Business Tax in Nigeria Made Simple: VAT, PAYE, CIT & WHT for SMEs

2026-08-01 — Compliance

Tax is the part of business most Nigerian founders avoid until a letter arrives. But the rules are more manageable than they look — especially since recent reforms exempted many small businesses. Here is the plain-English version.

## The four taxes every Nigerian business should understand

### 1. VAT (Value Added Tax) — 7.5%
Charged on most goods and services. You collect it from customers on your invoices and remit it monthly. Businesses with turnover **below ₦25 million** are exempt from charging VAT, but should still understand it — cross the threshold and obligations begin.

### 2. PAYE (Pay As You Earn)
Income tax you deduct from employees'' salaries every month and remit to the state tax authority. Rates are graduated. Recent reforms exempt low earners entirely, so payroll software must apply the current bands — not last year''s.

### 3. CIT (Company Income Tax)
Tax on company profits. **Small companies (turnover below ₦50 million with total fixed assets under the threshold) pay 0%.** Larger companies pay up to 30%. Accurate books are what prove which band you belong to.

### 4. WHT (Withholding Tax)
An advance tax deducted at source on certain payments (rent, professional fees, contracts). If clients deduct WHT from your invoices, keep the credit notes — they offset your CIT.

## The compliance rhythm

- **Monthly:** VAT returns and PAYE remittance
- **Annually:** CIT returns (within 6 months of your financial year end), plus employee annual returns
- **Always:** keep records — invoices, receipts, payroll and bank statements — because assessments are argued with evidence

## How Kontrol keeps you compliant

- Invoices apply VAT correctly (and cleanly omit it when you are exempt)
- Payroll calculates PAYE, pension and other deductions with current rates, and produces payslips and remittance schedules
- Every sale and expense is recorded, so your CIT filing starts from real books, not guesswork
- E-invoicing support keeps your receipts and invoices aligned with NRS (FIRS) fiscalisation requirements as they roll out
- Filing reminders mean deadlines stop being surprises

Tax compliance is cheaper than tax trouble — penalties and back-assessments cost far more than simply keeping clean records from day one.

**Stay compliant without the headache.** [See Kontrol''s tax tools](/tax-compliance).