adjustments: expenses wholly and exclusively incurred in producing the income are deducted (section 20), while capital expenditure, depreciation, fines and income taxes are not (section 21). For a trade, the assessable profits of a year of assessment are generally the profits of the accounting period before it (section 22).

Total profits are the assessable profits from all sources, chargeable gains included, less losses brought forward and capital allowances (section 27). Losses come off first, only against the same trade and never beyond the profit; capital allowances then come off what remains, and any part that cannot be used is carried forward (First Schedule, paragraph 22).

Rates, the levy and the additional deduction

• Company income tax (section 56): 0% for a small company and 30% for any other company. The Act lowers the rate to 25% from a date to be set by an order of the President on the advice of the National Economic Council; choose 25% only once that order applies.
• Development levy (section 59): 4% of the assessable profits of every company except small companies and non-resident companies. The Act shares it out among the Tertiary Education Trust Fund (half of it), Nigerian Education Loan, the National Information Technology Development Fund, the National Agency for Science and Engineering Infrastructure, the National Board for Technological Incubation, the Defence and Security Infrastructure Fund and the National Cybersecurity Fund.
• Additional deduction (section 162(3)): a further 50% of wage awards, salary increases and transport allowances that bring a low-income worker's gross pay to ₦100,000 a month or less, and of the salaries of net new employees hired in 2023 and 2024 who are not involuntarily disengaged within three years, for costs incurred in any two calendar years from 2023 to 2025.

The 15% minimum effective tax rate

A company with turnover of ₦50,000,000,000 or more in the financial year, or a constituent entity of a multinational group with aggregate group turnover of at least £750 million or its equivalent, compares its covered taxes — company income tax, petroleum profits tax and hydrocarbon tax paid or payable, the development levy and priority sector tax credit — with its net income: the profit before tax in the audited financial statements, without franked investment income and unrealised gains or losses. Below 15%, it recomputes and pays the additional tax that takes the rate to 15% (section 57). Approved free-zone enterprises are outside the rule for their approved activities, except sales into the customs territory and members of such groups.

Labelled startups and other incentives

The Nigeria Tax Act deleted the income tax exemption of the Nigeria Startup Act (section 196(10); Nigeria Startup Act, section 25(2)), so a labelled startup pays company income tax like any other company — 0% while it is a small company. Two of the Startup Act's tax rules now sit in the new Acts: investors' gains on a labelled startup's assets held in Nigeria for at least 24 months are exempt (section 162(1)(m)), and a non-resident company's technical, consulting, professional or management services to a labelled startup bear 5% withholding tax as the final tax (Nigeria Tax Administration Act, section 51(8)).

Other reliefs are not worked out here: the five-year exemption of companies in agricultural businesses (section 162(1)(p)), the exemption of companies engaged in sporting activities (section 162(1)(r)) and the economic development incentive for priority sectors (Part II of Chapter Eight).

Filing

Every company files a self-assessment return with its tax and capital allowances computations, and with the effective tax rate computation where section 57 applies, whether or not it has tax to pay. A company in business for more than 18 months files not more than six months after the end of its accounting year; a newly incorporated company within 18 months of incorporation or six months after its first accounting period, whichever is earlier (Nigeria Tax Administration Act, section 11).

Limitations

• You enter the assessable profit: the calculator does not adjust accounts, compute capital allowances or apportion allowances for partly exempt income.
• One company, one year of assessment. Group relief, the commencement and cessation rules, petroleum, insurance and other special trades, double taxation relief and withholding tax credits are not modelled.
• The agricultural, sporting and economic development incentives are not applied; take exempt income out of assessable profit yourself.
• The minimum effective tax rate uses the net income and covered taxes you enter; group-level figures and free-zone exceptions are yours to check.
• An estimate from the Acts’ rules, not tax advice: the Nigeria Revenue Service’s assessment decides what the company pays.

Privacy

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