Most Nigerian businesses will never calculate a minimum effective tax rate. The rule exists for a narrow group of very large companies and groups.
The 15% floor
The Nigeria Tax Act 2025 sets a minimum effective tax rate of 15%. A company caught by the rule tops up its tax if the rate it actually pays, relative to its profit, falls below that floor.
The idea behind it is simple even where the calculation is not: a company should not be able to use reliefs and allowances to push its real tax rate far below the headline one.
Where this sits next to the standard company income tax rate
An ordinary Nigerian company pays 30% company income tax and never needs to think about an effective-rate top-up. This rule is a separate, additional check that only starts once a company or its group is large enough to be tested against the 15% floor.
The two thresholds
A company falls into scope in one of two ways.
- By its own size. A company with turnover of ₦50 billion or more in a financial year is in scope on its own numbers.
- By its group. A company belonging to a multinational group with group revenue of €750 million or more is in scope too, even if the Nigerian entity itself is small.
Either test is enough on its own. A business does not need to fail both to be caught.
A quick example
A Nigerian company with turnover of ₦60 billion for the year, for example, would test above ₦50 billion and fall into scope on its own numbers, regardless of its group structure.
Why most SMEs sit outside this rule
₦50 billion is a large number by any Nigerian small-business standard. The great majority of SMEs, sole proprietors and even fairly substantial local companies never approach it.
The group-revenue test is the one worth a second look. A modest Nigerian subsidiary of a large international group can be pulled into scope by its parent's size, not its own.
What to check if you are close to either line
A fast-growing local company nearing ₦50 billion in turnover should raise this with an accountant before it crosses the line, not after.
A Nigerian company that is part of a foreign-owned group should ask its head office directly whether the wider group's revenue sits above €750 million. That answer is usually not visible from the Nigerian entity's own accounts alone.
What we could not confirm
The detailed mechanics of the top-up calculation, how the effective rate is worked out and how any shortfall is collected, were not something we could confirm with confidence in our research for this piece.
Given the size of company this rule targets, that computation sits with a tax adviser experienced in multinational structures, not a general guide.
Common mistakes
- Assuming this is an SME rule because it is new. It targets very large companies and groups specifically, by design.
- Checking only the Nigerian entity's own turnover. The group-revenue test can catch a small local entity through its parent's size.
- Ignoring it because turnover is currently well below the threshold. A fast-growing business should check its position again each year, not just once.
For the wider law this rule sits inside, read the Nigeria Tax Act 2025 explained. For the rates that apply to an ordinary Nigerian company instead, see CIT rates by company size, and browse the hub on the Nigeria Revenue Service (NRS), formerly FIRS, and Rev360 for more.