Nigeria Tax Act 2025: What Every Small Business Must Know

On 1 January 2026, Nigeria's tax system changed more than it has in a generation. The Nigeria Tax Act (NTA) 2025 — signed in June 2025 alongside the Nigeria Tax Administration Act and the law creating the Nigeria Revenue Service (NRS) — consolidated a tangle of old rules into a single framework. If you run a small business, most of the noise doesn't apply to you. This guide covers only what does.

1. FIRS is now the NRS

The Federal Inland Revenue Service has been reconstituted as the Nigeria Revenue Service (NRS). Practically, your invoices, TIN, and VAT dealings now reference the NRS rather than FIRS. Update your invoice templates and letterheads accordingly — ereQa handles this automatically for accounts set to Nigeria.

2. The ₦100m small-company exemption

This is the single most important change for most SMBs. A company is a “small company” — and therefore exempt from Companies Income Tax (CIT), Capital Gains Tax, and the new Development Levy — if it meets both tests at the same time:

• Annual gross turnover of ₦100 million or less, and
• Total fixed assets not exceeding ₦250 million.

Cross either threshold and you lose small-company status entirely — the standard 30% CIT plus the Development Levy then apply. Use the Nigeria Business Tax Calculator to see which side of the line you're on.

3. The new 4% Development Levy

The NTA 2025 scrapped four separate levies — Tertiary Education Tax, the NITDA levy, the NASENI levy, and the Police Trust Fund levy — and replaced them with a single 4% Development Levy on assessable profits (profit before tax, adjusted before capital allowances and losses). Small companies are exempt. For larger companies, it simplifies compliance but should be budgeted for alongside CIT.

4. VAT: still 7.5%, but lighter for small firms

The standard VAT rate remains 7.5%. The key change: small companies are no longer required to file monthly VAT returns. That means they generally don't charge VAT-inclusive invoices or withhold VAT — unless they choose to opt into the VAT net (some B2B suppliers do, so their clients can recover input VAT). Input VAT recovery was also broadened for registered businesses, including VAT on services and fixed assets, which helps cash flow for service providers inside the VAT net.

5. A practical checklist

• ✅ Confirm your turnover and fixed assets against the ₦100m / ₦250m tests.
• ✅ Update “FIRS” references to “NRS” on invoices and documents.
• ✅ Decide whether to voluntarily register for VAT (useful if your clients are VAT-registered businesses).
• ✅ Keep clean, digital records of revenue and expenses — the reforms lean heavily on digital reporting.
• ✅ Prepare for e-invoicing (see our NRS e-invoicing guide).

The winners under the new law are organised businesses with clean digital books. The losers are those still running on notebooks and WhatsApp screenshots.

ereQa keeps your invoices, VAT, and records tidy and Nigeria-ready — so when tax season comes, everything your accountant or the NRS needs is one export away. Start free →