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The 2026 Nigeria Tax Act has brought the most significant tax relief for SMEs in decades. To stimulate growth, the government has revised the classification of companies, effectively removing the tax burden from micro and small enterprises. But “tax-exempt” does not mean “compliance-exempt.”
The 2026 Turnover Thresholds
Under the new regime, a Small Company is defined as one with an annual gross turnover of ₦100 million or less (up from the previous ₦25 million). These companies are now exempt from Companies Income Tax (CIT) and the new 4% Development Levy. To qualify, you must maintain a valid Tax Identification Number (TIN) and file your returns annually, even if the balance due is zero.
2026 Tax Structure:
- Turnover < ₦100m: 0% CIT.
- Turnover ₦100m – ₦500m: 20% CIT (Medium Companies).
- Turnover > ₦500m: 30% CIT (Large Companies).
The Development Levy Catch
While small companies are exempt, companies with turnover above ₦100 million must pay a 4% Development Levy on assessable profits. This levy replaces the old TETFund and NASENI levies. Learn how to calculate your assessable profit to avoid overpayment.
Step-by-Step: Claiming Your 0% Tax Status
- Verify Turnover: Ensure your audited accounts clearly show your turnover is below the ₦100m mark.
- Obtain a Valid TIN: Use the FIRS Taxrom portal to verify your TIN status.
- File Nil Returns: You must still file your CIT returns by June 30th each year to remain in good standing.
- Track Fixed Assets: The exemption only applies if your total fixed assets do not exceed ₦250 million.
Practical Example: The Graphic Design Agency
‘Pixel-Perfect Ltd’ earned ₦45 million in 2026. Under the old rules, they might have struggled with various levies. In 2026, they paid ₦0 in CIT. They used the savings to hire two junior designers, taking advantage of the Startup Act R&D credits for their new app development.
External Resources
Consult the PwC Nigeria Tax Reform whitepaper for deep technical insights. For registration, visit the Federal Inland Revenue Service.
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