(i)

(ii) Under the Small Business Rate of Tax

A Nigerian company will be assessable to tax at a rate of 20% of the total profit for the first five years of assessment. This period may be extended by two additional years if the company demonstrates evidence of good records and management, and continues to remain in the sector for which the rate is granted.

The conditions for eligibility under the Small Business Rate of Tax are:

• The company must be engaged in one of the following sectors:
  • Manufacturing
  • Agricultural Production
  • Mining of Solid Minerals
  • Wholly export trade
• The Turnover (Revenue) of the company must be less than N1,000,000.

Saladine Manufacturing Company Limited

• The prescribed period of 5 years of assessment and a possible extension of 2 years have lapsed.
• Hence, the company is to be assessed to tax at the normal rate of 30%.

ABC Foods Limited

• The company fulfils all conditions to be granted the small companies rate of 20%, as it is still within the 5 years of assessment.

Zenith Nigeria Limited

• The company does not fall within the prescribed conditions, hence, it is assessed to tax at the normal rate of 30%.