Taxes in Nigeria are levied on the individual and companies, and are collected mainly by the Federal Inland Revenue Service (FIRS) on behalf of the Federal Government. Some taxes are mandated under the law, including Company Income Tax, Petroleum Profit Tax, Capital Gains Tax, Value Added Tax, Stamp Duties, Personal Income Tax, Withholding Tax, Education Tax, Industrial Training Fund, Employee Compensation Contributions, and Customs Duties, among others.
Non-payment of taxes due attracts penalties and possible prosecution.
Major Taxes
- Company Income Tax (CIT): Governed by the CIT Act and Finance Act. Rates:
- Less than ₦25m turnover – 0%
- ₦25m–₦100m turnover – 20%
- More than ₦100m turnover – 30%
- Foreign companies remit tax only on profit earned in Nigeria.
- Capital Gains Tax (CGT): 10% on capital gain on sale of chargeable assets.
- Petroleum Profit Tax (PPT): Imposed on petroleum companies’ earnings, from 50%–85% depending on contract nature and years of operations.
- Personal Income Tax (PIT): Remitted by citizens under PITA, either PAYE or self-assessment. It ranges between 7% to 24% depending on income range.
- Stamp Duties: Imposed on documents and transactions, remitted to either FIRS or State Boards.
- Value Added Tax (VAT): 5% on supply of goods and services.
- Withholding Tax: Withheld at source from payments like consultancy, dividends, contracts, rent, etc., at 5%–10% rates.
- Customs & Excise Duties: Levied on specified imported items, 5%–30% ranges.
- Employee Compensation Contributions: Employers contribute 1% of employees’ payroll to the NSITF.
- Industrial Training Fund (ITF): 1% of payroll annually for organizations with 5+ employees or turnover > ₦50m.
- Education Tax: 2% of assessable profit paid by Nigerian resident companies.
Taxation is a major source of government revenue. Compliance is essential to avoid prosecution, penalty, or fines by the FIRS and other regulatory bodies.