Nigeria Freelancer & SME Tax Estimator (PIT, CIT & VAT) 2026

If you earn money outside a regular salaried job in Nigeria — freelancing, running a side business, or operating a registered SME — you're dealing with a genuinely different tax structure than an employee, and which structure applies depends on one specific fact: whether you've incorporated a limited company or not. This estimator walks through both paths and the VAT obligation that sits on top of either one, using the actual 2026 Nigeria Tax Act rules. Here's the distinction that trips people up most: registering a business name with the Corporate Affairs Commission does not put you in the Company Income Tax regime. A business name registration and a sole proprietorship are not separate legal entities from you personally — your profit from that business is still taxed as your own personal income, under Personal Income Tax rules, the same progressive bands that apply to a salaried employee's PAYE. Only incorporating an actual limited company (a Ltd registered with the CAC as its own legal person) moves you into the Company Income Tax regime. A freelancer with a registered business name and a freelancer with no registration at all are taxed identically under PIT — the registration itself changes nothing about which tax applies. For freelancers and sole proprietors, the calculation starts with your gross turnover, from which you deduct legitimate business expenses — anything wholly and exclusively incurred in earning that income: internet and data costs, equipment and software, the business portion of a home office, transport for client work, professional fees, and tool subscriptions all count. What's left is your profit. From there, personal reliefs apply the same way they would for an employee: rent relief (20% of annual rent paid, capped at ₦500,000), and voluntary pension contributions, both come off your chargeable income before the progressive PIT bands apply — 0% on the first ₦800,000, then 15%, 18%, 21%, 23%, and 25% on income above ₦50,000,000. For registered companies, the Nigeria Tax Act keeps a two-tier structure. A company qualifies as small — and pays 0% Company Income Tax, plus exemption from the 4% Development Levy — if its annual turnover is ₦100,000,000 or less and its total fixed assets are under ₦250,000,000. There's an important carve-out here that catches a lot of professional service businesses off guard: law firms, accounting practices, engineering consultancies, and similar professional services firms don't qualify for the small company rate regardless of how small their actual turnover or assets are. Everyone else above the small company threshold pays a flat 30% CIT on assessable profit, plus the 4% Development Levy on top. At what point does incorporating actually make financial sense over staying a sole proprietor? There's no single answer, because PIT and CIT aren't directly comparable rate-for-rate — PIT is progressive and starts at 0%, while CIT for a non-small company is a flat 30% from the first naira of profit. In practice, a freelancer with modest profit is almost always better off staying unincorporated, since most of their income sits in the 0-18% PIT bands. The comparison becomes worth running once profit climbs into the higher PIT bands, where the freelancer's marginal rate starts approaching or exceeding what a company would pay — though a company also carries CIT, the Development Levy, and more formal compliance obligations that a sole proprietorship doesn't. VAT sits on top of whichever income tax path applies, and it's governed by turnover, not by whether you're a freelancer or a company. Once your annual turnover — including any foreign income, since Nigerian residents are taxed on worldwide income — passes ₦50,000,000, you're required to register for VAT, charge the standard 7.5% rate on your taxable supplies, and remit the difference between VAT you collected and VAT you paid on your own business purchases (input VAT) to the Nigeria Revenue Service. Businesses under the ₦100,000,000 turnover and ₦250,000,000 fixed asset thresholds that qualify as small are exempt from charging VAT even if they've registered, though voluntary registration can still make sense if most of your clients are VAT-registered businesses themselves, since it lets you reclaim input VAT you'd otherwise just absorb as a cost. Whichever category you fall into, the compliance basics don't change: you need a Tax Identification Number to file anything, records of your income and expenses need to be kept in a form you could defend if asked, and annual returns are typically due by 31 March following the year of assessment. None of this replaces professional advice on your specific situation — a good accountant earns their fee many times over once your income is complex enough to have real decisions riding on it — but knowing roughly where you stand before that conversation makes it a much shorter, cheaper one.