In this article, we will look at the comprehensive list of taxes that apply in Nigeria. Taxes are mandatory monetary levies imposed by a government organization on an individual or a legally established corporation adjudicated to be chargeable in order to pay public infrastructure expenditures and create money for the government.
The Federal Government and State Governments in Nigeria impose a variety of taxes on taxable persons and established firms, with particular institutions duly authorized and entrusted with the administration and collection of these taxes.
FULL LIST OF TAXES IN NIGERIA
The following is a list of taxes that apply in Nigeria:
COMPANIES INCOME TAX (CIT)
The Companies Income Tax Act (CITA), Cap. 21 LFN (as amended), mandates that fully integrated companies in Nigeria pay between 20% and 30% of their total profits. Those with yearly profits of exceeding NGN 100 million are taxed at 30%, whereas companies with annual profits of between NGN 25 million and NGN 100 million are taxed at 20%. The Federal Inland Revenue Service collects and administers the Companies Income Tax, which is one of the most basic levies (FIRS). It’s worth noting that international firms operating in Nigeria are subject to the Company Income Tax (CIT) on their Nigerian-sourced income.
CAPITAL GAINS TAX (CGT)
Whenever there is a sale of chargeable assets, the Capital Gains Tax is applied. According to the Capital Gains Tax Act, Laws of the Federation, Cap. C1 LFN, 2004, capital sums derived from the transfer, sale, lease, compulsory acquisition, or assignment of chargeable properties are usually taxed at a rate of 10% of total value realized (as amended). It is crucial to note, however, that the Capital Gains Tax doesn’t at all apply to public academic or philanthropic institutions. Furthermore, assets that are unrelated to any trade conducted by an established entity may be exempt from the Capital Gains Tax.
CUSTOMS AND EXCISE DUTIES
These taxes are levied at the country’s entry ports on certain imported and occasionally exported items. As mandated by the Customs and Excise Management Act, the Customs Service is responsible for administering and collecting Customs and Excise Duties. Its purpose is to generate income while simultaneously discouraging the consumption of commodities that have been chosen to be taxed. Excise and Customs Duties
EDUCATION TAX (EDT)
All established businesses and organizations in Nigeria are subject to the Education Tax (EDT). The Education Tax Act, Cap. E4, LFN 2004, and the Education Trust Fund Act, 2011, respectively, are in charge of regulating and governing the Education Tax. The Education Tax is administered by the Federal Inland Revenue Service (FIRS). In Nigeria, the available profit of registered firms and organizations is taxed at a rate of 2%. The generated funds are allocated in a 2:1:1 ratio to tertiary institutions, such as universities, polytechnics, and colleges of education.
PERSONAL INCOME TAX (PIT)
This tax is levied on taxable individuals, which may include employees, corporate bodies of individuals, businesses, communities, families, and trustees, among others. Personal Income Tax (PIT) rates range from 7% to 24%, based on the quantity of income earned. The Personal Income Tax also includes the taxation of estates and the evaluation of partnerships. The Personal Income Tax Act, Cap. P8 LFN 2004 (as amended), is the governing legislation in Nigeria for the collection of personal income tax. The Personal Income Tax Act mandates that the Federal Inland Revenue Service (FIRS) and State Boards of Internal Revenue Services manage and receive this revenue.
PETROLEUM PROFIT TAX (PPT)
The Petroleum Profit Tax Act, Cap. P13 LFN 2004, requires petroleum market players in the oil and gas sector of the oil and gas industry to pay income tax in accordance with the Petroleum Profit Tax Act, Cap. P13 LFN 2004. (as amended). Companies that are subject to the Petroleum Profit Tax, on the other hand, have not been obligated to return any of the same revenue to the Companies Income Tax (CIT).
STAMP DUTIES (SD)
The Stamp Duty Act, Cap. S8, LFN (as amended), enforces a fraction of a percent on equity stake when a company is formed or when new shares are registered. Stamp Duties are taxed in two ways: as flat rate charges or as ad valorem charges. Individual Stamp Duties are handled by individual state Internal Revenue Services (IRS), whereas corporate Stamp Duties are administered by the Federal Inland Revenue Service (FIRS) on behalf of the federal government.
VALUE ADDED TAX (VAT)
The Value Added Task is implemented on the sale of some defined goods and services. The value added tax rate was originally set at 5%, however it was raised to 7.5 percent in 2020. It’s also known as Compensation Tax, and the charges are passed on to the eventual consumer of these goods and services. Nigeria’s Value Added Tax is managed and administered by the Federal Inland Revenue Service. The Value Added Tax Act is the value added tax’s enabling legislation.
WITHHOLDING TAX (WHT)
Withholding tax is essentially an upfront payment of tax deductions made on almost any income owing to a person or a firm in anticipation of future remittance to appropriate government bodies tasked with administering and collecting taxes. Following the deduction from the source of income, it is remitted to the appropriate authorities. The Withholding Tax (WHT) rate varies depending on the transaction type for individuals and incorporated companies. Individual tax rates range from 2.5 percent to 10%, while corporate tax rates range from 5% to 10%.
NATIONAL INFORMATION TECHNOLOGY DEVELOPMENT LEVY
NITDL is a sort of tax applied on a company’s earnings before tax in Nigeria. The National Information Technology Development Agency Act governs it (NITDA). With a yearly turnover of N100,000 or more, the relevant rate is 1% profit before tax. When Company Income Tax returns are filed for self-assessment, the levy is determined and lodged with them.
These are property taxes that are paid to local government councils by landlords or tenants of a building. These wages are paid out of the company’s own funds. It combines the ground rent and the neighborhood improvement levy. The appropriate formula established by the statute under consideration.