Nigeria Business Tax Calculator

The three taxes this calculator covers

A Nigerian company sending invoices deals with three separate charges, and they are calculated on three different bases. Confusing them is the most common reason a business under-provisions for tax.

• Companies Income Tax (CIT) is charged on taxable profit — what is left after allowable expenses and capital allowances.
• The Development Levy is charged on assessable profit, at a flat 4%. It replaced the old Tertiary Education Tax, NITDA levy, NASENI levy and Police Trust Fund levy.
• Value Added Tax (VAT) is charged at 7.5% on the value of what you sell. It is not your money and never was — you collect it on behalf of the Nigeria Revenue Service and remit it monthly.

VAT is the one businesses most often get wrong, because it sits in the bank account looking like revenue. It is not. If you invoice ₦1,000,000 plus VAT, ₦75,000 of the ₦1,075,000 that arrives belongs to the NRS.

The small company exemption

This is the single most valuable provision in the Act for a growing business. A company that qualifies as small pays zero Companies Income Tax and zero Development Levy. Not a reduced rate — nothing.

To qualify you must satisfy both tests at once. Meeting one is not enough.

Cross either threshold and the company becomes liable for CIT at 30% of taxable profit plus the 4% Development Levy on assessable profit. There is no taper. A company on ₦99,000,000 of turnover pays nothing; the same company on ₦101,000,000 pays the full rate.

That cliff edge is worth planning around. If your turnover is approaching ₦100,000,000 late in the year, the timing of when you raise your remaining invoices can be the difference between a nil assessment and a seven-figure one. Speak to a licensed adviser before acting on that — the anti-avoidance rules are real — but know that the threshold exists.

What the rates cost in practice

Three companies, all with ₦20,000,000 of profit, and very different bills depending on which side of the thresholds they sit.

The third row is the one that catches people. Turnover well inside the limit, but a heavy asset base — a haulage fleet, a factory, a large property holding — puts the company over the second test and the exemption disappears entirely.

How VAT works at 7.5%

VAT is charged on the value you add. You collect output VAT on what you sell, you pay input VAT on what you buy, and you remit the difference. If you collected ₦750,000 and paid ₦200,000 on your own purchases, you remit ₦550,000.

When you must register

Registration is required once taxable supplies reach ₦25,000,000 in a twelve-month period. Below that threshold a small business is not obliged to charge VAT, which matters commercially: if your competitors are all under the threshold and you register voluntarily, your prices look 7.5% higher for the same work.

What is not charged at 7.5%

• Zero-rated: basic food items, medical and pharmaceutical products, educational materials, and exports. You charge 0% but can still reclaim input VAT.
• Exempt: most medical services, tuition from registered institutions, and certain financial services. You charge nothing and cannot reclaim.
• Everything else: 7.5%, including nearly all professional services, software, consulting and general goods.

Filing and deadlines

VAT returns are due by the 21st day of the month following the month of supply. It is a monthly obligation, not an annual one, and the penalties for late filing accrue per month. CIT returns are due within six months of your financial year end.

NRS e-invoicing and what it means for your records

Alongside the Act, the Nigeria Revenue Service is rolling out mandatory electronic invoicing. In practice that means invoices need to carry structured, machine-readable data — buyer and seller identification, line items, tax treatment per line — rather than being a PDF someone typed up.

The practical consequence for a small business is that the shoebox-and-spreadsheet approach stops working. Invoices need to be generated by a system that records them consistently, applies the right VAT treatment per line, and can produce the history on demand. That is a good reason to move invoicing off Word documents well before you are required to.

What this calculator does not cover

It gives a first-pass estimate, not a computation you can file. In particular it does not model:

• Capital allowances, which reduce taxable profit and can change the CIT figure substantially for asset-heavy businesses.
• Loss relief carried forward from earlier years.
• Withholding tax already suffered on your receipts, which is creditable against the final liability.
• Sector-specific rules — petroleum operations, banking and insurance are each treated differently.
• Personal income tax, which is covered separately by the Nigeria PAYE Calculator.

Use it to size the problem and to check whether you fall inside the small company exemption. Use a licensed tax adviser to file.