As Nigeria moves fully into 2026, tax compliance has become more important than ever for individuals, businesses, freelancers, and digital entrepreneurs. While there has been no complete overhaul of Nigeria’s tax laws, enforcement has significantly intensified through technology, audits, and data sharing.
This detailed guide explains all major taxes applicable in Nigeria in 2026, who pays them, current rates, exemptions, and compliance requirements.
Overview of Nigeria’s Tax System
Nigeria operates a three-tier tax system:
- Federal Government – Taxes collected by the Federal Inland Revenue Service (FIRS)
- State Governments – Taxes collected by State Internal Revenue Services (SIRS)
- Local Governments – Levies and rates at grassroots level
Understanding which authority collects each tax is critical for compliance.
1. Personal Income Tax (PIT)
Who Pays:
- Salaried employees
- Self-employed individuals
- Freelancers and consultants
- Sole proprietors and partners
Governing Law: Personal Income Tax Act (PITA)
Personal Income Tax Rates (2026)
| Income Band | Tax Rate |
|---|---|
| First ₦300,000 | 7% |
| Next ₦300,000 | 11% |
| Next ₦500,000 | 15% |
| Next ₦500,000 | 19% |
| Next ₦1,600,000 | 21% |
| Above ₦3,200,000 | 24% |
Allowances & Reliefs
- Consolidated Relief Allowance (₦200,000 or 1% of gross income + 20% of gross income)
- Pension contributions
- National Housing Fund (NHF)
- Life insurance premiums
PAYE System
Employers deduct monthly tax under Pay-As-You-Earn (PAYE) and remit to the State IRS where the employee resides.
2. Company Income Tax (CIT)
Who Pays: Registered companies operating in Nigeria
Governing Law: Companies Income Tax Act (CITA)
| Company Turnover | CIT Rate |
|---|---|
| ₦25 million or less | 0% |
| ₦25m – ₦100m | 20% |
| Above ₦100m | 30% |
Returns must be filed within 6 months after accounting year-end or 18 months after incorporation for new companies.
3. Value Added Tax (VAT)
VAT Rate: 7.5%
Collected by: Federal Inland Revenue Service (FIRS)
VAT Applies To:
- Goods sold in Nigeria
- Services rendered in Nigeria
- Digital services consumed in Nigeria
VAT-Exempt Items
- Basic food items
- Medical services and drugs
- Educational services
- Residential rent
- Exported goods
VAT returns must be filed monthly on or before the 21st day of the following month.
4. Capital Gains Tax (CGT)
Rate: 10%
Applies to gains from sale of:
- Land and buildings
- Business assets
- Shares (subject to exemptions)
- Intellectual property
5. Withholding Tax (WHT)
Withholding Tax is an advance payment of income tax.
| Transaction | Rate |
|---|---|
| Rent | 10% |
| Dividends | 10% |
| Interest | 10% |
| Professional services | 5–10% |
| Contracts | 5% |
6. Tertiary Education Tax (TET)
Rate: 2.5% of assessable profit
Applies to companies liable to Company Income Tax.
7. NITDA Technology Levy
Rate: 1% of profit before tax
Applies to banks, telecoms, insurance firms, pension managers, and large ICT companies.
8. Stamp Duties
Stamp duties apply to agreements and bank transfers.
- ₦50 charge on electronic transfers of ₦10,000 and above
9. State & Local Government Taxes
- Business premises levy
- Development levy
- Tenement rates
- Market and signage fees
Rates vary by state and local government.
10. Digital Economy & Online Income Taxation
Income earned from online activities such as freelancing, content creation, online sales, crypto trading, and foreign platforms is taxable in Nigeria.
Tax authorities now monitor digital income more closely.
Penalties for Tax Non-Compliance
- Late filing penalties
- Interest on unpaid tax
- Business closure
- Legal prosecution in severe cases
Conclusion
In 2026, Nigeria’s tax laws remain largely unchanged, but enforcement is stronger than ever. Individuals and businesses are advised to register with tax authorities, file accurate returns, keep proper records, and seek professional advice where necessary.
Tax compliance is now essential for financial credibility and business survival in Nigeria.
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