Are you wondering how to pay zero tax in Nigeria 2026? The answer is simpler than you think. Nigeria’s historic tax reform, signed into law by President Bola Tinubu on June 26, 2025, introduces a groundbreaking opportunity for small businesses to pay zero tax in Nigeria 2026 legally.
According to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reform Committee, approximately 97-98% of businesses can benefit from significant tax relief under the new Nigeria Tax Act. The reform specifically allows qualifying small companies to achieve zero tax in Nigeria 2026 status paying 0% Company Income Tax, 0% Capital Gains Tax, and enjoying exemption from the 4% Development Levy.
If you’re asking “can my business pay zero tax in Nigeria?”, you need to understand the ₦100 million tax exemption threshold and whether registering as a limited liability company makes sense for your business. This is your complete guide to how to pay zero tax in Nigeria 2026, backed by official tax reform data and expert implementation strategies from Rexobe Consult.
Can My Business Pay Zero Tax in Nigeria? Ensure you read the case studies on the last paragraph.
Yes, your business can legally pay zero tax in Nigeria 2026 if you meet two specific requirements under the Nigeria Tax Act 2025.
The question “can my business pay zero tax in Nigeria?” is one of the most searched tax queries right now, and for good reason. The new tax reform created a clear path for small companies to operate with zero tax liability.
The Two-Part Qualification Test
Your business qualifies to pay zero tax in Nigeria 2026 when:
- Annual turnover is ₦100 million or less
- Total fixed assets do not exceed ₦250 million
Both conditions must be satisfied simultaneously. This represents a dramatic increase from the previous ₦25 million threshold, meaning thousands more businesses now qualify.
What “Zero Tax” Actually Means
When people ask “can my business pay zero tax in Nigeria?“, they need to understand what’s exempt:
✅ 0% Company Income Tax (normally 30%)
✅ 0% Capital Gains Tax (normally 30%)
✅ 0% Development Levy (normally 4%)
✅ No withholding tax deductions on income
✅ No withholding tax on supplier payments
✅ VAT exemption (if turnover ≤₦100M)
Important: This applies to limited liability companies registered with the Corporate Affairs Commission (CAC). Business names (sole proprietorships) follow different tax rules under Personal Income Tax.
Who Doesn’t Qualify?
You cannot pay zero tax in Nigeria 2026 if:
- You provide professional consultancy services (explicitly excluded)
- Your turnover exceeds ₦100 million in any year
- Your fixed assets exceed ₦250 million
- You’re part of a multinational group with global revenue €750M+
Confused about your eligibility? Rexobe Consult provides zero tax qualification assessments. WhatsApp us now to find out if you qualify.
What is the Small Company Tax Exemption 2026?
The small company tax exemption 2026 is Nigeria’s most generous tax incentive for entrepreneurs and SMEs. Taiwo Oyedele explicitly designed this exemption to reduce the tax burden on productive sectors and encourage business formalisation.
Official Definition Under the Nigeria Tax Act 2025
A “small company” under the small company tax exemption 2026 is defined in Section 56 of the Nigeria Tax Act as:
“A company with annual gross turnover of ₦100 million or less AND total fixed assets not exceeding ₦250 million.”
How This Changed From Previous Law
| Element | Old Law (Until Dec 31, 2025) | Small Company Tax Exemption 2026 |
|---|---|---|
| Turnover Threshold | ₦25 million | ₦100 million |
| Asset Threshold | Not specified | ₦250 million |
| CIT Rate | 20% (₦25M-₦100M) | 0% |
| CGT Rate | 10% | 0% |
| Development Levy | Various separate levies | 0% (exempt) |
The small company tax exemption 2026 consolidates multiple tax exemptions into one clear framework, making compliance significantly easier.
What Small Companies Save Annually
Example Calculation:
A small trading company with ₦50 million turnover and ₦15 million profit:
Before Small Company Tax Exemption 2026:
- Company Income Tax (20%): ₦3,000,000
- Tertiary Education Tax (2.5%): ₦375,000
- NASENI Levy (1%): ₦150,000
- Total Tax: ₦3,525,000
After Small Company Tax Exemption 2026:
- All taxes: ₦0
- Annual Savings: ₦3,525,000
This is the power of understanding how to pay zero tax in Nigeria 2026 through proper business structuring.
Eligibility Verification Checklist
To benefit from the small company tax exemption 2026, verify:
□ You’re registered as a limited liability company (not business name)
□ Your annual turnover ≤ ₦100 million
□ Your total fixed assets ≤ ₦250 million
□ You don’t provide professional consultancy services
□ You maintain proper financial records
□ You file returns with Nigeria Revenue Service (even if ₦0 tax)
Not sure about your figures? Rexobe Consult offers comprehensive turnover and asset analysis to confirm your small company tax exemption 2026 eligibility. Click Here to Speak with an Expert.
How Do I Qualify for 0% Company Tax?
Qualifying for 0% company tax requires strategic planning before January 1, 2026. Here’s exactly how to qualify for 0% company tax under the new reform.
Step 1: Register as a Limited Liability Company
The 0% company tax benefit applies exclusively to limited liability companies, not business names.
Action Required:
- If you’re currently a business name, upgrade to LLC before December 31, 2025
- New businesses should register directly as LLC
- Existing LLCs need no structural change, just verification
Cost: ₦80+k -200,000 for LLC registration
Timeline: 2-4 weeks
ROI: Save ₦400,000-₦12,000,000 annually in taxes
Step 2: Structure to Stay Under ₦100 Million
Strategic structuring is key to how to qualify for 0% company tax:
Legitimate Strategies:
- Sell excess assets before year-end if near ₦250M threshold
- Lease equipment instead of purchasing to control asset values
- Separate business units into distinct legal entities (avoid artificial splitting)
- Outsource non-core functions to reduce asset holdings
- Distribute dividends regularly to manage retained earnings
Prohibited Strategies:
- Artificially splitting one business into multiple companies solely for tax avoidance
- Falsifying turnover records
- Transferring income to related parties without commercial substance
Step 3: Maintain Compliant Records
To qualify for 0% company tax, you must:
✓ Keep audited financial statements (if turnover >₦50M)
✓ File annual returns with CAC by March 31 each year
✓ Submit tax returns to Nigeria Revenue Service (showing ₦0 tax)
✓ Maintain invoices, receipts, and transaction records
✓ Track turnover and assets monthly to avoid exceeding limits
Step 4: Implement Proper Accounting Systems
How to qualify for 0% company tax includes technology requirements:
- Use accounting software (QuickBooks, Sage, Zoho Books, or Xero)
- Implement e-invoicing systems for VAT compliance
- Maintain digital records for 6 years
- Generate monthly financial reports
- Track fixed asset register with depreciation
Common Mistakes That Disqualify Businesses
❌ Not filing tax returns (thinking ₦0 tax means no filing)
❌ Including personal assets in business financial statements
❌ Poor record-keeping leading to inaccurate turnover calculations
❌ Mixing business name and LLC activities
❌ Ignoring related-party transaction rules
Need help implementing these steps? Rexobe Consult specialises in helping businesses qualify for 0% company tax through proper structuring, accounting system setup, and ongoing compliance monitoring. Visit us at B3 suite 13 FF, Abisco Lane, Rauf Aregbesola Shopping Complex, Ipaja Road, Lagos State, or WhatsApp: +234 806 383 0956.
Nigeria ₦100 Million Tax Exemption Requirements
The Nigeria ₦100 million tax exemption is the cornerstone of the 2026 tax reform. Understanding these requirements precisely determines whether your business can pay zero tax in Nigeria 2026.
Primary Requirement: Turnover Threshold
What counts as “turnover” under the Nigeria ₦100 million tax exemption?
Turnover = Total revenue from:
- Sale of goods
- Provision of services
- Interest income
- Rental income
- Commission income
- Any other business income
What doesn’t count:
- Capital introduced by shareholders
- Loans received
- Chargable Asset (these go to the capital gains calculation)
- VAT collected (not part of turnover)
Secondary Requirement: Fixed Assets Limit
What qualifies as “fixed assets” under the Nigeria ₦100 million tax exemption?
Fixed assets include:
- Land and buildings
- Plant and machinery
- Motor vehicles
- Furniture and fittings
- Computer equipment
- Any asset used for more than one year in business
Value used: Net book value (cost minus accumulated depreciation)
Important note: Personal assets must not be counted in your business fixed assets.
Should I Register Business Name or LLC for Tax Savings?
This is the critical question: should I register business name or LLC for tax savings in 2026? The answer depends entirely on your revenue level, but for most businesses, an LLC delivers substantially more tax savings.
Tax Comparison: Business Name vs LLC
Business Name (Sole Proprietorship):
- You pay Personal Income Tax (PIT) on profits
- Tax rates: 0% to 25% progressive
- No separate legal entity
- Unlimited personal liability
Limited Liability Company:
- Company pays Company Income Tax (CIT)
- Tax rate: 0% if qualified as small company, 30% if not
- Separate legal entity
- Limited liability protection
Real Numbers: Tax Savings Comparison
Scenario: ₦10 Million Annual Profit
| Structure | Tax Calculation | Tax Paid | Effective Rate |
|---|---|---|---|
| Business Name | PIT (progressive) | ₦1,000,000+ | 10%+ |
| LLC (Small Co.) | 0% exemption | ₦0 | 0% |
| Annual Savings with LLC | ₦1,000,000 |
Scenario: ₦50 Million Annual Profit
| Structure | Tax Calculation | Tax Paid | Effective Rate |
|---|---|---|---|
| Business Name | PIT (up to 19%) | ₦9,000,000+ | 18%+ |
| LLC (Small Co.) | 0% exemption | ₦0 | 0% |
| Annual Savings with LLC | ₦9,000,000 |
The Sweet Spot: If your business earns ₦1M-₦100M annually, the question of should I register business name or LLC for tax savings has a clear answer: LLC saves you millions.
Additional Benefits of LLC Beyond Tax
When deciding should I register business name or LLC for tax savings, consider:
- Legal Protection: Personal assets safe from business debts
- Credibility: Banks, investors, and corporate clients prefer LLCs
- Fundraising: Can issue shares to raise capital
- Perpetual Existence: Business continues beyond owner’s life
- Transferability: Can sell shares or exit smoothly
Ready to make the switch? Rexobe Consult handles complete business restructuring, from business name to limited liability company registration, ensuring you qualify for zero tax in Nigeria 2026. Follow us on Instagram @rexobeconsult for more tax-saving tips.
How to Upgrade from Business Name to LLC Nigeria
How to upgrade from business name to LLC Nigeria is one of the most strategic moves you can make before January 1, 2026. Here’s the exact step-by-step process.
Why Upgrade Now?
Before we cover how to upgrade from a business name to LLC Nigeria, understand the urgency:
⏰ January 1, 2026, deadline – New tax law takes effect
₦9-12 million annual tax savings for businesses earning ₦50M-₦100M
✅ 0% tax rate only available to LLCs, not business names
️ Legal protection for your personal assets
Critical Timing Consideration
To qualify for zero tax in Nigeria 2026 from January 1:
Start upgrade by November 2025 to ensure completion before year-end
Earliest tax savings: January 2026 (if registered before Dec 31, 2025)
Latest recommended start: December 1, 2025 (expedited processing)
Need expert guidance on how to upgrade from a business name to LLC Nigeria? Rexobe Consult provides complete upgrade services, handling all paperwork, CAC filings, and post-incorporation compliance. We’ve helped 200+ businesses transition successfully. Click here to get start immediately
Can I Split My Company to Qualify for 0% Tax?
This is a controversial question many business owners ask: can I split my company to qualify for 0% tax? The answer is nuanced and requires careful legal understanding.
The Short Answer
Yes, but only if done correctly for legitimate business reasons. Artificial splitting solely for tax avoidance is prohibited and carries severe penalties.
Legitimate vs. Artificial Splitting
✅ LEGITIMATE BUSINESS SEPARATION (Allowed):
You can split your company to qualify for 0% tax when:
- Different business lines with separate operations
- Example: Manufacturing company separates into production LLC and trading LLC
- Each has distinct customers, operations, and business purposes
- Geographical expansion
- Example: Lagos company opens Abuja operations as separate LLC
- Each serves local market independently
- Risk management
- Example: Real estate developer creates separate LLCs for each major project
- Commercial substance and genuine risk isolation
❌ ARTIFICIAL SPLITTING (Prohibited):
You cannot split your company to qualify for 0% tax when:
- Same customers, same services, same location
- Simply dividing invoices between multiple companies
- No independent management or operations
- All companies run from same office by same person
- Sole purpose is tax avoidance
- No business rationale beyond tax savings
The “Commercial Substance Test”
Nigeria Revenue Service will apply these tests:
□ Do the separate companies have distinct business purposes?
□ Do they maintain separate books and records?
□ Do they have independent management?
□ Do they serve different customer bases?
□ Would the structure exist absent tax considerations?
If you answer “no” to most questions, your structure may be challenged.
Penalties for Improper Splitting
If caught using artificial arrangements:
⚠️ Tax reassessment – All companies treated as one, 30% CIT applied
⚠️ Penalties – Up to 300% of tax underpaid
⚠️ Interest charges – On late payments
⚠️ Criminal prosecution – In severe cases of fraud
Need expert guidance on corporate structuring? Rexobe Consult provides comprehensive business restructuring advisory, ensuring your corporate structure is both tax-efficient and legally compliant. WhatsApp us: +234 806 383 0956.
Take Action Now: Secure Your Zero Tax Status for 2026
You now understand how to pay zero tax in Nigeria 2026. The question is: what will you do with this knowledge?
The January 1, 2026, Deadline is Real
Every day you delay costs you money. If your business earns ₦50 million in profit:
- Action today: Register LLC → Save ₦9 million in 2026
- Action in March 2026: Register LLC → Save ₦0 in 2026 (not registered before year start)
Why Choose Rexobe Consult?
We specialize in helping Nigerian businesses achieve zero tax status legally and efficiently:
✅ 200+ successful LLC registrations in 2025
✅ ₦2.3 billion in cumulative client tax savings
✅ 100% CAC approval rate on submissions
✅ Expert knowledge of Nigeria Tax Act 2025
✅ End-to-end service from registration to compliance
Contact Rexobe Consult Today
Visit Our Office:
B3 Suite 13 FF, Abisco Lane Rauf Aregbesola Shopping Complex Ipaja Road, Lagos State
WhatsApp: +234 806 383 0956
Website: www.rexobeconsult.com
Instagram: @rexobeconsult
Final Thoughts: Your Zero Tax Future Starts Today
The opportunity to pay zero tax in Nigeria 2026 is unprecedented. Taiwo Oyedele and the Presidential Tax Reform Committee designed this exemption specifically to help small businesses like yours thrive.
The businesses that will dominate Nigeria’s economy in 2026 aren’t necessarily those with the best products—they’re the ones with the smartest tax strategies. While your competitors continue paying ₦9-12 million annually in unnecessary taxes, you could be reinvesting that money into growth, hiring, and innovation.
The choice is yours:
❌ Stay as a business name, pay ₦9 million in taxes
✅ Upgrade to LLC, pay ₦0, invest ₦9 million in growth
Can your business pay zero tax in Nigeria? Yes. Absolutely. And we’ll show you exactly how.
Click here to WhatsApp us now – Consult us to get your eligibility assessment within 24 – 48 hours.
Disclaimer: This article provides general information about Nigeria’s 2026 tax reform based on the Nigeria Tax Act 2025 and public statements from Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reform Committee. For specific advice regarding your business, consult qualified tax professionals at Rexobe Consult.
Published: November 2025 | Author: Rexobe Consult Tax Advisory Team | Location: Lagos, Nigeria
Calculation Example
Case Study on How to Pay Zero Tax in Nigeria 2026: Ade’s Trading Company
Annual Revenue:
- Goods sold: ₦85 million
- Commission earned: ₦8 million
- Bank interest: ₦500,000
- Total Turnover: ₦93.5 million ✅ (Below ₦100M)
Fixed Assets (Net Book Value):
- Shop building: ₦180 million
- Delivery vehicles: ₦25 million
- Furniture: ₦5 million
- Computers: ₦2 million
- Total Fixed Assets: ₦212 million ✅ (Below ₦250M)
Result: Ade’s Trading Company qualifies for the Nigeria ₦100 million tax exemption and pays ₦0 tax.
Documentation Requirements
To claim the Nigeria ₦100 million tax exemption, maintain:
Monthly sales records and invoices
Annual audited accounts (if turnover >₦50M)
Fixed asset register with acquisition dates and values
Depreciation schedule
Bank statements showing all receipts
CAC annual return filings
Tax returns (even if showing ₦0 tax due)
Overwhelmed by the requirements? Rexobe Consult handles all documentation, record-keeping, and compliance for businesses seeking the Nigeria ₦100 million tax exemption. Contact us today for a profession consultation.
