Tax Administration in Nigeria
The three major tiers of government: Federal Government, State Government and Local Government have been saddled with the responsibility of collecting tax in Nigeria.
The Federal Government uses the Federal Inland Revenue Service (FIRS) to deal with taxes that are paid by companies and Federal Capital Territory. They ensure that all taxes collected are duly remitted to the Federal Government. It is their responsibility.
The State Board of Internal Revenue (SBIR) like the Lagos State Internal Revenue Service are saddled with the responsibility of administering Personal Income Tax. There are other types of taxes that are created and administered by the various state government, depending on the powers that they have to administer such taxes. The SBIRs are responsible to the State government in terms of accounting and remitting these collected taxes to the coffers of the State government.
The Local government also collects taxes through the committee set up within their powers. They collect taxes, rates and fines posted under its jurisdiction and are responsible to the Local government chairman for all taxes collected.
Types of Taxes Paid in Nigeria
- Companies Income Tax (CIT)
- Petroleum Profit Tax (PPT)
- Value Added Tax (VAT)
- Personal Income Tax (PIT)
- Withholding Tax (WHT)
- Tertiary Education Tax (EDT)
- Stamp Duties (STD)
- Capital Gains Tax (CGT)
- National Information Technology Development Fund (NITDF) Levy
Taxes Collected by State Boards of Internal Revenue (SBIRs) in Nigeria
- Personal Income Tax
- Capital Gains Tax (Individuals only)
- Stamp duties
- Business Premises levy
- Hotel occupancy and Restaurant Consumption Tax
- Capital Gains Tax (Individuals only)
Let’s talk about the Tax Collection in Nigeria
Tax Collection is also classified under the three tax administering bodies:
Taxes Collected by FIRS
|1||COMPANY INCOME TAX||30% OF PROFIT BEFORE TAX|
|2||WITHHOLDING TAX ON COMPANIES||10%|
|3||PETROLEUM PROFIT TAX|
|4||VALUE ADDED TAX||7.5%|
|5||EDUCATION TAX||2% OF ASSESSABLE PROFIT|
|6||CAPITAL GAINS TAX ON THE RESIDENCE OF THE FEDERAL CAPITAL TERRITORY, CORPORATE BODIES AND NON-RESIDENT INDIVIDUALS||10%|
|7||STAMP DUTIES ON BODIES CORPORATE AND RESIDENTS OF THE FEDERAL CAPITAL TERRITORY||FLAT RATE|
|8||PERSONAL INCOME TAX||RATES GRADUATED AS STATED IN PITA (AMENDMENT) ACT 2011 ON: MEMBERS OF THE ARMED FORCES OF THE FEDERATION, MEMBERS OF THE NIGERIAN POLICE FORCE; RESIDENTS OF THE FEDERAL CAPITAL TERRITORY, STAFF OF THE MINISTRY OF FOREIGN AFFAIRS AND NON-RESIDENT INDIVIDUALS|
Taxes Collected by the State Internal Revenue Service (Using Lagos as an example)
|WITHHOLDING TAX:||Personal Income Tax Act 2004 L.F.N.||Applicable to Individuals, Sole Proprietorship and Partnership|
|PERSONAL INCOME TAX: PAYE DIRECT/ASSESSMENT||Graduating rates as given in the 6th Schedule of the Personal Income Tax (Amendment) Act 2011||Personal Income Tax Act 2004 L.F.N.|
Personal Income Tax (Amendment) Act 2011
Lagos State Revenue Administration Law
|Personal Income Tax is collected from income earning adults i.e. Resident within the State|
|CAPITAL GAINS TAX||10%||Capital Gains Tax Act CAP. 42 L.F.N 1990 Act CAP. C1 L.F.N. 2004||Individuals only|
|STAMP DUTIES||Flat Rate||Stamp Duties Act Cap.42 L.F.N. 1990||Individuals and Corporate Entities|
|BUSINESS PREMISES REGISTRATION FEE IN RESPECT OF:|
|URBAN AREAS||Registration = ₦10,000 Annual Renewal = ₦5,000||Registration = ₦10,000 Annual Renewal = ₦5,000||Corporate Entities|
|RURAL AREAS||Registration = ₦2,000 Annual Renewal = ₦1,000||Act 21 of 1998||Corporate Entities|
|TAX ON GOODS & SERVICES CONSUMED IN HOTELS , RESTAURANTS AND EVENTS CENTRES||5% of total bill issued to the consumer, excluding value added tax.||Hotel Occupancy and Restaurant Consumption Law 2009.||This tax is not applicable where the Sales Tax is collected|
Taxes and Levies Collected by Local Government
- Shops and Kiosks rates
- Tenement rates
- On and Off Liquor License fees
- Slaughter slab fees
- Marriage, birth and death registration fees
- Naming of street registration fees, excluding any street in the State Capital
- Right of Occupancy fees on lands in the rural areas, excluding those collectible by the Federal and State Governments.
- Markets taxes and levies excluding any market where State finance is involved
- Motor park levies
- Domestic animal license fees
- Bicycle, truck canoe wheelbarrow and cart fees, other than a mechanically propelled truck
- Cattle tax payable by cattle farmers only
- Merriment and road closure
- Radio and television license fees (other than radio and television transmitter)
- Vehicle radio license
- Wrong parking charges
- Public convenience, sewage and refuse disposal fees.
- Customary burial grounds permit fees
- Religious places establishment permit fees.
- Signboard and Advertisement permit fees.
Now that you have all you need to know regarding tax administration in Nigeria.