Nigeria's 2026 Tax Reform Act — the most significant rewrite in a generation — creates two zero-rates that matter for every freelancer and small shop: a small company exemption at ₦50 million in turnover and a personal income tax-free threshold at ₦800,000.
The New Zero Lines
Small company exemption: Companies with annual turnover at or below ₦50,000,000 and with fixed assets below a threshold are exempt from companies income tax (CIT) at 30% — the rate is 0% on profit for that turnover band, provided the company is not in an excluded sector and is compliant with filing.
Personal tax-free threshold: Individuals whose annual personal income is at or below ₦800,000 pay 0% personal income tax. Above that, progressive rates apply from 15%.
Who Qualifies and Who Does Not
- Small vs. medium vs. large: The exemption tiers are based on turnover, not profit. A company with ₦48 million in turnover and ₦4 million in profit may be exempt; a company with ₦52 million and ₦2 million profit is not. The threshold is turnover-first.
- Freelancer as business name vs. limited: An individual freelancer is assessed under personal income tax rules (the ₦800K threshold), not the small company exemption. Incorporating to access the ₦50M exemption changes liability, filing, and compliance in ways that may cost more than the CIT saved.
- Withholding and VAT still apply: Exemption from CIT does not exempt from VAT, withholding tax, or levies that are collected at source.
Bookkeeping That Keeps the Exemption
- Turnover tracker: Monthly gross revenue, annualized. Set an alert at ₦42M and ₦48M. A late December invoice that pushes you over ₦50M moves you from 0% to 30% on the year's profit.
- FIRS filing: Even exempt companies must file — the exemption is claimed on the return, not by not filing. Keep e-filing credentials active.
- Personal vs. company separation: A freelancer who mixes personal and business turnover risks losing the small company exemption's turnover calculation and the personal threshold's clarity.
Keep Your Finances Organized From Day One
A turnover-based exemption is unforgiving of messy gross tracking. Every naira of revenue counts toward the line, and the line is now the difference between 0% and 30%.
Beancount.io keeps turnover as a ledger that sums gross by month, by threshold, and by FIRS filing, version-controlled and comparable before the year closes. Get started for free and make the new zero a planned stay, not a surprise exit.