Company Income Tax: Everything You Must Know As A Business Owner With A Significant Economic Presence In Nigeria

INTRODUCTION

Company Income Tax, also known as Corporate Tax, is a levy imposed on the profits of companies conducting business in Nigeria.[1] It is primarily regulated by the Companies Income Tax Act (CITA), as amended by various Finance Acts, and is administered by the Federal Inland Revenue Service (FIRS).

 

WHAT TYPE OF INCOMES ARE TAXABLE?

Under the Companies Income Tax Act (CITA), as amended by the Finance Acts, companies in Nigeria are required to pay tax on their profits for each year of assessment.[2] These profits are taxed at the rates specified in Section 40(1) of CITA and apply to income that:

• Is earned in Nigeria,
• Is brought into Nigeria,
• Comes from Nigeria, or
• Is received in Nigeria.

However, profits already taxed under other laws like the Capital Gains Tax Act, Petroleum Profits Tax Act, or Personal Income Tax Act are excluded.[3]

The types of profits that are taxable under CITA include:

1. Profits from any trade or business, regardless of how long the business has been operating.
2. Rental income or lease premiums from granting the right to use or occupy property.
   • If rent is paid in advance, it is taxed proportionately over the period it covers (or over 5 years, whichever is shorter).
3. Investment income, such as:
   • Dividends,
   • Interest,
   • Royalties,
   • Discounts,
   • Charges, and
   • Annuities.
4. Other income sources not listed above but considered annual profits or gains.
5. Compensating payments in securities lending transactions, including:
   • Interest-like payments received by a borrower if the original lender earns interest on collateral;
   • Dividend-like payments received by a lender if the borrower earns dividends on temporarily borrowed shares or securities.
6. Deemed income or profit, including:
   • Benefits from pension or provident funds (as provided under the Personal Income Tax Act),
   • Fees, dues, and allowances for services rendered—no matter where the payment is made.
7. Profits from short-term government securities, such as:
   • Treasury bills,
   • Savings certificates,
   • Federal Government bonds,
   • Debenture certificates, etc.

Note: Transactions in securities lending (where the same securities are returned to the original lender) are not considered “disposals” and are not taxed as gains.

8. Other profits from securities lending, excluding the compensating payments already mentioned.

 

WHEN ARE COMPANY PROFITS TAXABLE IN NIGERIA?

1. Nigerian Companies

If your company is incorporated in Nigeria, all profits are deemed to arise in Nigeria, regardless of:

• Where the income is generated (inside or outside Nigeria), or
• Whether the profits have been brought into or received in Nigeria.

In short: Nigerian companies are taxed on their worldwide profits.

2. Foreign (Non-Nigerian) Companies

Foreign companies are taxed on profits only if those profits are derived from Nigeria. The law identifies several ways this can happen:

a. Fixed Base in Nigeria

If the company has a fixed place of business in Nigeria (like an office or factory), it will be taxed on the portion of profits attributable to that base.

b. Business Through a Nigerian Agent

Even without a fixed base, the company is taxable if it:

• Habitually conducts business through a Nigerian agent or representative, or
• Maintains a regular stock of goods in Nigeria for deliveries handled by a local person.

Tax applies to profits generated through that person or setup.

c. Digital and Online Services (Significant Economic Presence)

If the company provides digital services to Nigerian users—such as:

• Streaming,
• Online ads,

• Mobile apps,
• Electronic payments,
• Data storage or cloud services,

and has a significant economic presence in Nigeria, its profits from those activities are taxable here.

(The Minister of Finance can define what counts as “significant economic presence” by regulation.)

d. One-Off Contracts in Nigeria

Profits from a single contract involving:

• Surveys,
• Deliveries,
• Installation, or
• Construction,

are taxable, even if the company has no permanent presence.

e. Technical, Consultancy, or Professional Services Rendered Outside Nigeria

If a foreign company provides services like management consulting or engineering to a Nigerian resident from abroad, it is taxed if there is a significant economic presence in Nigeria.

Note: If the foreign company only earns this kind of income (and none of the above applies), withholding tax (WHT) deducted at source will be considered final tax.

f. Related-Party Transactions (Transfer Pricing Rules)

If the foreign company transacts with a related Nigerian entity and the pricing or terms are considered artificial or not at arm’s length, the FIRS can adjust the profits to reflect a fair value—and tax accordingly.

 

WHAT DOESN’T COUNT AS A TAXABLE PRESENCE?

A foreign company will not be considered to have a fixed base in Nigeria just because it has:

• A place used only for storing or displaying goods, or
• A facility used solely for collecting information

 

OPTIONS FOR FILING YOUR COMPANIES INCOME TAX RETURN

You have three options for filing your company’s income tax in Nigeria:

1. Online Filing
   Submit your tax return electronically through the FIRS or your State Internal Revenue Service (SIRS) e-filing portal.
2. Paper Filing
   You can fill out and submit a paper return at the nearest FIRS.
3. You can also hire an accredited tax agent or consultant to file on your behalf.

 

DOCUMENTS REQUIRED FOR COMPANY TAX FILING IN NIGERIA

When filing your company’s tax returns, you must submit the following key documents:

1. Tax Identification Number (TIN) or RC Number – For company identification.
2. Completed Tax Return Forms – Either manual or electronic.
3. Audited Financial Statements – Including:
   • Profit and Loss Statement
   • Statement of Financial Position (Balance Sheet)
   • Notes to the Financial Statements
4. Tax Computation Schedule – Showing how your accounting profit was adjusted to arrive at taxable profit.
5. Capital Allowance Schedule – Detailing claims on assets like equipment, vehicles, or buildings.
6. Withholding Tax (WHT) Credit Notes – For taxes that were deducted at source on your company’s income.
7. Tax Exemption or Compliance Certificates – If your company is claiming any tax reliefs or exemptions.
8. Supporting Documents/Schedules, such as:
   • Transfer pricing documentation (for related-party transactions)
   • Evidence of carried-forward losses
   • Proof for special deductions or allowances

 

WHAT DEDUCTIONS ARE ALLOWABLE FOR COMPANIES IN NIGERIA?

When calculating taxable profits, companies are allowed to deduct certain expenses, as long as they are:

• Wholly, exclusively, necessarily, and reasonably incurred in generating those profits.

Below are the types of expenses that can be deducted:

1. Interest on Loans
   Interest paid on loans used to fund the business is deductible (subject to rules in the 7th Schedule).
2. Rent & Property Costs
   Rent and premiums for business premises are deductible. For staff housing, claims are limited to 100% of the employee’s basic salary.
3. Staff Expenses
   • Salaries and wages for senior staff and executives.
   • Benefits/allowances provided for them (within agreed and approved limits).
4. Repairs and Maintenance
   Expenses for maintaining buildings, equipment, or tools used in the business.
5. Bad and Doubtful Debts
   • Debts proven to be irrecoverable during the year.
   • Doubtful debts estimated to become bad (subject to FIRS approval).
   • Recoveries on previously written-off debts are treated as income.
6. Pension Contributions
   Contributions to approved pension or retirement benefit schemes are deductible.
7. Industry-Specific Deductions
   For example, the Nigerian Railway Corporation may deduct expenses as specified by their own rules.
8. General Business Expenses
   Any other legitimate business expenses incurred in the relevant period that are not already covered.
9. Research & Development (R&D)
   • Expenses on R&D activities are deductible.
   • This includes levies paid to the National Science and Technology Fund.
10. Minister-Approved Deductions
    Any other deductions approved by the Minister of Finance through official rules.
11. Real Estate Investment Companies
    Dividends or mandatory distributions paid to shareholders are deductible.
12. Securities Lending
    Certain compensating payments treated as interest in regulated securities lending transactions are also deductible.

 

HOW TO FILE COMPANIES INCOME TAX (CIT) IN NIGERIA

Filing your company’s income tax return is a legal requirement under the Companies Income Tax Act (CITA) and is enforced by the Federal Inland Revenue Service (FIRS).

You can file your tax returns either manually or through the FIRS electronic self-service portal.

1. Choose Your Filing Method

You have two options:

1. Manual Filing

Steps:

• Gather all required documents (TIN, audited financial statements, tax computation schedules, etc.).
• Download and complete the appropriate form from FIRS:
  • Form C08A – Large companies
  • Form C08B – Medium companies
  • Form C08C – Small companies
  • Form C08D – For companies eligible for exemptions or simplified returns
• Visit your nearest FIRS office (use the FIRS Tax Office Locator to find one).
• Submit the filled form and supporting documents.
• Obtain an acknowledgment receipt as proof of submission.

1. Electronic Filing (e-Filing)

Steps:

• Visit the FIRS TaxPro Max portal.
• Register or log in using your Tax Identification Number (TIN) and access credentials.
• Prepare the necessary documents:
  • Completed Form C08A–D as applicable
  • Audited financial statements
  • Tax computation and capital allowance schedules
  • Withholding tax (WHT) credit notes (if applicable)
• Enter your financial data:
  • Report income from all sources
  • Claim allowable deductions and tax reliefs
  • Calculate your chargeable income and tax liability
• Submit your return online.
• Download and keep the acknowledgment receipt as evidence of compliance.

 

WHAT ARE THE RATES TAXABLE FOR COMPANIES AS COMPANIES INCOME TAX?

Under the Companies Income Tax Act (CITA) as amended by the Finance Act, companies in Nigeria are taxed based on their annual turnover, using a tiered tax rate structure. This reform was introduced to ease the tax burden on smaller businesses and promote economic growth among Micro, Small and Medium Enterprises (MSMEs).

Firstly, small companies defined as those with an annual gross turnover of ₦25 million or less are exempt from paying Companies Income Tax (CIT). This exemption is provided under Section 23(1)(o) of CITA. These companies are, however, still required to file annual tax returns with the Federal Inland Revenue Service (FIRS) to maintain compliance, even though no tax is payable.

Secondly, medium-sized companies, which have an annual turnover of more than ₦25 million but not more than ₦100 million, are subject to CIT at a reduced rate of 20%. This rate is aimed at easing the tax burden during the growth phase of such companies and is explicitly stated in Section 40(b) of CITA as “20 kobo for every Naira”.

Lastly, large companies those with a turnover exceeding ₦100 million per year are taxed at the standard CIT rate of 30%, as provided under Section 40(c) of CITA. These companies are considered more financially robust and therefore subject to the full corporate tax rate.

 

WHEN AND HOW TO PAY COMPANIES INCOME TAX

Section 77 of the Companies Income Tax Act gives a thorough explanation on when and how to pay

• If your company receives a tax assessment and you do not object to it, the tax must be paid within 30 days from the date you receive the assessment notice.
• If that 30-day period ends after December 14th, you can pay by December 14th of the same year.
• If you file an objection or appeal, the tax won’t be collected until the issue is resolved. However, you must pay either the provisional tax or the undisputed portion of the tax, whichever is higher, while the dispute is ongoing.
• Once the tax authority makes a final decision, you must pay the tax within 1 month of receiving the new assessment.
• You can pay in installments instead of a lump sum. To do this, you must:
  • Write to FIRS and show proof of the first installment payment.
  • Get approval for the number of installments.
  • Make sure the final installment is paid on or before the filing due date.
• If your company pays its tax at least 90 days before the due date, you get a bonus:

• • • 2% bonus for medium-sized companies.
    • 1% bonus for all other companies.

• If you don’t pay on time, you’ll be charged interest and penalties.
• Tax must be paid in the same currency that the income was earned in.

 

CONCLUSION

Navigating Nigeria’s complex tax environment requires local expertise. It is advisable that companies partner with local tax consultants or legal advisors who are well-versed in Nigerian tax regulations. These tax experts and legal advisors can help companies comply with all Company income tax filing requirements and avoid costly mistakes.

Written by Felicia Ayeomoni and Adeola Austin Oyinlade for Adeola Oyinlade & Co

 

Email us: [email protected]

Telephone Number: +234 803 826 7683 / +234 802 686 0247

_________

As one of the top law firms in Nigeria, Adeola Oyinlade & Co provides legal services to national and multi-national companies and clients for their corporate and commercial law matters with specialty in tax law. Our services have earned us the Nigeria Law Firm of the Year Award at the Lawyers Global 2024 Annual Legal Awards and the prestigious International Law Firm of the Year in Nigeria of Corporate INTL Global Awards for the years 2022, 2023, 2024 and 2025 (4 years in a row) among others.

[1] https://www.firs.gov.ng/company-income-tax accessed 14 of May, 2025.

[2] Section 9 of the Companies Income Tax Act

[3]  Section 9 (1) of the Companies Income Tax as amended by the Finance Act 2019.