Company Formation & Tax in Nigeria
Africa's largest economy and consumer market — a tiered company income tax that exempts small companies, a low 7.5% VAT, and Lagos as the continent's commercial powerhouse.
Nigeria taxes company profits on a tiered basis by size: small companies are exempt, medium companies pay 20%, and large companies pay 30%. VAT is a relatively low 7.5%. With the continent's largest population and economy, a vast domestic consumer market and Lagos as its commercial capital, Nigeria is a priority destination for groups building African scale — provided the tax, forex and regulatory environment is navigated carefully.
The headline numbers
| Tax | Rate |
|---|---|
| Company income tax — small (turnover ≤ ₦25m) | 0% |
| Company income tax — medium (₦25m–₦100m) | 20% |
| Company income tax — large (> ₦100m) | 30% |
| VAT | 7.5% |
| Dividend / interest / royalty withholding | 10% |
Large companies also pay a tertiary education tax on assessable profits. VAT at 7.5% applies to most goods and services, with a registration obligation and exemptions for certain items. Dividends, interest and royalties carry a 10% withholding (reduced under treaties); withholding tax on dividends can operate as a final tax.
What shapes the effective burden
- Size-based exemption — genuinely small companies (turnover ≤ ₦25m) pay no company income tax, a real incentive for early-stage ventures.
- Tertiary education tax — an additional levy on assessable profits for larger companies raises the effective burden above the headline 30%.
- Free zones — companies in approved free-trade and export zones enjoy broad tax exemptions on qualifying activity.
- Foreign exchange — capital importation should be documented with a Certificate of Capital Importation to secure access to official FX channels for repatriation.
Forming the company
The standard vehicle is the private company limited by shares (Ltd), registered with the Corporate Affairs Commission (CAC) — increasingly online. Under the Companies and Allied Matters Act (CAMA), a company can have a single shareholder and director; companies with foreign participation generally require a minimum share capital (commonly ₦100 million for full foreign ownership and to support expatriate quotas). Foreign-owned companies must register with the Nigerian Investment Promotion Commission (NIPC), obtain a business permit, and secure a Certificate of Capital Importation for imported capital. A Tax Identification Number and VAT registration follow. 100% foreign ownership is permitted in most sectors.
Frequently asked questions
What is Nigeria's corporate tax rate in 2026?
Tiered by size: 0% for small companies (turnover ≤ ₦25m), 20% for medium companies, and 30% for large companies, plus a tertiary education tax for larger companies.
How are dividends taxed in Nigeria?
A 10% withholding tax applies to dividends (and to interest and royalties), which can operate as a final tax and may be reduced under a tax treaty.
What is the VAT rate in Nigeria?
7.5% on most goods and services, with certain items exempt or zero-rated.
Can a foreigner own a Nigerian company fully?
Yes — 100% foreign ownership is permitted in most sectors, subject to a minimum share capital, NIPC registration, a business permit and capital-importation documentation.
Official sources
- FIRS — company income tax and VAT
- Corporate Affairs Commission — company registration
- Nigerian Investment Promotion Commission — foreign investment
This guide is general information prepared by A.R.M. Management and is current as at July 2026. It is not legal or tax advice; capital, zone and sector rules carry conditions and change. Confirm against the FIRS and CAC, or with an advisor, before acting.
Structure a Nigerian company the right way.
A.R.M. Management advises founders, investors and multinational groups on Nigerian incorporation, NIPC registration, capital importation and tax across West Africa. Begin with a confidential conversation.