Top-up tax to reach the 15% minimum effective rate.
Top-up tax
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Current effective rate
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Minimum rate
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Rules apply?
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Who this minimum tax floor is actually aimed at
If you run finance for a large Nigerian group or a multinational with subsidiaries here, you have probably been told that an effective tax rate dipping into single digits no longer just attracts a query, it triggers a bill. That is what this tool models. It is built for tax directors, group controllers, and advisers stress-testing a structure, not for an individual or a small trading company. The premise is the global minimum tax idea, often called the Pillar Two approach, that the OECD pushed and that Nigeria has folded into its 2025 reform. The logic is simple to state. If a group large enough to be in scope ends up paying less than a set minimum share of its profit in tax, an additional charge, the top-up, lifts it back to the floor.
Two numbers decide everything here, and both are figures the calculator applies rather than rates I am certifying as settled law. The first is the size gate. As modelled here, the rules bite once group turnover reaches NGN 50 billion, so a group below that line sees a clear message that it is out of scope and owes nothing extra. The second is the floor itself, set at a 15 percent effective rate in this tool. The Nigerian reform package is genuinely in motion, the Federal Inland Revenue Service is being recast as the Nigeria Revenue Service, and several thresholds are still bedding in, so treat both figures as the starting position and confirm the current position with the FIRS before you act on a real return.
How the top-up is worked out
The mechanic is deliberately blunt. The calculator divides the tax a group has already paid by its assessable profit to get the current effective rate. If that rate sits at or above the floor, nothing is due. If it falls below, the top-up is the gap between the tax the floor would demand and the tax already paid. In plain arithmetic the additional charge equals the floor rate multiplied by profit, less the tax already settled. Turnover does not feed the size of the top-up at all, it only opens or closes the gate. That separation matters because a group can be enormous by turnover yet thin on margin, and it is the profit and the tax against it that set the number.
A group at a 10 percent effective rate
Take the worked figures the tool loads by default, using the rates this calculator applies. A group reports assessable profit of NGN 10 billion, has paid NGN 1 billion in tax, and turns over NGN 60 billion. Turnover clears the NGN 50 billion gate, so the rules are in scope. The current effective rate is 1 billion divided by 10 billion, which is 10 percent, comfortably under the floor. The floor would demand 15 percent of 10 billion, or NGN 1.5 billion. Subtract the NGN 1 billion already paid and the top-up comes to NGN 500 million.
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The chart below shows the same idea as two stacked bars. The left bar is what the group has paid, the right bar is what the floor requires, and the shaded block on top of the right bar is the top-up that closes the gap.
Where groups trip up
The most common mistake is reading the current effective rate off the headline companies income tax rate and assuming the floor is satisfied. It often is not. Incentives, pioneer status, capital allowances, and losses carried forward can all pull the cash tax well below the statutory rate, and it is the actual tax against actual profit that the floor measures. A second trap is treating turnover as the thing that drives the charge. It does not. A trading group with vast revenue but slim profit can owe a smaller top-up than a leaner, high-margin group, because the calculation hangs entirely on profit and the tax paid on it. The practical tip is to run this before year end, while you still have room to bring forward genuine tax payments or reconsider how aggressively you are claiming reliefs.
Does the top-up replace my normal company tax?
No. It sits on top. Your group still computes and pays its ordinary companies income tax and any development levy in the usual way. The top-up only appears if, after all of that, the effective rate is still under the floor, and it is the difference that gets added. Think of it as a backstop, not a substitute.
My group turns over NGN 45 billion. Am I safe forever?
Not necessarily. The size gate is measured against the figure the calculator applies, currently NGN 50 billion, but turnover grows and thresholds in this reform are still being settled. A group close to the line should model both sides of it and revisit the test each year. Confirm the live threshold with the FIRS or its successor revenue service before concluding you are permanently out of scope.