SMEs vs Big Corporations: Who Benefits Most from Nigeria’s New CIT Policy?

Category	SMEs (≤ ₦100m turnover)	Big Corporates (> ₦100m turnover)
CIT Rate	0%	30%
CGT	Exempt	30% (possible 25% in 2026)
Development Levy	Exempt	4% of assessable profits
Compliance Burden	Minimal	High (ETR rules, levy consolidation)
Net Benefit	Major relief, lower costs	Higher tax load, reduced arbitrage

Nigeria’s new Companies Income Tax (CIT) policy, which started in January 2026, is one of the biggest tax changes in recent years. 

It is designed to make taxes easier, improve compliance, and help businesses grow. But the big question is: who gains more from this change, small and medium enterprises (SMEs) or big corporations?

The New CIT Policy in Simple Terms

The government raised the threshold for tax exemption. Any company with turnover of ₦100 million or less, and assets not more than ₦250 million, no longer pays CIT, Capital Gains Tax (CGT), or the new Development Levy. Before now, only companies below ₦25 million enjoyed this relief.

Large corporates, on the other hand, still pay 30 percent CIT. They also face a four percent Development Levy, which replaces older levies like the Education Tax and IT Levy. Capital Gains Tax has gone up from 10 percent to 30 percent, though the government has promised to reduce it to 25 percent later. Multinationals and companies with turnover above ₦50 billion must also meet a minimum effective tax rate of 15 percent, no matter how many deductions they claim.

Category	Share of Businesses	CIT Rate	Levy	Share of CIT Revenue
SMEs (≤ ₦100m turnover)	~92%	0%	Exempt	<10%
Large Corporates (> ₦100m turnover)	~8%	30%	4%	>70%

SMEs: The Clear Winners

SMEs make up about 92 percent of Nigeria’s 41 million businesses and employ nearly 80 percent of the workforce. For them, this policy is a huge relief. They now have more money to reinvest, fewer compliance costs, and stronger reasons to register formally.

The only concern is that some businesses may try to stay under the ₦100 million turnover limit just to avoid paying tax. This could discourage growth in the long run.

Big Corporations: Carrying the Weight

Large corporates represent only about eight percent of registered businesses, but they contribute more than 70 percent of Nigeria’s tax revenue. Under the new policy, they face heavier obligations. The combination of 30 percent CIT, a four percent levy, and higher CGT means their tax bills are bigger.

For multinationals, the minimum effective tax rate adds another layer of cost. While the government’s promise to reduce CIT and CGT to 25 percent may help, big corporates remain the backbone of Nigeria’s tax system and carry most of the burden.

What Experts Are Saying

Stakeholder	View on SMEs	View on Corporates	Key Concern
Taiwo Oyedele	Major beneficiaries	Relief expected if CIT drops to 25%	Investor confidence
PwC Nigeria	Exempt from CIT, CGT, Levy	Heavy burden (CIT + Levy + ETR)	Competitiveness
TheCable Analysts	Encouraged to grow	Still taxed at 30%	Investment attractiveness

Taiwo Oyedele, who chairs the Presidential Committee on Fiscal Policy and Tax Reforms, has said that lowering CIT and CGT to 25 percent is important for investor confidence. 

PwC Nigeria agrees that SMEs are the biggest winners but warns that the heavier load on corporates could hurt competitiveness. 

Analysts at TheCable note that professional service firms like law and consulting are excluded from SME exemptions, meaning they still pay the full 30 percent CIT. 

They also argue that merging CGT into CIT reduces loopholes but may make Nigeria less attractive to investors.

Frequently Asked Questions (FAQ)

What is Nigeria’s new CIT policy?  

The new Companies Income Tax (CIT) policy started in January 2026. It exempts small businesses with turnover of ₦100 million or less from paying CIT, Capital Gains Tax, and the new Development Levy. Larger companies still pay 30 percent CIT plus a four percent levy.

How does the policy affect SMEs?  

SMEs benefit the most. They no longer pay corporate taxes, which means they can reinvest more money into their businesses. This also encourages more small businesses to register formally.

How does the policy affect big corporations?  

Big corporations continue to carry most of Nigeria’s tax burden. They pay 30 percent CIT, a four percent levy, and higher Capital Gains Tax. Multinationals with turnover above ₦50 billion must also meet a minimum effective tax rate of 15 percent.

Why did the government raise Capital Gains Tax?  

The government raised CGT from 10 percent to 30 percent to align it with CIT and reduce tax loopholes. However, there are plans to lower it to 25 percent by late 2026 to ease investor concerns.

How many businesses are SMEs in Nigeria?  

About 92 percent of Nigeria’s 41 million businesses are SMEs. They employ nearly 80 percent of the workforce, making them the backbone of the economy.

Are all SMEs exempt from tax?  

Not all. Professional service firms such as law, consulting, and accounting practices are excluded from the exemption. They still pay the full 30 percent CIT.

Who benefits more from the new policy?  

SMEs are the clear winners because they are fully exempt from corporate taxes. Big corporations, though fewer in number, continue to contribute most of Nigeria’s tax revenue and face heavier obligations.