TAXATION IN NIGERIA by Adebola Olubanjo

 

TAXATION IN NIGERIA

Nigerian Tax System has become more sophisticated in the recent times.  There are amendments to the rules and regulations, which have made it more complex than before.  At the same time, the government has introduced incentives to encourage investment.  Some outdated tax provisions have been discontinued.  It is advisable that individuals and corporate entities should comply with these changes and improvements in the tax laws of the country.  There are three tiers of government through which taxes are collected, viz, Local Government, State Government and Federal Government.  The various taxes being collected are listed herewith according to the tiers of government that collects them. 

 

(a)   Taxes collectible by the Federal Government

  • Companies Income Tax
  • Withholding tax on companies, residents of FCT, Abuja and non-resident individuals
  • Petroleum Profit Tax
  • Value-Added Tax (VAT)
  • Education Tax
  • Capital gains tax – Abuja residents, corporate bodies and non-resident individuals
  • Stamp duties involving corporate bodies and the Federal Capital Territory Abuja
  • Personal Income Tax in respect of Armed forces personnel, Police personnel, Residents of Abuja FCT and Staff of Ministry of Foreign Affairs and non-resident individuals.

 

(b)   Tax collectible by State Governments

  • Personal Income Tax: Pay-As-You-Earn (PAYE) and Direct (self and government) assessment;
  • Withholding Tax (individuals only);
  • Capital Gains tax;
  • Stamp duties (instruments executed by individuals);
  • Pools betting, lotteries, gaming and casino taxes;
  • Road taxes;
  • Business premises registration and renewal levy;

–          Urban Areas

–          Rural Areas

  • Development levy
  • Naming of street registration fee in state capitals
  • Right of occupancy fees on lands owned by the state government in urban areas of the state
  • Market taxes and urban levies where state finances are involved.

 

 

 

(c)    Taxes/Levies Collectible by Local Governments

  • Shops and kiosks rates;
  • Tenement rates;
  • On and off liquor license;
  • Slaughter slab fees;
  • Marriage, birth and death registration fees;
  • Naming of street registration fee (excluding state capitals);
  • Right of occupancy fees (excluding state capitals);
  • Market taxes and levies (excluding market where state finances are involved);
  • Fees for domestic animal license;
  • Fees for bicycle, truck, canoe, wheelbarrow and cart;
  • Cattle tax;
  • Merriment and road closure fees;
  • Motor park levies

 

There are 36 States in Nigeria while there are 774 Local Government Areas.  The Federal Capital Territory in Abuja also collects taxes.  In the recent past, it is the Federal Government that collected taxes on behalf of the Federal Capital Territory in addition to the taxes that are collected on the federal level.

 

In the next write up we shall look into some of the taxes and the collection procedures.

 

 

Adebola Olubanjo