The tax note for a Nigerian company from 2026
What a Nigerian company's tax note should show now that company income tax and the Development Levy apply under the Nigeria Tax Act 2025.
By Achekam · · 5 min read · For Accountants & audit firms in Nigeria
For years, the taxation note in a Nigerian company's statements had a familiar shape: company income tax, tertiary education tax, perhaps the IT levy, a reconciliation and a payable. The Nigeria Tax Act 2025 changed the charges behind that note, and the first year-ends under the new law are now reaching the preparation stage. A note rolled forward from last year will carry the wrong headings, the wrong rates and, for small companies, a charge that should no longer be there.
This article sets out what the note should show for periods under the new Act, what changes for small companies, how to handle years that began before the change, and what Achekam does and does not compute for it today.
Company income tax and the Development Levy as separate charges
At the time of writing, from 1 January 2026, a small company in Nigeria pays 0% company income tax and every other company pays 30%. Companies other than small and non-resident companies also pay a Development Levy of 4% of assessable profits. The levy replaces the tertiary education tax, the NITDA IT levy, the NASENI levy and the Cybercrime Act levy; whether it also replaces the Police Trust Fund levy is uncertain, so do not assume either way without advice.
Present the two charges separately in the note. The levy is charged on assessable profits, and its rate, its exemptions and the companies it applies to all differ from those of company income tax. A combined line hides those differences and makes the reconciliation hard to follow. Because the levy is calculated on profits, decide whether it is presented within the income tax charge, state that choice in the accounting policy, and apply it consistently.
A note for a company that is not small would typically show:
| Line | Basis |
|---|---|
| Company income tax, current year | 30% for a company that is not small |
| Development Levy, current year | 4% of assessable profits |
| Adjustments for prior years | Under- or over-provisions |
| Deferred tax | Movement in temporary differences |
| Total tax charge | Sum of the above |
For companies in multinational groups or above a turnover threshold, section 57 of the Act also sets a minimum effective tax rate of 15%. Achekam treats that turnover threshold as a contested figure and does not use it until it has been chosen and approved, so if a client may be affected, take advice and say in the note how the test was applied.
The NRS's Information Circular No. 2026/01 explains how companies, including small and exempt companies, work out assessable and total profits, basis periods, capital allowances, losses and the 4% development levy under the Nigeria Tax Act. It is the document to have open while preparing the computation behind the note.
Small companies at 0%: what still needs disclosing
A small company's tax charge may be nil, but its note is not empty. Disclose:
- that the company qualifies as a small company for the period, and the basis of that conclusion;
- that the company income tax rate applied is 0%, and that the Development Levy does not apply to it;
- any deferred tax position and why it is or is not recognised;
- any prior-year tax still payable under the old law.
The qualification itself needs care. The small-company turnover figure is one of three Nigerian figures Achekam treats as contested: it does not use it until one platform administrator chooses a candidate with a reason and a different administrator approves it, and until then the size class shows as undetermined, with what each candidate would give. Do not let the note say "small company" more confidently than the facts support.
Small companies still file. Every Nigerian company, including a small or exempt one, must file an annual self-assessment return, due within 6 months after the year end for a company in business more than 18 months, and a small company may attach taxpayer-attested accounts instead of audited ones.
Years that started before 1 January 2026
The Nigeria Tax Act 2025 commenced on 1 January 2026, and tax periods before that date stay under the repealed laws. A company with a December year end has a clean break. A company whose year began before 1 January 2026 and ends after it does not.
Achekam holds no Nigerian tax rule for periods before 1 January 2026 and refuses to compute them. Its company tax and levy rules resolve on the period's first day, so a period that straddles 1 January 2026 is refused rather than split. For those clients, the firm prepares the computation outside Achekam, applying whatever transitional treatment the law requires, and the note explains the basis used. The transitional questions are covered in years straddling 1 January 2026.
Reconciling the charge to accounting profit
The rate reconciliation should start from accounting profit before tax multiplied by 30%, then explain each difference: expenses the law does not allow, income not taxable, the difference between depreciation and capital allowances, losses used or not recognised, and prior-year adjustments. Show the Development Levy as its own line or its own short reconciliation, because its base is different.
Add a tax payable movement: opening balance, charges for the year, payments made, and closing balance. Where a company still owes tax under the old law, show those balances separately so the reader can see what belongs to which regime.
Where the computation comes from while rules await approval
In the Studio, Achekam includes standard accounting policy wording based on IFRS for SMEs, labelled for review before issue, and staff can write their own policies. Notes take their figures from the mapped trial balance; facts the trial balance does not hold are left as '[to be completed]', and a line carries a note reference only when that note is in the set. Map company income tax and the Development Levy to separate accounts, and the note can show them separately.
Once its rules are approved, Achekam's Revenue Service Centre computes Nigerian company income tax with the Development Levy and the minimum-ETR check. But every Nigerian tax figure in Achekam's rule book was seeded 'under review', and Achekam computes nothing from a figure until a platform administrator approves it. Until then, the firm computes the charge itself and enters the result through the trial balance. The wider changes for 2026 are summarised in Nigerian company income tax from 2026.
Before the first new-law note goes out
Retire last year's note template. Build a new one with separate lines for company income tax and the Development Levy, a small-company version, and a version for straddling periods, and have a partner approve all three before the season starts.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
