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One of the most confusing aspects of the Nigerian tax system is knowing whether you are paying tax as a ‘business’ or as an ‘individual’. Mixing these up can lead to double taxation or, worse, unintended tax evasion. In 2026, the lines are clearer, but the stakes are higher.
What is Company Income Tax (CIT)?
CIT is a federal tax levied on the profits of incorporated companies (Ltd, PLC). It is regulated by the Nigeria Revenue Service (NRS). If you registered a ‘Limited Liability Company’ with the CAC, your business is a separate legal entity and pays CIT. As of 2026, if your turnover is under ₦100 million, your CIT is 0%. For more, see The Ultimate Guide to Company Income Tax.
What is Personal Income Tax (PIT)?
PIT is a tax on the income of individuals, including sole proprietors, partners in a firm, and employees. It is usually paid to the State Internal Revenue Service (SIRS). If you registered a ‘Business Name’ (Enterprise) rather than a ‘Company’, you do not pay CIT; you pay PIT on your business profits. Under the 2026 rules, the first ₦800,000 of your annual income is tax-free. For more on individual rates, see Federal, State and Local Taxes in Nigeria Explained.
Key Differences at a Glance
| Feature | CIT | PIT |
|---|---|---|
| Entity | Limited Liability Companies | Individuals / Business Names |
| Authority | Federal (NRS) | State (e.g., LIRS) |
| Small Business Rate | 0% (if < ₦100M turnover) | Progressive (0% to 25%) |
Understanding these differences is the first step in your Nigerian Tax Compliance Checklist. It also helps you avoid Common VAT Filing Mistakes, as VAT applies to both types of entities if they meet the threshold. For deeper insights, visit Proshare Nigeria or the NRS official website.”