Blessing runs a cleaning services company in Port Harcourt. She has four employees. Her revenue last year was ₦12 million.
She knows she pays VAT. She has heard of WHT. But her accountant mentioned something called "CIT" and "development levy" and she nodded along without really understanding what they meant, or whether she actually owed them.
Most Nigerian MSME owners are in exactly this position. They know the obvious taxes. The others feel like something for big companies or government contractors.
They are not. Here is what they are, who owes them, and how much.
This is the most important question, because it determines which income tax you pay.
If you went to the Corporate Affairs Commission (CAC) and registered "Blessing's Cleaning Services Ltd", you pay CIT. If you are trading under your own name or a business name (not an Ltd), you pay PIT.
Most MSMEs in Nigeria start as sole traders and only incorporate later. Know which you are.
What it is: The tax that incorporated Nigerian companies pay on their annual profit.
Who pays it: Any company registered with the CAC as a limited liability company (Ltd or PLC).
The rate depends on whether you are a small company:
The Nigeria Tax Act 2025 (effective 1 January 2026) abolished the old three-band structure. Any guide citing "0% under ₦25M" or "20% for ₦25M–₦100M" is outdated. Unlike VAT, CIT's small-company test has no professional-services exclusion: turnover and fixed assets alone decide it. You still need to file a return even when the liability is zero.
What it applies to: Your taxable profit: revenue minus allowable deductions (operating expenses, salaries, wear-and-tear on equipment, etc.). Not your total revenue.
When it is due: CIT is filed six months after your company's year-end. If your financial year ends December 31st, your return is due by June 30th.
Who you pay it to: The Nigeria Revenue Service (NRS).
Minimum tax: the old minimum tax on gross turnover was repealed with the Companies Income Tax Act from 1 January 2026. The Nigeria Tax Act 2025 now applies a top-up so that the effective tax rate reaches 15%, but only to companies in a multinational group with worldwide group turnover of €750 million or more, or to companies with aggregate turnover of ₦50 billion or more on their own. Most MSMEs are not affected.
What it is: Income tax deducted from employees' salaries before they receive their pay.
Who is responsible: The employer. You deduct PAYE from each employee's salary and pay it to the State Internal Revenue Service (SIRS) every month.
The rate: from 1 January 2026, under the Nigeria Tax Act 2025, PAYE works in bands applied to each employee's annual chargeable income: gross pay minus the deductions the Act allows (the employee's 8% pension contribution, NHF, health insurance, life insurance premiums, interest on a loan for an owner-occupied home, and rent relief of 20% of annual rent, capped at ₦500,000). The old Consolidated Relief Allowance was abolished.
Employees on the national minimum wage pay no PAYE.
Example for Blessing: She has an employee earning ₦150,000 per month (₦1.8 million a year). Assuming the only deduction is the 8% pension contribution (₦144,000), chargeable income is ₦1,656,000. The first ₦800,000 is taxed at 0% and the remaining ₦856,000 at 15%, so PAYE is ₦128,400 a year, about ₦10,700 a month, deducted from the employee's salary before payment.
When to pay: By the 10th of the following month. January's PAYE is due by February 10th.
Where to pay: Your State Internal Revenue Service, not the NRS. Lagos businesses pay to LIRS, Abuja businesses to FCTS, Rivers State businesses to RIRS, and so on.
If you have employees and you are not deducting and paying PAYE, you are in breach of Nigerian tax law, even if your business is otherwise compliant. The penalty for non-payment includes the unpaid amount plus a late penalty of 10% of the amount due per year, and interest.
What it is: From 1 January 2026, a 4% Development Levy on assessable profits replaced the old Education Tax.
Who pays it: Companies above the small-company threshold. Small companies (see the CIT section) are exempt, whether or not they provide professional services.
The rate: 4% of assessable profits.
Example: A company with ₦150 million turnover and ₦20 million assessable profit pays 4% × ₦20 million = ₦800,000. Blessing's company, with ₦12 million revenue, is a small company and pays no levy.
Filing: confirm how and when to file it for your year-end with the NRS or your accountant.
Blessing's company: revenue ₦12 million, expenses ₦7.5 million, profit ₦4.5 million. Four employees.
Total annual tax burden (excluding VAT, which flows through the business): approximately ₦660,000, all of it PAYE.
If Blessing had assumed she owed a levy she does not, she would have overpaid. If she had not been deducting PAYE, she would face a penalty on two years of unpaid amounts.
The Tax Calculator in Lucrive covers all of the above:
① Open Tax Calculator
② Enter your annual revenue and expenses
③ Select your business type (sole trader or incorporated company)
④ Add your employees and their salaries (for PAYE calculation)
⑤ Select Advanced mode to see the Development Levy
The calculator applies the 2026 NRS rates and income bands. It produces a breakdown of every tax type (CIT, PIT, PAYE, Development Levy) so you know the full picture before you file.
Ask Lex for specifics. If your situation is unusual (a charity, an export business, a company with a non-December year-end), ask Lex (the AI tax assistant in Lucrive). Lex answers from Nigerian tax statutes and guidance and can handle specific scenarios that a general guide cannot.
Calculate your full tax position today. Log in to Lucrive at lucrive.io, open the Tax Calculator, and run the numbers for your business. Ten minutes now is better than a surprise bill later.
Sources & further reading
People and businesses in our examples are illustrative, not real Lucrive customers. Figures are worked examples: confirm your own position with a qualified tax adviser.