What the Nigeria Tax Act 2025 changes for small businesses

The Nigeria Tax Act 2025 (NTA) took effect on 1 January 2026. It consolidated and replaced the Personal Income Tax Act, the Companies Income Tax Act and the Value Added Tax Act. These are the changes small businesses and their owners ask us about most.

Companies income tax

• Small companies: a company that falls below the turnover and fixed-asset thresholds set in the Act pays companies income tax at 0 percent. Companies that provide professional services cannot use this small-company relief, even if they are below the thresholds.
• Other companies: the standard rate is 30 percent. The Act allows the rate to be reduced to 25 percent later, from a date set by a presidential order.

The development levy

The Act introduces a single 4 percent development levy on the assessable profits of companies. It replaces several earmarked taxes, including the tertiary education tax. Small companies and non-resident companies do not pay the development levy.

Value added tax

The standard VAT rate remains 7.5 percent. Some supplies are zero-rated, including basic food items on a defined list, medical and pharmaceutical products, and educational books and materials. Businesses can now also claim input VAT on services and on capital assets, not only on goods.

Personal income tax for owners and staff

The annual personal income tax bands are:

• first 800,000 naira: 0 percent;
• next 2,200,000 naira: 15 percent;
• next 9,000,000 naira: 18 percent;
• next 13,000,000 naira: 21 percent;
• next 25,000,000 naira: 23 percent;
• above 50,000,000 naira: 25 percent.

Employees earning no more than the national minimum wage are exempt from personal income tax. A rent relief of 20 percent of annual rent paid, up to 500,000 naira, replaces the former consolidated relief allowance.

What to do now

Check with your accountant whether your company qualifies as a small company, update your payroll for the new bands, and review your VAT input claims.

This article is general information, not tax advice. For advice on your business, book a consultation with our Tax team.