Understanding the Nigeria 2026 Tax reform and what it means for your business (II)
From January 1, 2026, Nigeria’s tax rules for businesses will look very different. This means it is important for businesses to understand what counts as business income, which taxes apply, and the reliefs and exemptions available. It also means that both small and large businesses will know exactly what they need to do to stay compliant.
Small business reliefs are one of the biggest changes. If your company has an annual turnover of ₦100 million or less and total fixed assets of ₦250 million or less, you are considered a small company. This means you do not pay Corporate Income Tax (CIT), Capital Gains Tax (CGT), or the new 4% Development Levy. Additionally, small companies are exempt from withholding tax deductions on their income and on payments to their suppliers. In the past, small businesses had a much lower threshold for exemptions, but now more businesses qualify as long as you are properly registered and keep basic records.
Corporate Income Tax (CIT) is charged on profits, not on total sales. This includes profit from:
- Business operations: Any profit from trading, providing services, or running a business.
- Property income: Rent or premiums from leasing or letting out property.
- Investments: Dividends from shares, interest on loans or deposits, and royalties.
- Fees and service payments: Any payment received for services provided by your business.
- Financial instruments: Gains from short-term government securities like treasury bills, savings certificates, bonds, or debenture certificates.
- Other taxable profits: Any other profit your business earns that isn’t specifically exempt under the law.
Also, the Development Levy of 4% is applied on assessable profits. This new levy replaces several sundry levies, like the Tertiary Education Tax and IT levy.
The Capital Gains Tax (CGT) rate for companies increases from 10% to 30%, though the government has announced plans to review this rate down to 25% by 2026, pending approval. Small companies within the exemption threshold do not pay CGT. This applies to profits made from selling business assets like land, buildings, or shares. If your business makes a loss on one asset, you can offset it against the profit from another asset, and at the end, you only remit CGT on the net gains.
Professional service firms including consulting, legal, accounting, and technical services are now clearly brought under Corporate Income Tax. Also, if your business operates as a partnership or sole proprietorship, it is not treated as a separate legal entity like an incorporated company. This means that all the profits your business earns are considered personal income for the owners and are fully taxable under the Personal Income Tax (PIT) rules.
Value Added Tax (VAT) stays at 7.5%. Businesses supplying taxable goods or services must charge and remit VAT. Businesses with annual turnover of less than ₦100 million are exempt from registering for, charging, or remitting VAT until they grow beyond that point. Essential goods and services, such as basic food items, medical and pharmaceutical products, education fees, and electricity, are exempt or zero-rated from VAT regardless of business turnover.
Withholding Tax (WHT) continues to apply on specific payments, such as rent, contracts, interest, royalties, and professional services. It acts as an advance of tax towards your final tax liability if you have proper documentation. Therefore, it is important to keep good records. Remember that small companies are exempt from WHT deductions on both their income and payments they make to suppliers.
All of this means that structure and proper documentation are now more important than ever. Businesses must operate separate accounts for business and personal transactions, track income and expenses clearly and make sure they have a valid Tax Identification Number (TIN). If your business is registered and it doesn’t have a TIN, it is very important to get one now.
The tax administration is now supervised under the Nigeria Revenue Service, which centralizes assessment, collection, enforcement, and record-keeping. This means that business income, filings, payments, and credits are now linked under a single tax profile.
In simple terms: the 2026 tax reform rewards businesses that are transparent, and compliant, and it penalizes those that operate in the shadows.
NOW TO THE NEWS
Vale Finance launches business finance app to simplify business banking for SMEs
Vale Finance, a Nigeria Fintech Company, has unveiled its new business finance app, “Vale Business”, designed to help small and medium-sized enterprises (SMEs) and corporate users manage their business money more efficiently and effectively
The fintech company, says the platform is designed to combine everyday banking needs with growth-focused tools.
The app offers several features to help businesses manage and grow their funds. The “Vault” feature allows businesses to set aside funds while earning profits, while “Flex Biz” provides a flexible account for daily transactions with 10% annual interest paid daily. Businesses can also access quick loans through the app to support expansion and cover operational needs.
Vale Finance explained that the app was developed to address common pain points such as cash flow management, limited access to financing, and underutilized savings options. By integrating multiple services into one platform, the company aims to give business owners a clearer view of their finances and more opportunities to grow.
The app is now available for download on the Google Play Store and Apple App Store for both new and existing users.
Naira closes the week at N1,455.50/$1
The Naira ended the week slightly weaker against the US dollar, closing Friday at N1,455.50/$1 in the official forex market. This is a small decline from Thursday’s rate of N1,455.25/$1 and a bit softer than last week’s finish at N1,454/$1.
For the entire week, the currency remained above N1,450/$1, a level not seen in more than three weeks. Previously, the Naira last traded in this range between November 18 and 22, when it fluctuated between N1,451 and N1,458/$1.
Looking at last week, the Naira began Monday at N1,450.01/$1, strengthened slightly to N1,447/$1 on Tuesday, and stayed near N1,447.5/$1 on Wednesday. It slipped to N1,449/$1 on Thursday before finishing at N1,454/$1. While this shows some stability, pressure on the currency continues despite positive macroeconomic signals.
CBN set to raise N825bn in final 2025 debt auctions
The Central Bank of Nigeria (CBN) plans to raise a total of N825 billion from the domestic debt market in the final round of sovereign issuances for 2025, highlighting the Federal Government’s continued dependence on local borrowing amid high yields.
The fundraising will be split between Federal Government of Nigeria (FGN) bonds and Treasury Bills, with the CBN noting that the offered amounts may be adjusted depending on market conditions. N460 billion will be raised through FGN bonds, while N365 billion will come from Treasury Bills.
However, the CBN’s flexibility to vary the offer size suggests that final allotments will be guided by investor demand and prevailing market realities.
For the bond segment, the CBN, acting on behalf of the Debt Management Office (DMO), will auction N460 billion across two long-term instruments. This includes a reopening of the 17.945% FGN August 2030 bond and the 17.95% FGN June 2032 bond, with N230 billion allocated to each. The bond auction is scheduled for December 15, 2025, with settlement expected on December 17.
At previous auctions, the August 2030 bond cleared at a stop rate of 15.90%, while the June 2032 bond closed at 16.00%. Current market expectations point to higher stop rates, with guidance suggesting ranges of 17.30–17.50% for the 2030 bond and 17.40–17.60% for the 2032 paper, reflecting rising yields on longer-dated instruments.
In addition to bonds, the CBN will conduct a Treasury Bills auction on December 18, 2025, targeting N350 billion across three tenors. This includes N100 billion each for the 91-day and 182-day bills, and N165 billion for the 364-day bill. The auction will follow the Dutch auction format, with bids submitted through the CBN’s Secure Software for Settlement System (S4), marking a renewed push to fully implement the electronic interface as part of broader reforms to improve transparency, control market flows, and reduce pricing distortions in government securities auctions.
CBN moves to create short code to improve complaint resolution
The Central Bank of Nigeria (CBN) is working with the Nigerian Communications Commission (NCC) to introduce a single short code that will allow consumers to contact their banks anytime, even without internet access. The initiative is aimed at helping vulnerable users who currently have to visit bank branches to resolve issues.
The CBN has also streamlined its complaint-handling process, achieving a 94% monthly resolution rate for consumer issues. This improvement is part of efforts to make it easier for customers to raise and resolve complaints with financial institutions.
Recent data show that failed transactions remain a common problem, with many reversals taking between 24 and 48 hours. Fraud, hidden charges, and poor customer service also continue to affect a significant number of consumers.
Consumer advocates are calling for stronger protections, including fraud insurance to ensure faster refunds in fraud cases. They also emphasized that banks not merchants are responsible for resolving disputes between customers and service providers.
