Tax Types Changes

Tax is imposed on individuals who are either in employment or are running their own small businesses, under a business name or partnership. There are various tax types ranging from PIT, Stamp duties, WHT … Nigeria (/naɪˈdʒɪəriə/ Listen), officially the Federal Republic of Nigeria, is a country in West Africa.

Personal Income Tax

Though collection of Personal Income Tax is a federal responsibility, this tax is generally collected by state governments from those that are resident in their various states, regardless of whether they are federal, state, local government, or private sector workers.

The Federal Inland Revenue Service, also collects this tax but only from residents of the Federal Capital Territory as well as what may be described as highly mobile federal worker; staff of the Ministry of Foreign Affairs, other Nigerians and foreigners outside the country but earning income in Nigeria (non-residents), expatriate workers resident in Nigeria, Police Officers, and Military Officers.

Civilians working in Police and Military formations, however, pay to their respective States of residence.The current law guiding the taxation of personal incomes is the Personal Income Tax Act (Cap P8 LFN 2004). Under the law, Federal and States’ tax boards are empowered to identify persons living in or earning income from Nigeria who are required to pay tax, and to assess incomes and tax their incomes using specified guidelines and rules.

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This law also guides the tax official in identifying the residence of potential taxpayers, as well as the sources and origins of their incomes for the purpose of taxing the income.

TWO TYPES OF PIT :

  1. PAYE is an acronym for “Pay as You Earn”. It is a method of collecting personal income tax from employees’ salaries and wages through deduction at source by an employer as provided by the relevant sections of the Personal Income Tax Act (PITA). (S.81 of Personal Income Tax Act Cap P8 LFN 2011).
  2. Taxes from self employed persons (Direct Assessment) Direct Assessment is an assessment raised directly on self-employed persons (eg. Professionals, Contractors, Traders, Landlords etc). The self employed person will without notice or demand, file a return of income earned in the preceding year using Tax Form A.

Capital Gains Tax

It is a tax on the profit made from the sale or exchange of capital assets like land shares, machinery.

Business Premises levy

It is a tax on property used for the production of income including rental houses, office buildings, factories etc.

Stamp duties

It is a tax imposed on legal instruments/documents executed by individuals, this tax is usually placed on the transfer of homes, buildings, copyrights, land, patents and securities.

Withholding Taxes

It is the specified amount deducted at source from payment accruing or made to individuals or corporate entities in respect of income receivable for service(s) rendered or from investment and remittance of same to the Relevant Tax Authority in line with the provisions of Personal Income Tax (PITA) and Companies Income Tax Acts (CITA).