Yes, except where the employee is exempt under the law.
The tax rate has not changed. It is the same as the figures in the pre-Finance Act 2020.
The tax rate for nationals and expatriates are the same
The tax for an expatriate will depend on whether the taxpayer is tax-equalized.
Yes. An employee should pay tax on all employment income.
An employee cannot use an employer’s contribution to reduce tax.
PAYE tax remittance is through the designated banks in Nigeria.
A person may use a tax clearance certificate (TCC) of the employee or an extract of the Form H1 return.
An employer will apply for a tax card on behalf of all employees.
Payment of taxes in Nigeria is a legal requirement for individuals and business owners. So if you are thinking of starting a business, then you should understand that your business is required to make a contribution to Government’s revenue.
Value Added Tax is a consumption tax that is levied at each stage of the supply chain, from production to consumption.
VAT is paid on all goods and services except those that are exempted by law.
The VAT rate in Nigeria is 7.5%.
VAT payments are due on or before the 21st day of the month following the month of transaction.
Under the Nigerian VAT regime, some taxpayers are obligated to deduct VAT at source and remit directly to the tax authority. These are Oil&Gas companies, Telecommunications companies and some other designated companies,government ministries, departments, and agencies in Nigeria
It is a Payment on Account for Company Income Tax (CIT) or a deposit for payment for Personal Income Tax for those in business .
WHT plays a crucial role in the Nigerian tax system:
– Combating Tax Evasion: By collecting tax at the source, WHT makes it harder for individuals and businesses to avoid their tax obligations.
– Simplifying Tax Compliance: WHT takes the guesswork out of tax filing. Instead of calculating and paying taxes yourself, your payer handles the initial deduction and remittance.
– Boosting Government Revenue: WHT provides the government with a predictable and steady stream of income.
WHT touches both individuals and businesses.
Individuals:
– Individuals receiving dividends from investments
– Individuals receiving interest income from savings or loans
– Individuals receiving rental income from property
– Receiving other payments like contracts etc.
Businesses:
– Banks and other financial institutions receiving interest on deposits
– Businesses receiving dividends to shareholders
– Businesses receiving rental payments for office or commercial space
– Receiving other payments like contracts etc.
Here is a list of the different items that may attract Withholding Tax in Nigeria:
– Dividends
– Interest Income
– Rent and Property Income
– Royalties
– Management/Technical Fees
– Commission, Consultancy, Service Fees
– Construction (roads, buildings, bridges)
– Contracts etc.
A tax return is a form used to disclose a taxpayer’s affairs for a definite period and filing in the prescribed format with the relevant tax authority.
A companies income tax return is a return that shows the companies income tax (CIT) payable of a company.
The CIT rate in Nigeria ranges between 0% to 30% based on a company’s annual turnover.
The relevant tax authority for CIT is the Federal Inland Revenue Service (FIRS).
An audited accounts, tax computation and evidence of payment of CIT that was self assessed.
The taxpayer must have registered for tax with FIRS, prepare the accounts of the company for the financial year, appoint an external auditor to review the accounts and issue an audited financial statement, visit the taxpayer’s account on FIRS portal TaxPro Max and pay the CIT amount at any of the banks designated for tax collection.
Yes, every company is required to file a return with Federal Internal Revenue Service (FIRS) even if the company reports a taxable loss.
For existing companies, CIT returns should be filed within six (6) months after the accounting year-end. For new companies, CIT returns should be filed within eighteen (18) months from the date of incorporation or six (6) months after accounting year end whichever is earlier.
Yes, a taxpayer may request for an extension of time, in writing, to file a CIT return or TP return
The penalty for failure to file CIT returns on the due date is ₦25,000 for the first month of default and ₦5,000 for each succeeding month.
How do we get more information
Consult the nearest office of OR&C Tax Consultants and get a copy of the Nigeria Tax Summary via the premium download section of our website.
https://www.orandcconsultants.com/shop