Understanding Company Income Tax in Nigeria: A Guide for All Businesses
If you run a business in Nigeria, one thing you can’t afford to ignore is Company Income Tax (CIT). It’s one of the most important taxes that every registered company must pay, whether big or small. But for many business owners, the rules, rates, and filing process can feel confusing.
This guide explains everything you need to know about Company Income Tax in Nigeria, how it’s calculated, what rates apply, and how tools like TaxAnchor360’s Tax Calculator can help you stay compliant and save time.
What Is Company Income Tax in Nigeria?
Company Income Tax (CIT) is a tax on the profits of companies operating in Nigeria. It’s collected by the Federal Inland Revenue Service (FIRS) under the Companies Income Tax Act (CITA).
In simple terms, if your business makes profit, you’re required to pay a percentage of that profit to the government as CIT. The revenue from this tax supports national development, funding infrastructure, education, and social programs.
Who Should Pay Company Income Tax?
Every registered company in Nigeria is required to pay CIT, whether it’s a:
- Limited liability company
- Public limited company
- Joint venture
- Foreign company doing business in Nigeria
However, the tax rate you pay depends on your company’s annual turnover. This means small businesses don’t pay the same rate as large corporations.
Current CIT Rates in Nigeria (2025)
As of 2025, the CIT rates remain structured to support smaller businesses:
| Category | Annual Turnover | CIT Rate |
| Small Companies | Below ₦25 million | 0% (Exempt) |
| Medium Companies | ₦25 million – ₦100 million | 20% |
| Large Companies | Above ₦100 million | 30% |
If your business earns less than ₦25 million annually, you’re exempt from CIT. But you still need to file returns to show that your income falls within that range.
How to Calculate Company Income Tax
CIT is calculated based on your assessable profit, which is your total profit after allowable deductions such as expenses, salaries, and depreciation.
Here’s a simple breakdown:
- Start with your total revenue
- Subtract allowable business expenses (e.g., rent, staff salaries, marketing, utilities)
- The remaining figure is your assessable profit
- Apply the applicable CIT rate (0%, 20%, or 30%)
Example:
If your company made ₦50 million and your allowable expenses were ₦10 million, your assessable profit is ₦40 million.
As a medium company, your CIT would be 20% of ₦40 million = ₦8 million.
Tools like the TaxAnchor360 Tax Calculator make this much easier. You can instantly calculate your estimated CIT based on your turnover, expenses, and tax rate — saving you from manual errors and guesswork.
When and How to File Company Income Tax Returns
Filing your Company Income Tax returns on time is just as important as paying the tax itself.
When to File
- New companies: File within 18 months of incorporation or 6 months after the first accounting period, whichever is earlier.
- Existing companies: File within 6 months after the end of each financial year.
Where to File
All filings are done through the FIRS TaxPro Max portal. This is where you can upload your financial statements, make payments, and track filing status.
What to Submit
When filing, you’ll typically need to upload:
- Audited financial statements
- Tax computation schedule
- Evidence of tax payments
- Capital allowances claim
- Relevant supporting documents
Once your returns are accepted, FIRS issues an acknowledgment receipt, confirming your submission.
Penalties for Non-Compliance
Failing to file or pay CIT comes with penalties that can affect your business credibility.
Here’s what happens if you miss deadlines:
- Late filing penalty: ₦25,000 for the first month of default and ₦5,000 for each subsequent month.
- Failure to pay tax: Accrued interest and possible enforcement actions.
- Reputational damage: You may be denied tax clearance or lose eligibility for contracts and loans.
In short, staying compliant protects both your money and your brand reputation.
Common Mistakes Businesses Make with CIT
Many Nigerian SMEs struggle with Company Income Tax because of simple errors that can be avoided. Some of the most common include:
- Ignoring tax filing deadlines
- Not separating personal and business expenses
- Misreporting income or deductible expenses
- Depending solely on manual bookkeeping
- Forgetting to renew tax clearance certificates
By keeping accurate records and automating your financial processes, you can avoid most of these issues.
Benefits of Paying Company Income Tax
It’s easy to see tax as a burden, but compliance actually benefits your business in several ways:
- Builds credibility: A tax-compliant business looks more trustworthy to investors and clients.
- Enables growth: You can access government contracts, grants, and loans.
- Avoids penalties: Staying compliant keeps your cash flow stable.
- Supports national development: Your taxes contribute to public infrastructure and services.
Paying taxes isn’t just an obligation — it’s a way to keep your business legitimate and sustainable.
How TaxAnchor360 Helps Businesses with CIT Compliance
Handling taxes manually can be stressful. Between deadlines, calculations, and document tracking, it’s easy for things to slip through the cracks. That’s why using an automation platform like TaxAnchor360 changes everything.
With TaxAnchor360, you can:
- Automatically calculate your Company Income Tax using the built-in tax calculator
- File your CIT returns seamlessly through an integrated dashboard
- Track all tax deadlines with reminders and alerts
- Store your records securely for quick access during audits
- Generate compliance reports ready for submission
In other words, TaxAnchor360 makes tax management simple, accurate, and stress-free.
Frequently Asked Questions about CIT in Nigeria
Q: Are small businesses exempt from CIT?
Yes, companies earning less than ₦25 million annually are exempt, but they must still file returns.
Q: Can I file CIT manually?
No. FIRS now requires all filings to be done online via the TaxPro Max platform.
Q: What happens if I file late?
You’ll pay a penalty fee and may have difficulty renewing your Tax Clearance Certificate.
Q: Can I use accounting software to calculate my CIT?
Yes, and platforms like TaxAnchor360 include tax calculation tools tailored for Nigerian regulations.
Final Note
Understanding Company Income Tax isn’t just about compliance, it’s about building a credible, scalable business. Whether you’re running a startup or a large corporation, keeping up with your CIT obligations protects your operations and boosts your reputation.
With TaxAnchor360, you can automate your tax calculations, simplify your filings, and focus on what really matters; growing your business.
In 2025, smart businesses aren’t avoiding taxes. They’re managing them better.
