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  Compared to the other countries, the concept of taxation has been treated with disdain amongst the working-class citizens of Nigeria. This may be owing to the belief that monies paid to the country are mismanaged or stolen, as most leaders tend to be unaccountable to the allocation of funds, tenure after tenure. For this reason, new youths fresh in the labour market are complacent and ignorant about the taxation policies and how it applies to their earnings.
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Taxation historically dates back to the days of non-existent legal tender or cash; back to the times of trade by barter and cowries, tribute payments were made to the coffers of the rulers of the kingdom. Most of these payments were in form of farm produces at harvest, animals or clothing, whichever item formed the value for survival in that age. The chiefs and most times, army commanders were tasked with the responsibility of enforcing that citizens pay their dues. In the North, the emirate ensured taxes were paid based on Qur’anic requirements and backings. Indigenes, hitherto, see taxes as a form of duty to Allah than to mankind. The Taxation began to take a much modern form during the colonial times, the Governor-Generals imposed taxes on villages, towns and protectorates alike to fund their political and economic aspirations. In 1939, the Companies Income Tax was created but was changed due to some irregularities in its policies and by 1978, the Tax administration Taskforce led by Alhaji Musa Shehu established the Federal Inland Revenue Service (FIRS) as the operational arm of the Federal Board of Inland Revenue (FBIR).
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There are no preferential treatments in the payment of taxes. This indicates that every type of income is weighed irrespective of the size of income. In Nigeria, tax rates vary and one may be required to pay different rates on different portions of your income depending on the purpose of money earned. There are two forms of tax rates paid in Nigeria.

  • Corporate Tax

Indigenous companies are expected to pay 30% of the profit made within and outside the country while foreign companies pay 30% of the profit made only in Nigeria. For both types of firms, there is an educational charge that is pegged at 2% of the assessable profit while 10% withholding tax is deducted from dividend payments to companies and individuals.

  • Individual Tax

Nigerians under the law are to pay from 7% to 24% of their total worldwide income while foreign individuals are to also pay 7% to 24% of the profit made in Nigeria only. Paying taxes is a civic duty and a legal obligation, hence, it is very compulsory for all working-class citizens either employed by public or private firms. Taxes are funds accrued to service all political expenditures, from the local to the federal level, including activities in law-making and representation. Simply put, it is your way of paying your government its salaries. the Federal Inland Revenue Service enforces the payment of taxes by supervising payments and imposing penalties on defaulters. The Tax payees are identified through the Tax Identification Number (TIN). Featured Image Source: Invoice NG
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This article was first published on 5th July 2021

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