The Nigeria Tax Act 2025 and the professional practice

What changed

Four Acts were signed on 26 June 2025 and the substantive one, the Nigeria Tax Act 2025, commenced on 1 January 2026. It repealed the Companies Income Tax Act, the Personal Income Tax Act, the Capital Gains Tax Act, the Value Added Tax Act and the Stamp Duties Act, folding all of them into a single statute. Alongside it sit the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board (Establishment) Act.

The Federal Inland Revenue Service no longer exists. Section 40 of the Nigeria Revenue Service (Establishment) Act repealed the 2007 FIRS Act and section 41 vested the new Nigeria Revenue Service with all the powers, rights and obligations of the old one. Correspondence, filings and assessments now run to the NRS.

The small company regime

Section 56 of the Nigeria Tax Act is short and consequential: tax is levied on total profits at 0% for a small company and 30% for any other company. Section 59 exempts small companies from the development levy of 4% on assessable profits, a levy that itself replaced the tertiary education tax, the NITDA levy, the NASENI levy and the Police Trust Fund levy.

So a qualifying small company pays no companies income tax and no development levy. It must still obtain a Tax Identification Number and file annual self-assessment returns; a nil liability is not an exemption from filing.

The proviso that catches professional practices

The definition of a small company carries a proviso to the effect that any business providing professional services shall not be classified as a small company. Commentary across several Nigerian firms reproduces it in those terms.

Two features of it matter. First, it is categorical rather than proportionate. A sole practitioner turning over ₦5m is excluded on exactly the same footing as a practice turning over ₦500m. There is no de minimis. Second, the Act does not appear to define “professional services”, and we have found no Nigeria Revenue Service guidance on its boundaries. Legal practice, accountancy, medicine, architecture and engineering consultancy are plainly caught. Whether a training business, an IT consultancy or a bookkeeping service is caught is genuinely unclear, and any practice near that line should take the point up with its adviser rather than assume.

The same exclusion appears in the equivalent definition in the Nigeria Tax Administration Act governing value added tax. A professional practice therefore cannot use the small-business VAT exemption either.

Unincorporated businesses fall outside the regime entirely

This is the structural point, and it affects more Nigerian businesses than the proviso does. A business name or sole proprietorship has no separate legal personality. It is not a company, so it cannot be a small company, so the 0% rate is unavailable to it whatever its turnover. The proprietor pays personal income tax on the business profits instead.

Partnerships are tax-transparent. Section 15 charges each partner on their remuneration, interest on capital and share of profits, in the proportion the partnership agreement specifies.

Given that the overwhelming majority of Nigerian small businesses trade as registered business names rather than as companies, the practical reach of the 0% rate is a good deal narrower than the headlines suggested.

The threshold conflict

Anyone advising on this needs to know that the two Acts do not agree. The Nigeria Tax Act sets the small company turnover cap at ₦50 million. The Nigeria Tax Administration Act sets it at ₦100 million. Both put fixed assets at ₦250 million.

In September 2025 the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee said publicly that ₦100m is the correct figure and the ₦50m in the Nigeria Tax Act is an error. Many practitioners now work to ₦100m, but published commentary is still divided and some guidance continues to state ₦50m. We have found no amending Act and no formal correction, and commentary remains split even on the Administration Act figure.

The honest position for a business near the line is that ₦100m is what the revenue authority is applying in practice and ₦50m is what one of the two statutes says. Plan on the statutory figure, and document the basis on which any more generous position is taken.

A caution on citations

On 27 December 2025 the National Assembly directed its Clerk to re-authenticate and re-gazette all four Acts, following claims that the versions in circulation differed from those passed. Certified True Copies were released in early January 2026 and the public was told to disregard uncertified versions. This explains why commentators cite different section numbers for the same provision. Anyone relying on a section number in correspondence or a pleading should take it from a Certified True Copy.