By Ajibola Olaide, JKNewsMedia Reporter
— Zero tax for small businesses maintained, capital gains tax repealed, and FIRS set to become Nigeria Revenue Service
THE FEDETRAL GOVERNMENT has retained the company income tax (CIT) at a flat rate of 30 percent for all companies except small businesses, under new provisions of the Nigerian Tax Act (NTA) scheduled to take effect from January 2026.
According to the Act, companies with gross annual turnover of ₦50 million or less, and fixed assets not exceeding ₦250 million, will continue to enjoy zero percent CIT.
However, firms offering professional services, such as consulting, planning, or support services—will no longer qualify for this exemption.
“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of a small company, at 0%; and (b) any other company, at the rate of 30 percent from the commencement of this Act,” the law states.
It also introduces a minimum effective tax clause: any company whose effective tax rate falls below 15 percent will be required to recompute and pay additional tax to meet the 15 percent threshold.
As part of the sweeping changes, the government has repealed the Capital Gains Tax Act, effectively scrapping the 10 percent tax on capital gains.
The Cable confirmed that capital gains taxation has now been subsumed under the CIT structure.
The Taiwo Oyedele committee pushes for CIT cut, tax harmonisation
The reforms come amid ongoing advocacy by the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by tax expert Oyedele, who said the committee had proposed a five-percent cut in CIT to boost investor confidence and reduce business costs.
Speaking in Abuja during a media impact assessment session, Oyedele said, “We are proposing that the company’s income tax rate be reduced by about 5% over the next two years. Nigeria’s CIT is one of the highest in the world.”
He argued that with effective rates exceeding 40 percent when surcharges are added, Nigeria ranks among the top ten globally for corporate tax burden.
“This is not where we want to be for a country that needs all the investments it can get,” he said.
The reforms also include a plan to replace the Federal Inland Revenue Service (FIRS) with a new national agency to be known as the Nigeria Revenue Service (NRS).
Under the proposed structure, state revenue services and even the Nigeria Customs Service (NCS) will operate as departments within the new central body.
“FIRS is not a federal government agency; it’s a federation’s agency.
All taxes they collect are shared. So let’s call it the Nigeria Revenue Service,” Oyedele explained.
He added that governors would still appoint heads of the state-level departments and that the NRS board would be dominated by state representatives, “in line with true fiscal federalism.”
The reform committee also raised concern over the inefficiency of Nigeria’s tax collection system.
Oyedele noted that collection costs in some states are as high as 35 percent and proposed a maximum threshold of 1 percent.
“Agencies should not collect taxes; they don’t have the competence,” he said, citing the Federal Inland Revenue Service’s collection of ₦700 billion last year for the Tertiary Education Trust Fund (TETFund).
Oyedele revealed that Nigeria currently has 60 approved taxes and over 200 unofficial levies across the federation, which have burdened businesses and distorted the tax landscape.
He said the goal was to streamline the tax system to just seven: income tax, value added tax (VAT), property tax, customs duties, excise duties, stamp duties, and a special levy.
“This will improve compliance, ease of payment, and reduce economic distortions,” Oyedele said.
