On 1 January 2026, the biggest tax overhaul in a generation took effect. For most small businesses it is very good news. But there is a turnover line and an exclusion clause that catch people out — here is exactly where you stand.
For years, the complaint of every Nigerian small business owner was the same: too many taxes, too many agencies, too little clarity. In June 2025, President Tinubu signed four laws meant to fix that, and on 1 January 2026 they came into force — the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service Act and the Joint Revenue Board Act. Together they fold more than a dozen old tax laws into a single framework, and they rename the tax authority you used to call FIRS. It is now the Nigeria Revenue Service, the NRS.
The headline the government is keen to repeat is that roughly 97% of small businesses will pay little or no company tax under the new rules. For once, the headline is broadly true. But “little or no tax” is not the same as “nothing to do,” and whether you actually qualify depends on two numbers and one important exception.
What counts as a “small company”
Under the Nigeria Tax Act, a small company is one with annual turnover of ₦50 million or less AND total fixed assets not exceeding ₦250 million. If you fall under both thresholds, your Companies Income Tax rate is effectively zero. You are also exempt from Capital Gains Tax and from the newly introduced 4% Development Levy. In plain terms: the profit your small business makes is no longer eaten into by company tax.
“Exempt” is not “invisible.” You still have to register, file, and keep records to prove you qualify.
This is where the first mistake happens. Some owners hear “exempt” and assume they can ignore the tax system entirely. They cannot. To claim the exemption you must still be registered with the NRS and file your returns. The exemption is a benefit you demonstrate with clean records, not a free pass to disappear. A business that keeps no books cannot prove it earned under ₦50 million, and an unregistered business cannot claim anything at all.
The exclusion that catches professionals
Here is the rule that surprises people: businesses providing professional services cannot be classified as small companies, no matter how small they are. If you run a law firm, an accounting practice, a medical clinic, a consultancy or a similar professional outfit, the ₦50 million exemption does not apply to you. The reasoning is that professional services are presumed to earn high margins relative to their size. Fair or not, it is the law — so if you are a solo consultant turning over ₦20 million, you should budget for company tax that a trader at the same turnover would not pay.
Three other changes worth knowing
On the personal side, anyone earning ₦800,000 a year or less now pays no personal income tax, and the top rate is capped at 25%. On payments, the familiar ₦50 electronic transfer levy has been redefined as Stamp Duty and applies to electronic transfers of ₦10,000 and above. And if you trade cryptocurrency or other digital assets, profits from those transactions are now formally taxable.
The danger zone: businesses near ₦50 million
If your turnover is climbing toward ₦50 million, pay attention. Crossing that line changes your tax status, and a business that jumps from ₦49 million to ₦55 million without planning can find itself with obligations it did not budget for. This is not a reason to limit your growth — it is a reason to grow deliberately, to keep your books clean enough that the line is defensible, and to model the cost of crossing it before you do.
| ✓ YOUR ACTION CHECKLIST |
| ❑ Find your annual turnover and total fixed assets, and confirm which side of the ₦50m / ₦250m lines you fall on. |
| ❑ Confirm whether your business counts as “professional services” — if so, you lose the exemption regardless of size. |
| ❑ Register or update your details with the Nigeria Revenue Service (NRS); the exemption still requires filing. |
| ❑ Start keeping monthly books from January so you can prove your small-company status at year-end. |
| ❑ If you are near the ₦50m line, model the cost of crossing it before you scale. |
| ❑ Talk to a tax adviser about VAT registration and the new digital-asset rule if either applies to you. |
1 of 10 New 2026 Nigeria Tax Policy Reform Series —- Next
2026 Nigeria Business Policy Reforms Guide
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