The truth is, tax preparation for small businesses in Nigeria doesn’t have to be this complicated. Whether you’re filing for the first time or you’ve been doing it for years, understanding the system, knowing what tools are available, and getting your processes right can save you time, money, and a whole lot of stress.
With Nigeria’s 2025 Tax Reform Acts coming into full effect by January 2026, this is the time to get your house in order. From how to file your company tax to calculating VAT and using technology to automate compliance, this guide walks you through everything you need to know as a Nigerian SME owner.
Here’s the thing about taxes in Nigeria: the system wasn’t exactly designed with small businesses in mind. At least, that’s how it’s felt for a long time. But the new tax reforms are changing things—finally tilting the table a bit in favor of small and growing businesses.
Company Income Tax (CIT)
This is the big one. Tax on your business profits, collected by the Federal Inland Revenue Service (FIRS).
Under the new tax classification:
This 3-tier structure replaces the older “simplified tax regime” that was capped at ₦25 million. It’s more inclusive, giving more Nigerian SMEs breathing room.
Value Added Tax (VAT)Currently 7.5%, and yes, you’re required to collect it from your customers and remit it to FIRS. VAT applies to most goods and services, except for specific exempt categories (we’ll get into that shortly).
Withholding Tax (WHT)A portion deducted at source from payments like contracts, rent, or professional services. You or your clients remit this to FIRS, and it counts as advance tax credit.
Personal Income Tax (PAYE)If you have employees, you’re responsible for deducting PAYE monthly. Rates are progressive, up to 24%, but the new reform gives relief to low-income earners—anyone earning under ₦800,000 annually is exempt.
Development Levy (New)This is one of the new elements of the 2025 reform. Medium and large companies will now pay a 4% Development Levy on assessable profits. It replaces a mix of older levies like the Education Tax, IT Levy, and NASENI Levy, consolidating them into one cleaner charge.
Common Compliance Challenges
Even with all these changes, the real struggle for many Nigerian SMEs isn’t the tax rates—it’s compliance.
Here’s what still trips people up:
If that list feels familiar, you’re not alone.
Alright, let’s get practical. How do you actually file company tax in Nigeria?
If you don’t already have one, start here. Your TIN is your business’s fingerprint in the tax system. You’ll need it for every transaction with FIRS.
You can register online via the FIRS website or walk into a local tax office. Required documents include:
This one’s non-negotiable. Tossing receipts in a drawer isn’t record-keeping. You need:
Many businesses now use accounting software to make this easier. Tools like TaxAnchor360 are built for Nigerian tax laws, automating calculations and record management.
Once your books are tidy, it’s time to compute your taxable income. You’ll need:
You can do this manually at FIRS offices (brace yourself for long queues) or the smarter way e-filing.
Nigeria’s Integrated Tax Administration System (ITAS) lets you submit returns, upload documents, and track your filing status online. It’s faster, cleaner, and saves you at least a day of back-and-forth.
Once you get your assessment notice, pay promptly via:
Keep proof of every payment—receipts, screenshots, bank alerts. They’re your best friend if FIRS ever comes knocking.
Miss these and you’re looking at penalties—₦25,000 for the first month and ₦5,000 for each subsequent month, plus interest.
Let’s talk about something painful.
Many Nigerian SMEs overpay taxes—not because they’re trying to be saints, but because they don’t know better.
Common mistakes include:
The solution isn’t to overpay “just to be safe.” It’s to stay informed and use tools that calculate accurately.
Handling tax manually in 2025 is like using a typewriter when everyone else is on laptops.
Every hour spent tinkering with spreadsheets is time you could spend growing your business. Beyond saving time, good tax software offers:
TaxAnchor360 stands out as a Nigerian-built, AI-powered tax compliance tool designed specifically for local businesses. It automates CIT, VAT, and PAYE calculations, connects with FIRS for direct filing, and flags potential errors before they become penalties.