Tax and Tax Rates

Tax is a compulsory levy imposed on taxpayers by any government on an individual or an organization to fund government spending and various public expenditures. Where there’s a refusal to pay taxes or evasion of taxes, there will be penalties made available. The main aim of taxation is to generate revenue for the government.

Major Types of Taxes
  • Companies Income Taxes (CIT) 
  • Value-Added Taxes (VAT) 
  • Withholding Taxes (WHT) 
  • Petroleum Profits Taxes (PPT) 
  • Personal Income Taxes (PIT)
  • Customs and Excise Duties (CET)
  • Stamp Duties (SD)
  • Capital Gains Taxes (CGT)
  • Education Tax (ET)
APPLICABLE TAX
TAX RATE
GOVERNING LEGISLATION
Companies Income Tax (CIT) 30 % of total profits of a company less allowable deductions Companies Income Tax Act
Capital Gains Tax (CGT) 10% of gains realized upon disposal of a chargeable  asset Capital Gains Tax Act

 

Value Added Tax (VAT) 7.5% on the supply of goods and services Value Added Tax Act
Education Tax 2% of assessable profits of a company Education Tax Act
Petroleum Profits Taxes (PPT) 
  • 50% for petroleum operations under production sharing contracts (PSC) with the Nigerian National Petroleum Corporation (NNPC).
  • 65.75% for non-PSC operations, including joint ventures (JVs), in the first five years during which the company has not fully amortized all pre-production, capitalized expenditure.
  • 85% for non-PSC operations after the first five years.
Personal Income Taxes (PIT)
Annual Income Personal Income Tax Rate
First N300,000.00                             7%
Next N300,000.00 11%
Next N500,000.00 15%
Next N500,000.00 19%
Next N1,600,000.00 21%
Above N3,200,000.00 24%
Stamp Duties (SD)

Taxable Item Rate Of Tax

Lease Agreements 16 kobo for every N200 (0.08%)

Mortgages 16 kobo for every N200 (0.375%)

Incorporation of limited liability company 0.75% of authorized share capital.

Value Added Tax (VAT)

The current VAT rate payable is 7.5% following the amendment of the Value Added Tax Act by the Finance Act 2020.

Withholding Taxes (WHT) 

Withholding tax is charged at the rate of five percent (5%) for services or ten percent (10%) for goods depending on the nature of the transaction and also whether the beneficiary of the payment is an individual or a corporation. For non-resident companies, a reduced withholding tax rate of 7.5% applies to the non-resident company where Nigeria has a double treaty with the recipient country and the date for filing this tax return is the 21st of every succeeding month.

Customs and Excise Duties (CET)

 Any company involved in importation operations is liable to pay the tax charge from 5% to 30%, depending on the goods imported.

Education Tax (ET)

This Act regulates taxes imposed on every Nigerian resident company at the tax rate of 2% of all assessable profit for each year of assessment as provided by Section 1 of the Act. It is payable by the company within sixty (60) days of an assessment notice from FIRS.

 

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