The 15% minimum effective tax rate in Nigeria is a floor on what a large company pays. If your effective tax rate falls below 15% of net income, you owe the difference as top-up tax. It applies to companies with aggregate turnover of ₦50 billion or more in a financial year, and to Nigerian members of multinational groups with group turnover of €750 million or more.
What is the 15% minimum effective tax rate in Nigeria?
The rule sits in section 57 of the Nigeria Tax Act 2025, which took effect on 1 January 2026. The headline company income tax rate stays at 30%. The floor only bites when incentives, capital allowances or losses drag your effective rate under 15%.
The base is net income, which PwC describes as profit before tax, excluding franked investment income and unrealised gains or losses. BusinessDay reports that the taxes counted toward the 15% include company income tax, petroleum profit tax, hydrocarbon tax and the 4% development levy. The test runs off audited financial statements, so your audit file now drives your tax floor.
Who does the 15% minimum tax apply to?
- Large domestic companies. Aggregate turnover of ₦50 billion or more in the financial year.
- Multinational group members. Group turnover of at least €750 million, the same size test used in the OECD global minimum tax. Some local commentary prints this figure in pounds, so confirm the wording in the Act for your group.
- Outside the rule. Companies with turnover below ₦100 million, and free zone companies on export income, provided they are not part of a multinational group.
A company can be caught by turnover alone. A ₦60 billion trading business with thin margins and heavy allowances is in scope even if profit is small.
How does the top-up tax work?
Take a ₦60 billion turnover contractor with ₦9 billion of net income in audited accounts. After capital allowances and an incentive claim, its total tax charge, development levy included, is ₦900 million. That is an effective rate of 10%.
The floor is 15% of ₦9 billion, which is ₦1.35 billion. The company owes a top-up of ₦450 million. The figures are our illustration, not a client case.
There is a cross-border limb too. BusinessDay cites section 6(3) of the Act: where a foreign subsidiary of a Nigerian parent is taxed below 15% in its own country, the Nigerian parent pays the shortfall in Nigeria.
What has the NRS said about computing company tax?
The Nigeria Revenue Service issued Information Circular No. 2026/01 on 29 June 2026, and KPMG published its summary on 1 October 2026. The circular explains how to compute company income tax and the development levy. The levy is 4% of total assessable profits. It does not apply to small companies or non-resident companies, and profits taxed under hydrocarbon tax are excluded. Our earlier post explains who pays the 4% development levy.
Why is the NRS watching large companies closely?
Money is coming in, but not evenly. A report presented at the August FAAC meeting shows the NRS collected ₦3.70 trillion in August 2026. Petroleum royalties brought in about ₦993 billion, well above their ₦675 billion budget. Company income tax, capital gains tax and stamp duty together raised ₦1.04 trillion against a ₦1.07 trillion budget.
Large listed companies are paying more. ThisDay reports that 20 listed firms remitted ₦3.04 trillion in income tax in the first half of 2026, up 79.5% from ₦1.69 trillion a year earlier.
What this means for your business
If your turnover is within reach of ₦50 billion, or you sit in a large group, do this before year-end:
- Test the threshold. Compare financial-year turnover with ₦50 billion, and group turnover with €750 million.
- Compute your effective rate. Divide total tax charge, levy included, by net income as defined above. Do it on the audited numbers, not the tax computation alone.
- Model your incentives. Capital allowances, exempt income and brought-forward losses all lower the rate. Know how far each takes you below 15% before you claim it.
- Check foreign subsidiaries. List every subsidiary and its local tax rate. A low-tax shipping or trading entity can create a Nigerian bill.
- Brief your auditors early. The floor needs a clean reconciliation from profit before tax to net income. Agree the method before the 31 December year-end.
Filing mechanics are covered in our guide to filing company income tax on Rev360.
FAQ
Does the 15% minimum tax apply to small companies?
No. Companies with turnover below ₦100 million are outside the rule, and the ₦50 billion turnover test means most mid-sized businesses are not caught. Small companies are also outside the 4% development levy.
Is the top-up tax paid on top of the 30% company income tax?
It is a top-up only where your effective rate is below 15%. If your effective rate is already 15% or more, nothing extra is due. The company income tax rate of 30% is unchanged.
Can free zone companies avoid the 15% floor?
Free zone companies are excluded on export income, as long as they are not part of a multinational group. A free zone entity inside a qualifying group can still be pulled in, so check the group position.
Not sure whether the 15% floor reaches your company? VOG Global can run the threshold test, compute your effective rate and plan the audit file before year-end. Contact VOG Global at vog.global or visit us in Area 10, Garki, Abuja.