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This is an attempt to enlighten you on tax operation in Nigeria, and the appropriate response as a citizen of Nigeria to tax payment. In Nigeria, there are different kinds of taxes paid to different bodies. There are taxes paid to the Federal Government, State Government and Local Government. There are also taxes paid to different organizations for different purposes.
Types Of Taxes
- Companies Income Tax: This is regulated by the Company Income Tax Act. Companies Income Tax is the payment of tax of registered companies in Nigeria or foreign companies carrying on businesses in Nigeria. The tax rate is 30 % of the total profits of a company less allowable deductions.
- Personal Income Tax: Personal Income Tax is regulated by the Personal Income Tax Act of Nigeria. It is the tax collected from individuals and is imposed on different sources of income like labour, pensions, interest and dividends. In employment, a non-resident person is liable to payment of this tax if the whole or part of his business takes place in Nigeria. The rates are ranging between 7% – 24%, depending on the amount of chargeable income a person has. However, the maximum tax payable by any individual, regardless of the income, is 19.2% of such individual’s gross income.
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- Value Added Tax: Value Added Tax is a type of tax paid on the sale of services and goods to consumers. VAT is paid by the producers of services and goods, but it is finally imposed on the consumers who purchase the services and goods when they pay for them. This means that the producers charge VAT on the services and goods they render so that they can be repaid by them to the Government. Value Added Tax is 7.5% of the price of the products or goods sold.
- Capital Gains Tax: Capital Gains Tax is regulated by Capital Gains Tax Act and is the tax paid on the profit made from the disposal or exchange of some kinds of assets. CGT is charged at a flat rate of 10% of chargeable gains.
- Stamp Duties: Stamp Duties is regulated by the Stamp Duties Act. It was promulgated to impose the payment for stamping of duties of instruments like receipts, electronic documents, which is used to show the validity of such instruments. FIRS is the only valid authority empowered to impose, charge, and collect stamp duties in respect of documents relating to matters between a company and an individual, group or body of individuals.
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