A Practical Guide to the Nigeria Tax Act 2025
What changed, what stayed the same, and the handful of decisions that actually affect your books this year.
Cited against the NTA 2025 Act textThe Nigeria Tax Act 2025 — Act No. 7 of 2025 — took effect on 1 January 2026 and replaced the Companies Income Tax Act, the company-facing half of the Personal Income Tax Act, and the separate levies that used to sit alongside them. If you run a business, employ people, or file returns in Nigeria, some part of your compliance work now runs on a different rulebook than it did in December.
This guide goes through what actually changed, with the Act cited section by section rather than paraphrased — the same provisions Core Ledger's tax engine computes against. It isn't a replacement for reading the Act itself or for your accountant's read on your specific position; treat it as the orientation worth having before either of those conversations.
- Small-company status now needs two tests passed at once — turnover at or under ₦100m and fixed assets at or under ₦250m — and the Act's carve-out for professional-services companies isn't settled, so a 0% rate isn't a given until your adviser has looked at it.
- Capital allowance is now a flat share of cost each year, and disposals no longer settle up inside the pool — an asset just leaves it, and any gain above residue is taxed separately as a chargeable gain.
- Two reliefs rarely covered elsewhere — R&D and donations — exist, but neither carries a carry-forward. Whatever you can't use against this year's cap is gone, not deferred.
Is your company still “small”?
Everything downstream — your CIT rate, whether the Development Levy applies, how closely your filing gets read — starts from one classification: is your company “small” this year. Get this wrong and every other figure in this guide is moot.
Under the repealed Companies Income Tax Act, “small” meant turnover at or under ₦25,000,000, tested on its own. Under the Nigeria Tax Act 2025, a company is small only if it clears two tests at once — and crossing either line makes you a standard-rate company for the year. There is no medium tier left to land in instead.
A small company pays 0% company income taxNTA 2025 s.56and is exempt from the Development Levy outright. Nothing else changes with size: filing obligations, PAYE as an employer, WHT, VAT all still apply regardless — a 0% CIT rate changes what you owe, not what you have to do.
Company income tax: one rate, then a cliff
Company income tax is charged under s.56 on your “total profits” — the Act's term for adjusted profit plus any chargeable gains for the yearNTA 2025 s.27(1)— before capital allowance is deducted from that combined figure. There are now exactly two outcomes: 0% if you're small, 30% if you're not. The 20% band that used to ease medium-sized companies up toward the top rate no longer exists.
That makes the ₦100m line a cliff rather than a slope — one naira of turnover changes the whole bill, not just the bit above the line. If you want to see that arithmetic on your own numbers, the CIT cliff chart on What changed in 2026 runs both regimes side by side, with your own turnover, assets and profit dialled in.
The Development Levy replaces four separate charges
Assessable profit used to carry four riders under the repealed regime — four computations, four lines on the filing. The Nigeria Tax Act 2025 folds all four into one: the Development Levy, charged at 4% of adjusted profitNTA 2025 s.59(1).
One detail is easy to miss even after that: it's charged on adjusted profit, not the after-capital-allowance figure CIT is charged on, so it moves independently of however much capital allowance you claim in a given year.
Capital allowance: a flat share of cost, nothing more elaborate
This is the change most likely to still be wrong in a depreciation schedule someone is maintaining by hand, because the repealed mechanism had more moving parts than the current one. First Schedule Part I sets out three qualifying capital expenditure classesNTA 2025 First Sch. Pt I, para (f), each relieved at a flat straight-line rate on original cost:
| Class | Rate | Typical assets |
|---|---|---|
| Class 1 | 10% | Buildings, masts, agricultural expenditure, intangibles |
| Class 2 | 20% | Plant, furniture & fittings, mining and agricultural equipment |
| Class 3 | 25% | Motor vehicles, software, other capital expenditure |
There's no initial allowance layered on top of the annual claim, and nothing holding relief back in the early years — every year claims the same percentage of cost until the pool is exhausted. Try it on all three classes:
Disposals work differently too. When you dispose of an asset — a wider meaning than a simple saleNTA 2025 First Sch. Pt I, para 9— it leaves the pool at its residue: total qualifying expenditure less the relief already claimedNTA 2025 First Sch. Pt I, para 8(1). A disposal value still has to be brought into the computation regardless of what the asset actually fetchesNTA 2025 First Sch. Pt I, para 10.
What used to happen next was a balancing charge or balancing allowance, settling up the gap between residue and disposal proceeds inside the capital allowance pool. Neither survives. Under the current rules, only the residue is deductible from disposal proceeds; anything above it is a chargeable gain, taxed separately as part of total profitsNTA 2025 s.39(a), at whatever CIT rate applies to your company under s.56 — see the difference it makes on the same asset sold either side of residue:
Only the ₦1,000,000 residue is deductible from the proceeds. The ₦400,000 above it is a chargeable gain, taxed alongside the rest of that year's profit at your CIT rate under s.56 — not netted against the capital allowance pool.
Two reliefs almost nobody explains: R&D and donations
Two provisions get little airtime in the general commentary around the Act, and neither behaves the way a more forgiving tax system would lead you to expect: both are capped, and neither carries an unused excess into next year.
Spend more than 5% of turnover on qualifying R&D in a lean-revenue year, and the excess doesn't roll into next year when turnover — and the cap with it — might be larger. It's relief you either use this year or lose. Donations are structured the same way: a donation above the cap in one year gets nothing in the next.
PAYE: the relief changed shape, not just size
On the payroll side, the Consolidated Relief Allowance is gone. In its place is a rent relief. Two employees on identical salaries can now owe different PAYE, because their rent differs and CRA never asked that question.
The PAYE comparison on the 2026 changes page runs both regimes on the same salary, side by side.
Late remittance costs more, and part of it isn't fixed yet
The companion Nigeria Tax Administration Act 2025 sets one late-remittance penalty regime for both PAYE and WHT: a flat penalty on whatever wasn't remitted on time, plus interestNTAA 2025 s.65.
What to actually do this quarter
Re-run both tests — turnover and fixed assets — for your company. Don't carry forward last year's classification by default.
If your business is arguably a professional-services company, get the small-company question answered by your adviser before relying on a 0% rate.
Rebuild any planned disposal around the current rule: a residue-only deduction, plus a separately taxed chargeable gain — not a single netted balancing figure.
Check whether this year's R&D or donations spend is anywhere near its cap. There is no second chance to use the excess.
If you run payroll, confirm your employees' rent relief evidence is in order — it now does the job CRA used to do automatically.
The businesses that adjust smoothly to this Act are the ones treating it as a classification and a disposal-mechanics change — not a wholesale rewrite of how they keep books.
None of this replaces reading the Act itself or talking to your accountant about your specific position — least of all the professional-services carve-out, which is genuinely unsettled rather than merely inconvenient. What this guide should leave you with is the shape of what changed, in the Act's own terms, so that conversation starts from the right place.
Everything above is general information about published law, not advice about your situation. Figures are checked against the same rate tables and cited sections Core Ledger's tax engine runs on — for a decision that matters, especially anything near a threshold or an unsettled area of the Act, take it to a professional who can see your whole position.
The Core Ledger team tracks Nigerian tax legislation so the platform's compliance tooling — and this blog — stay current with it.