The verdict in three sentences
In Nigeria, a web agency usually falls under standard tax rules once it regularly invoices businesses, with VAT at 7.5 % and Company Income Tax up to 30 % depending on turnover. Filings are largely monthly via the FIRS and the state IRS, and any delay triggers penalties. The golden rule: provision every month the VAT collected and the tax due so you never dip into cash that is not yours.
The main taxes and their rates
A digital agency in Lagos must master a small set of recurring taxes. Here are the 2026 benchmarks.
| Tax | Rate 2026 (est.) | Due date | Base |
|---|---|---|---|
| VAT | 7.5 % | Monthly (21st) | Turnover |
| Company Income Tax | 0-30 % by turnover | Annual | Profit |
| Withholding tax (WHT) | 5-10 % | On payment | Certain services |
| PAYE (staff income tax) | Bands | Monthly | Salaries paid |
| Tertiary Education Tax | ~ 3 % | Annual | Assessable profit |
| Pension (employer) | ~ 10 % | Monthly | Payroll |
Small companies with turnover below NGN 25 million enjoy a 0 % Company Income Tax rate, a major relief. Medium companies pay 20 % and large companies 30 % of profit.
Thresholds and penalties
Your regime depends on turnover. Here are the 2026 orders of magnitude and the sanctions to avoid.
| Item | Benchmark 2026 (est.) |
|---|---|
| Small company (0 % CIT) | Turnover below NGN 25M |
| Medium company (20 % CIT) | NGN 25M - 100M |
| Large company (30 % CIT) | Above NGN 100M |
| Late filing penalty | Fixed fine + monthly interest |
| Late payment interest | Commercial rate + surcharge |
| Recommended provisioning | 15-20 % of turnover set aside |
A late VAT filing attracts a fixed penalty plus monthly interest. The best protection is to set aside the VAT collected each month: that money is not your margin.
Mini case study
Tunde's agency in Lagos invoices NGN 6 million (ex-VAT) in January. It collects NGN 450,000 in VAT (7.5 %) to remit by 21 February, and sets aside a share for annual income tax. By keeping that VAT in a separate account, Tunde avoids the classic phantom-cash trap. Over the year, this discipline saves him penalties that repeated delays could have pushed past NGN 700,000.
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FAQ
What is the VAT rate in Nigeria in 2026?
VAT stands at 7.5 % and is filed monthly by the 21st. It applies once your turnover passes the registration threshold.
How does Company Income Tax scale?
Small companies below NGN 25 million turnover pay 0 %, medium companies pay 20 % and large companies 30 % of profit. Tertiary Education Tax adds about 3 % of assessable profit.
What penalties apply for late filing?
A fixed fine plus monthly interest applies, and persistent default can lead to enforcement. Filing on time even with partial payment limits the damage.
How much should I provision each month?
A prudent order of magnitude is 15 to 20 % of turnover set aside for VAT and income tax. That money is not your profit.
Do I need an accountant for a small agency?
Strongly recommended, since monthly VAT and payroll filings are technical. A qualified accountant sharply reduces penalty risk.
Let's talk about your project. We build websites that comfortably fund their own tax obligations. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
