FG scraps capital gains tax, combines it with CIT

By Abubakar Yunusa

The federal government has retained the corporate income tax (CIT) at a flat rate of 30 percent for all companies, excluding small businesses.

The CIT framework is contained in the new provisions of the Nigerian Tax Act (NTA), which will take effect in January 2026.

The new law also kept the tax rate for small companies (those with a gross turnover of

N50 million or less per annum with total fixed assets not exceeding N250 million) at zero percent.

“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 document reads.

Under the law, businesses providing professional services are not classified as small companies.

Specifically, the Act said ‘professional services’ refers to services provided by an individual or a firm having specialised knowledge, skills, and qualifications in specific fields, “including consulting, planning, or support services, excluding artisans or vocational services”.

“Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15%, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15%,” the Act further said.

The provisions of this section shall apply to a company that is a constituent entity of an MNE group, and (b) any other company with an aggregate turnover of N20,000,000,000 and above in the relevant year of assessment.”

Meanwhile, the federal government also scrapped the capital gains tax of 10 percent, as the establishment of the NTA repeals the Capital Gains Tax Act.

TheCable understands that the 10 percent capital gains tax is now combined with the CIT.

On June 4, 2024, the presidential committee on fiscal policy and tax reforms, chaired by Taiwo Oyedele, said it was proposing a CIT cut of 5 percent.

Oyedele said the move would bring down the tax rate from 30 percent to 25 percent to encourage businesses and investors.

In October last year, TheCable reported that the national assembly was considering a bill that sought to reduce the CIT to 27.5 percent in 2025 — down from 30 percent — and a further cut to 25 percent by 2026.