Companies are mandated by law to pay Company Income Tax (CIT) in Nigeria based on the profit. The amount charged is 30% o the profit earned in the year preceding assessment.
Companies resident in Nigeria are liable for CIT on their worldwide income and non-resident companies are liable only to CIT on their Nigerian-source income.
However, when there is an investment income paid by a Nigerian resident to a non-resident and was sourced in Nigeria is subject to withholding tax at source and this serves as the final tax paid.
For cases of non-resident companies with a fixed base in Nigeria, their business profit is taxable based on the profit attributed to the fixed base.
CIT Rates for Small Companies
Small companies in the manufacturing sector as well as those that are export-oriented have a reduced CIT rate of 20%. This is applicable if they have a turn over below one million naira and are still within five calendar years of operation
Minimum Tax for Companies
Sometimes, companies might end up with no taxable profit for that particular year or with a taxable profit that is less than the stipulated minimum tax. In this situation, a minimum tax becomes the alternative for these companies.
Companies within the first four calendar years of operation, companies with foreign equity capital of at least 25% as well as companies in the agricultural sector are exempted from the minimum tax.
Alternative Tax on Deemed Profit
The law allows the FIRS to assess and charge companies to tax on a fair and reasonable percentage of turnover when there is no assessable profit or if the assessable profit cannot be ascertained.
Petroleum Profit Tax (PPT)
PPT is a tax on the income of companies engaged in upstream petroleum operations in lieu of CIT.
Other forms of CIT are alternative tax on distribution, local income taxes and tertiary education tax.
Always get adequate advice on what applies to your company as every company has unique characteristics.