Tax

The ₦100 Million Tax Exemption Myth — How to Prove Your SME Qualifies

Draft chatter said ₦100m. The gazetted Nigeria Tax Act sets small-company CIT relief at ₦50m turnover and ₦250m fixed assets — and professional services are out. Here’s how to prove where you stand.

Let’s kill the WhatsApp rumour first

Picture this: you’re in a founders’ group chat. Someone drops a voice note — “Guys, under ₦100 million you don’t pay company tax again o.” The chat explodes. Emojis. Screenshots. Someone already telling their accountant to “relax.”

Pause.

That headline is incomplete — and if you plan cash flow on it, you’ll get hurt. The Tax Reform Acts signed in June 2025 created two different “small” tests. Mixing them up is how founders overclaim CIT relief or sleep on VAT admin relief they actually qualify for.

Small company (income tax)

Under the Nigeria Tax Act (ss. 56 & 202): turnover ≤ ₦50m and fixed assets ≤ ₦250m. That unlocks 0% CIT — and related CGT / Development Levy relief for qualifying small companies. This is the “I can reinvest every naira of profit” lane.

Small business (VAT admin)

Under the Nigeria Tax Administration Act (s. 147): turnover ≤ ₦100m and fixed assets under ₦250m. That unlocks VAT admin relief, including exemption from certain VAT return filing under s. 22. Helpful. Not the same as zero CIT.

Call it the “₦100 million exemption” only if you mean VAT-side small-business relief. For Companies Income Tax at 0%, the gazetted gate is ₦50 million turnover — not ₦100 million.

KPMG notes earlier drafts used ₦100m before the Act settled at ₦50m. Some early summaries (including PwC) still quote the higher figure. EY lines up with ₦50m / ₦250m. Cross-check the gazetted Act with your adviser — not the loudest person in the group chat.

The dual test for 0% CIT

You need all three:

  1. Gross turnover ≤ ₦50 million for the year (all revenue before expenses).
  2. Total fixed assets ≤ ₦250 million (PPE, vehicles, property — not inventory, receivables, or cash).
  3. You are not in excluded professional services.

Fail any one and you’re generally in the 30% CIT world, not the 0% lane. No soft landings for vibes.

Professional services are out

Both definitions exclude professional services — law, accounting, consultancy, and similar. So that lean consultancy doing ₦20m? Looking “SME-sized” on Instagram does not unlock small-company CIT relief. Structure and activity matter.

How to prove you qualify

Tax authorities don’t take “trust me, Chief” as evidence. Build a file you can defend when someone asks for receipts.

1. Validate your TIN

Start on tin.jtb.gov.ng. If your name, RC number, or address doesn’t match CAC / FIRS, fix that before you argue thresholds. Bad master data sinks good claims — like showing up to a pitch with the wrong company name on the deck.

2. Prove turnover

You need a trail: sales ledger, bank credits reconciled to invoices, management accounts that match what you’ll file. If your “books” live across WhatsApp chats and three POS notebooks, you’re not ready for an audit conversation.

3. Prove fixed assets

Keep a fixed asset register — description, date, cost, depreciation, carrying amount. Total carrying value must sit ≤ ₦250m for small-company status. Don’t invent depreciation the night before filing. That’s how stories end badly.

4. Document what you actually do

Sell goods or run a non-professional trade? Keep contracts and invoices that show it. Professional services? Plan for standard CIT and stop hoping the exemption applies by accident.

Quick self-check

  • Turnover above ₦50m? You’re not a small company for 0% CIT.
  • Fixed assets above ₦250m? Same answer.
  • In professional services? Exemption typically doesn’t apply.
  • Between ₦50m and ₦100m? You may still sit in VAT admin relief without 0% CIT — confirm with your adviser. Don’t assume both come as a package deal.

That middle band is where founders get confused. Stay sharp there.

Your homework this week

  1. Pull year-to-date turnover and a draft fixed-asset total.
  2. Validate your TIN on tin.jtb.gov.ng.
  3. Ask your accountant in writing: are we a small company under NTA s.56/202, a small business under NTAA s.147, both, or neither?
  4. Keep e-invoicing clean too — exemption talk doesn’t cancel fiscalisation: How FIRS e-invoicing affects SMEs.

Clean books aren’t vanity. They’re how you keep the relief you’re actually entitled to — and sleep when FIRS/NRS asks for proof.

This article is for SME awareness, not legal or tax advice. Confirm your position with a tax adviser.

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