Quick answer
Do not assume your business is exempt from Company Income Tax just because turnover looks small.
Under the Nigeria Tax Act 2025, a small company is one with:
- gross turnover of ₦50,000,000 or less per annum
- total fixed assets not exceeding ₦250,000,000
Both conditions matter.
What this means in practice
A lot of businesses hear only the ₦50 million turnover figure and stop there. That is where mistakes begin.
If your business wants to take a clean Company Income Tax position in 2026, it should check:
- annual gross turnover
- total fixed assets
- whether the records behind both figures are clear enough to support the conclusion
For the full tax context, link this article back to your main guide: The Complete 2026 Tax Compliance Checklist for Nigerian SMEs.
Wrong assumption vs correct check
Wrong assumption
Correct check
“We are under ₦50 million, so we are exempt.”
Check both gross turnover and total fixed assets.
“We are a small business, so the tax position is obvious.”
Use the official small-company test in the law.
“Finance knows the answer already.”
Make sure finance can show the records behind the answer.
“We can sort the evidence out later.”
Keep the support ready before filing time.
How to check your position properly
1. Check annual gross turnover
Do not guess. Use figures your finance team can support with real records.
2. Check total fixed assets
This is the second part many businesses forget. The official small-company test uses both turnover and fixed assets.
3. Check whether the records support the conclusion
A tax position is only as strong as the records behind it.
If finance cannot clearly show:
- how turnover was assessed
- what fixed assets were counted
- how the conclusion was reached
then the position is weaker than it looks.
4. Document the position internally
Even if your business appears to qualify, it is still wise to document how the conclusion was reached.
That makes later filing, review, and audit work easier.
For the next step after this check, link to: How to File Tax Returns in Nigeria in 2026.
For year-round record discipline, link to: How Nigerian Businesses Can Stay Audit-Ready All Year.
Common mistakes businesses make
Mistake 1: Using only turnover
The official small-company test uses both turnover and fixed assets.
Mistake 2: Treating “small business” as the same as “small company” for tax
In everyday conversation, businesses use “small” loosely. For tax purposes, the official rule is narrower and uses the exact statutory test.
Mistake 3: Reaching a conclusion without proper records
A business may be right in theory and still weak in practice if the supporting records are messy, incomplete, or hard to retrieve later.
How Flex Tax helps
What Flex Tax helps businesses keep:
- tax-relevant records
- supporting documents
- filing preparation notes
- cleaner audit trails
in one better structure.
So instead of trying to prove your tax position later with scattered records, your team works from a cleaner system from the start.
Use Flex Tax if your business wants seamless tax filing
Final checklist
Before your business says it qualifies, make sure you can answer yes to these questions:
- Have we checked annual gross turnover properly?
- Have we checked total fixed assets properly?
- Do we understand that both conditions matter?
- Can finance retrieve the records behind our conclusion?
- Has someone clearly reviewed and documented the position internally?
If the answer to the fourth or fifth question is no, the business may have an opinion, but not a strong tax position.
FAQs
Is my Nigerian business exempt from Company Income Tax in 2026?
Do not assume. Start by checking whether your business meets the official small-company test under the Nigeria Tax Act 2025. That test uses both turnover and fixed assets.
What is the turnover threshold for a small company in Nigeria?
The official threshold is gross turnover of ₦50,000,000 or less per annum.
What is the fixed-asset threshold for a small company in Nigeria?
The official threshold is total fixed assets not exceeding ₦250,000,000.
Is turnover alone enough to decide?
No. Both turnover and fixed assets matter.
Suggested internal links
- The Complete 2026 Tax Compliance Checklist for Nigerian SMEs
- How to File Tax Returns in Nigeria in 2026
- How Nigerian Businesses Can Stay Audit-Ready All Year
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