Small business owners in Nigeria have spent 2026 hearing two opposite messages. One says small companies now pay no company income tax. The other says penalties are heavier than ever and the whole compliance system has been rebuilt. Both are true. Four new tax laws took effect on 1 January 2026, the tax authority has a new name, and the tax identification number most owners knew has been replaced. Knowing which rules apply to your business, and which filings remain even when you owe nothing, is the difference between a quiet year and an avoidable penalty.

This guide explains the Tax ID, company income tax, VAT and the other recurring obligations in plain language. Where sources disagree, we say so, because tax professionals are still arguing over a few important thresholds. Use this as orientation, then confirm your own figures with the Nigeria Revenue Service or a qualified accountant. Rules were checked in November 2026.

What changed in 2026

The Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board Act were signed on 26 June 2025, as PwC Nigeria’s summary records. They began to apply from 1 January 2026. The Federal Inland Revenue Service became the Nigeria Revenue Service (NRS), as reported by Radio Nigeria, and filing moved from TaxProMax to a new platform called Rev360, which went live on 30 April 2026.

In practice, federal taxes such as company income tax and VAT go through the NRS, while personal income tax and PAYE are generally handled by your state internal revenue service. That split matters if you run a sole proprietorship or employ staff.

TIN is now the Tax ID

The old Tax Identification Number is being replaced by a single Tax ID. For individuals, it is linked to the National Identification Number. For companies, it is linked to the CAC registration number. The Joint Revenue Board and the NRS launched a Tax ID portal on 1 January 2026, where you select the corporate option, enter your CAC number and retrieve a 13 digit Tax ID.

Government announcements say businesses that already hold a CAC number do not need a separate registration. Practitioner guides add that business name registrations are also linked through their CAC number, and that anyone not found in the system may need to complete registration through the NRS portal. Because the CAC and NRS now share data, the details on your CAC record must be accurate. If you have not registered yet, start with our guide on how to register a business with the CAC, since the Tax ID depends on it.

Company income tax and the small company exemption

Under the new law, a company that qualifies as a “small company” pays 0% company income tax. It is also exempt from capital gains tax and from the new 4% Development Levy, according to PwC’s analysis. A company that does not qualify pays company income tax at 30%, plus the Development Levy of 4% on assessable profits. That levy replaces the Tertiary Education Tax, the IT levy, the NASENI levy and the Police Trust Fund levy.

To qualify, a company must meet two tests at the same time: turnover under the limit and total fixed assets not above ₦250 million. Professional service businesses are excluded from small company status, whatever their size, as KPMG Nigeria notes.

Here is where the confusion lives. PwC and a good deal of government guidance describe the turnover limit as ₦100 million. KPMG reports that the signed Nigeria Tax Act itself uses ₦50 million, up from the previous ₦25 million, and press reports say a senior tax reform official later described that figure as an error. The tax administration law uses ₦100 million for its own definition of a small business. A fair reading is that the two numbers have not been fully reconciled.

So be practical. If your annual turnover is comfortably below ₦50 million, you are safe on either reading, provided your assets are within the cap and you are not a professional services firm. If you sit between ₦50 million and ₦100 million, get written advice before you claim the zero rate. The exemption also does not remove your duty to keep records and file returns. Our guide to types of business structures explains why many owners choose a company in the first place.

If you run a business name or sole proprietorship

A registered business name is not a company, so the 0% company rate does not apply to you as such. As a sole proprietor you are taxed as an individual on your business profit under personal income tax. The new law exempts annual income of ₦800,000 or less and uses progressive bands that rise to 25%, according to PwC. Returns are usually filed with your state revenue service. If you expect your income to grow, this is one of the real reasons to move to a company, and a business lawyer or accountant can compare both routes for your numbers.

VAT: when it applies and how it works

The VAT rate stays at 7.5%. What the new law changed is how businesses recover it. Under the reforms, businesses can claim input VAT on services and fixed assets, not just goods, as long as it relates to their VATable sales. The list of zero-rated items also grew to include basic food, medical products, educational materials and exports other than oil and gas, and mandatory e-invoicing rules were codified.

The harder question is the registration threshold. For years it was ₦25 million in annual turnover, and many guides still say so. Some 2026 commentary cites ₦50 million, relying on the definition of a “small business” in the tax administration law, while others treat the two tests as separate. We could not find a single authoritative statement settling this, so if your VATable sales are near either figure, register early or ask the NRS in writing. The figure is measured on turnover, not profit, and on a rolling twelve months, not a calendar year.

Once registered, VAT returns and payment are due by the 21st of the month after the sale, and a return is required even when you had no VAT to report. VAT you collect from customers belongs to the government, so keep it separate from your working cash.

Other recurring obligations

If you employ people, you must deduct PAYE from salaries and remit it to the relevant state authority, and keep staff records. Our piece on why businesses use a recruiting agency is useful if you are building a team and want the paperwork handled properly.

Withholding tax is deducted at source on qualifying payments such as contracts, rent, dividends and royalties, with rates reported between 2% and 20%, and remitted by the 21st of the following month. If you pay a contractor or landlord, find out whether you must deduct it.

Deadlines and penalties at a glance

Obligation	Usual due date	Reported consequence of default
Company income tax and Development Levy returns	Within six months after your financial year end	₦100,000 in the first month, then ₦50,000 for each further month
VAT return and payment	21st of the following month	Same filing penalty; 10% plus interest on late payment
Withholding tax remittance	21st of the following month	10% plus interest; 40% administrative penalty for failing to deduct
Annual returns to the CAC	Every year	Separate CAC penalties apply

The ₦100,000 and ₦50,000 figures come from Section 101 of the Nigeria Tax Administration Act, as BusinessDay explains. You can read the Act itself here. New companies have a slightly different first deadline, so confirm yours.

Common mistakes to avoid

Thinking exempt means no filing. Small companies still file and keep evidence of their turnover and assets. Nil returns are treated as filings, and missing them attracts the same penalties.

Claiming the zero rate from a blog post. Because of the ₦50 million versus ₦100 million question, claim exemption only after checking your numbers against the law or getting advice.

Treating the Tax ID as automatic and forgetting it. Confirm your ID on the portal, and make sure your CAC and bank records match.

Missing the VAT threshold. Rapid growth, a big festive month or a large contract can push you over the line within a rolling year.

Spending collected VAT or withheld tax. It is not your money, and the 10% late penalty plus interest adds up quickly.

Weak record keeping. Without invoices and bank statements you cannot prove your turnover, claim input VAT or defend an assessment. A written business plan with projected sales also helps you see which thresholds you will cross and when.

Ignoring the other side of compliance. Protect the business as well, and read our guide to business insurance.

A simple routine that keeps you compliant

Keep a separate business account, issue proper invoices, and record every payment received and made. Review your turnover each month against the thresholds that matter to you. Put the 21st of every month and your annual filing date in your calendar. When you approach ₦50 million in turnover, or if you sell professional services, speak to an accountant before the numbers force the conversation. For wider support on running a compliant small business, SMEDAN publishes guidance for micro, small and medium enterprises, and the CAC keeps your registration details current.

This article is general information and not tax or legal advice. Tax rules, thresholds and deadlines are changing quickly, so confirm current details with the Nigeria Revenue Service, your state revenue service or a qualified tax professional before you file or pay.