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Navigate the Nigerian tax system as a startup

🇳🇬Nigeria

A practical guide to understanding and complying with Nigeria’s tax obligations as a startup - company income tax, VAT, WHT, PAYE, and how to work with FIRS without it becoming a nightmare.

Register your company with FIRS immediately after CAC registration. Go to TaxPro Max (taxpromax.gov.ng) and register for a Tax Identification Number (TIN). This is required before you can open most business bank accounts and is mandatory for invoicing B2B clients.

Understand your core tax obligations as a Nigerian startup. Company Income Tax (CIT): 30% of profits (20% for companies with turnover under ₦100M). Value Added Tax (VAT): 7.5% on taxable goods and services - collect from customers and remit monthly. Withholding Tax (WHT): deduct at source on contractor payments (5% individuals, 10% corporates) and remit quarterly. PAYE: deduct from employee salaries monthly and remit to the relevant State Internal Revenue Service.

Keep proper accounting records from day one. A simple Wave Accounting or Zoho Books setup is sufficient. Record every invoice issued, every expense, every bank transaction. The threshold for a tax audit is lower than most founders think.

File even when you have zero revenue. Many early-stage Nigerian startups make the mistake of not filing because they have no profit. FIRS requires annual returns regardless of revenue. Non-filing attracts penalties of ₦25,000 for the first month and ₢5,000 per subsequent month.

Register for VAT if your turnover exceeds ₦25M annually. Once registered, charge 7.5% VAT on all eligible invoices and remit monthly. Keep VAT records separate from income records.

Hire an accountant or tax consultant early. Not necessarily a full-time employee - a part-time accountant for ₢50K–150K/month handles filing, reconciliation, and FIRS correspondence. This is cheaper than the penalties from non-compliance.

Use the Pioneer Status incentive if you qualify. Technology companies in approved sectors can apply for Pioneer Status, which grants 3–5 years of Company Income Tax exemption. Apply via the NIPC (Nigerian Investment Promotion Commission).

Understand transfer pricing rules if you have a parent or subsidiary company abroad. Nigerian transfer pricing regulations require formal documentation of inter-company transactions. This is increasingly enforced for Nigerian fintechs with US holding companies.