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Calculating your Company Income Tax (CIT) in 2026 requires more than just looking at your bank balance. Under the new Nigeria Tax Act, the formula for ‘Taxable Profit’ has been refined. Understanding how to move from ‘Net Profit’ to ‘Total Profit’ is essential for accurate filing and avoiding overpayment.
The CIT Calculation Formula
The calculation follows a specific hierarchy of adjustments:
Total Profit = (Net Profit + Disallowable Expenses) – (Exempt Income + Capital Allowances)
- Disallowable Expenses: Costs not incurred ‘wholly or exclusively’ for business (e.g., personal travel, fines).
- Exempt Income: Profits from activities the government doesn’t tax (e.g., certain export profits).
- Capital Allowances: Deductions allowed for the wear and tear of business assets like computers and machinery.
Once you have your Total Profit, apply the 30% rate (for companies over ₦100M turnover). For a practical look at how VAT interacts with these numbers, see How to Calculate VAT in Nigeria.
Practical Example: The Mid-Sized Tech Firm
A company earns ₦150 million in revenue with ₦40 million in net profit. After adding back fines and subtracting capital allowances, their ‘Total Profit’ is ₦30 million.
- CIT: 30% of ₦30m = ₦9,000,000.
- Development Levy: 4% of assessable profit (let’s assume ₦35m) = ₦1,400,000.
- Total Tax Liability: ₦10,400,000.
If this company’s turnover was only ₦80 million, the tax would be ₦0. You can learn more about these thresholds in our Ultimate Guide to Company Income Tax (CIT). For assistance with automation, check out TaxCalc.ng or the KPMG Nigeria tax tools. Remember to file via the NRS TaxPro Max portal to avoid tax penalties.”