Personal Income Tax in Nigeria is a tax levied on all incomes of an individual employed by a business or organization. Self-employed individuals are expected to file their returns, annualy, and pay the taxes due. A taxpayer is required to file returns for the preceding year within 90 days of the end of the year. Personal Income tax could be:
All employers in Nigeria are responsible for deducting Pay As You Earn (PAYE) taxes from their employees' pay. The deducted taxes are to be remitted to the appropriate tax office by the 10th day of the month following the deduction. Monthly payments of Pay As You Earn (PAYE) tax liabilities are to be made on or before the 10th day of the month following the applicable month (e.g. January Tax are to be remitted by 10th of February).
All individuals, businesses entities, communities, families, executors, trustees and the self-employed who receive or derive income in form of gain or profit either from trade, business profession or vocation within or outside Nigeria shall be liable to direct assessment.
Direct Assessment is used to assess tax for self-employed individuals. With the self-assessed tax, a new tax payer can assess himself/herself, pay the calculated tax at any of the designated banks and get an e-TCC (Tax Clearance Certificate) without visiting any tax office.
All tax payers falling within this category should file the returns of their income and claims for reliefs and allowances relating to the preceding year within 90 days from the beginning of every year.
The tax authority will assess the taxable person thereafter.
This is a tax chargeable at the rate of 10% on capital gains arising from the disposal of capital assets. Capital gains mainly represent the excess of disposal proceeds realized over the cost of the particular asset. The effects of some of the provisions of the Capital Gains Tax Act 1967 are as listed below:
Capital loss on disposal of any asset is not deductible from capital gains on disposal of any other asset even if both are of the same type.
Chargeable gains are assessed on current year basis. In other words, the assessment is based on the year the asset is disposed.
Roll-over relief is available to any company acquiring a new asset to be used for the purposes of the trade in replacement of an old one. This is of particular interest to companies as there could be benefit accruing to those that would want to claim the relief.
When the consideration is payable by instalments over a period exceeding 18 months, the chargeable gain shall be apportioned to the affected assessment years in proportion to the amount of the instalments payable in each of the years.
The production of evidence of payment of applicable capital gains tax is a condition for effecting change of ownership of property.
Currently, gains arising from disposal of shares and stocks are exempted from capital gains tax.
They are duties paid basically on Instruments, (stamp duties Act, Section 23) and for the purposes of stamp duty, and Instrument is defined to include every written document.
If a transaction is effected orally or arises only from the conduct of the parties involved so that there is no document to stamp, then there can be no duty.
It is therefore advisable that transactions must always be in writing to avoid unnecessary legal tussle, although it is dependent on the level of sensitivity of the transaction.
Withholding Tax is the deduction of the tax at source from payment made to a taxable person or company in respect of income derivable from services or investments. It is not another form of tax but simply an advance payment of the tax, as the tax deducted at source can be off-set against any subsequent tax liability that may be due in respect of such income. In certain cases, the withholding tax deducted at source is the final tax e.g. Interest and dividend.
The authority of the deduction of Withholding Tax at source is contained in Sections 69, 70, 72 and 73 of the Personal Income Tax Act in respect of individuals and Sections 78, 79, 80 and 81 of CITA Cap. C21 LFN 2004 in respect of Companies.
The Tax provisions referred to above deal with deductions from rent, interest, royalties, dividends, directors’ fees (PITA only) and other payments. It is under these Sections that the application of the general provisions contained in Section 73 PITA and Section 81 CITA widens the scope of Withholding Tax deductions to including building contracts, contract of supplies, consultancy and professional service, which are not specifically mentioned in the Tax Acts.
Others Taxes include:
Hotel Occupancy and Restaurant Consumption Law is a law enacted by the Enugu State House of Assembly which imposes Tax on goods and services consumed in Hotels, Facility or Event Centres within the State. It imposes on any person, corporate or otherwise, who pays for the use or possession of any hotel, facility or event centre; or purchases consumable goods or service in any restaurant.
The rate of tax imposed by the law is 5% of the total bill issued to the customer excluding Value Added Tax and Service Charge.
- 1. Pools Betting and Lotteries, Gaming and Casino Taxes
- 2. Road Taxes
- 3. Development Levy (Individuals Only) Not More than N100 per Annum on all Taxable Individuals
- 4. Market Taxes And Levies, where State Finance is Involved
- 5. Business Premises Registration Fees In Respect Of Urban and Rural Areas which Includes Registration Fees and Per Annum Renewals as Fixed by each State.
- 6. Naming of Streets Registration Fees in the State Capital
- 7. Right Of Occupancy Fees on Land Owned by the State Government in Urban Areas of the State
- 8. Land Use Charge, where applicable
- 9. Hotel, Restaurants or Event Centre Consumption Tax, where applicable
- 10. Entertainment Tax, where applicable
- 11. Environment (Ecological) Fee Or Levy
- 12. Mining, Milling and Quarrying Fee, where applicable
- 13. Animal Trade Tax, where applicable
- 14. Produce Sales Tax, where applicable
- 15. Slaughter or Abattoir Fees, where State Finances Is Involved
- 16. Infrastructures Maintenance Charge or Levy, where applicable
- 17. Fire Service Charges
- 18. Property Tax, where applicable
- 19. Economic Development Levy, where applicable
- 20. Social Services Contribution Levy, where applicable
- 21. Signage’s and Mobile Advertisement, jointly collected by State and Local Government
Below are the approved list of Taxes and Levies to be collected by the Local Government
- 1. Shops and Kiosks rates
- 2. Tenement Rates
- 3. On and Off liquor License Fee
- 4. Slaughter Slap Fees
- 5. Marriage, VAT and Death Registration Fees
- 6. Naming of Streets Registration Fees, excluding any streets in the state capital
- 7. Right of Occupancy Fees on lands in rural areas excluding those collectable by the Federal and State Government
- 8. Markets Taxes and Levies excluding any market were state finance is involved
- 9. Motor Park Levies
- 10. Domestic Animal Licence Fees
- 11. Bicycle, Truck, Canoe, Wheel Barrow and Cart Fees, other than a mechanically propelled truck
- 12. Cattle Tax payable by Cattle Farmers only
- 13. Merriment and Road Closure levy
- 14. Radio and Television License Fees (other than radio and television transmitter)
- 15. Vehicle Radio License Fees (to be impose by the Local Government of the state in which the car is registered)
- 16. Wrong Parking Charges
- 17. Public Convenience, Sewage and Refuse Disposal Fees
- 18. Customary Burial Ground Permit Fees
- 19. Religious Places Establishment Permit Fees
- 20. Signboard and Advertisement Permit Fees
- 21. Wharf Landing Charge, where applicable
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