“
For years, ‘Minimum Tax’ was a source of frustration for Nigerian businesses that made losses but were still forced to pay the government. As of 2026, the rules have shifted significantly under the Nigeria Tax Act (NTA) 2025. The goal is to ensure only profitable or exceptionally large entities carry the heaviest burden.
The Big Change: Minimum Tax Abolition
The 0.5% minimum tax on turnover has been largely phased out for most local businesses to encourage growth. However, it has been replaced by a more sophisticated Minimum Effective Tax Rate (ETR) of 15%. This doesn’t apply to everyone—it specifically targets:
- Multinational Enterprises (MNEs) with global turnover above €750 million.
- Nigerian companies with an annual turnover exceeding ₦50 billion.
For everyone else, if you make a loss, you generally won’t pay income tax that year. For more on general corporate rates, see The Ultimate Guide to Company Income Tax (CIT).
Exemptions Still in Place
Even under the new rules, certain entities are fully protected from any form of ‘bottom-line’ tax:
- Companies in their first four years of business.
- Small companies with turnover ≤ ₦100 million.
- Companies engaged in primary agricultural business.
If you fall into these categories, you can focus on your Compliance Checklist without worrying about the minimum tax. However, ensure you are still handling VAT filing correctly, as VAT is based on sales, not profit.
Practical Tip for 2026
If your turnover is approaching the ₦50 billion mark, you must prepare for ‘Pillar 2’ compliance. This involves a complex calculation of your effective rate across all subsidiaries. Failure to meet the 15% threshold will trigger a ‘Top-up Tax’. For expert guidance, visit the NRS portal or read the PwC Pillar 2 Nigeria Guide. To see how these taxes fit into the bigger picture, read Federal, State and Local Taxes Explained.
“