The profits of all companies (other than those specifically exempted and the profits from the sale or disposal of crude oil for upstream petroleum companies that are not converting under the terms of the Petroleum Industry Act) are subject to companies income tax (CIT). Nigerian companies are assessed to tax on their worldwide income, whilst Non-Resident Companies (NRCs) are subject to tax only on profits accrued in or derived from Nigeria, to the extent that the profits are attributable to operations in Nigeria. For NRCs whose activities constitute a Significant Economic Presence (SEP)1 in Nigeria, CIT is charged on only the portion of the profit attributable to such activities in Nigeria. Every company carrying on trade or business in the country or whose activity constitutes SEP is expected to prepare audited financial statements and file CIT returns within 6 months from the end of their financial year. However, withholding tax (WHT) will be the final tax for a NRC that derives profit from the provision of technical, management, consultancy, or professional services to persons resident in Nigeria, provided that the NRC does not have a fixed base or engage in other trade or business as defined by the CIT Act.
There are currently three (3) CIT rates applicable to companies in Nigeria depending on their turnover, viz, 30% for large companies with over ₦100 million turnover, 20% for medium companies with ₦25 million to ₦100 million turnover, and 0% for small companies with less than ₦25 million turnover.
Nigerian companies and NRCs are liable to a minimum tax where: the total assessable profit for any year of assessment (YOA) results in a loss; or the computed total profits results in no tax payable; or tax payable is less than the minimum tax, unless they meet the criteria for minimum tax exemption. Finance Act, 2019 amended the base and rate of minimum tax to 0.5% of a company’s turnover less franked investment income.