| Know About |
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| Personal Income Tax in Nigeria |
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| Withholding Tax in Nigeria |
| Personal Income Tax in Nigeria |
| What it is: |
It is a tax that is imposed on the gain or profit from any trade, business, profession or vocation; or any salary, wage, fee, allowance or other gain or profit from employment of individuals. |
| Enabling Law: |
Personal Income Tax (Amendment ) Act 2011. |
| Who Pays it: |
Individuals who are either in employment or are running their own businesses under a business name or partnership and communities, families and any trustee or executor under any settlement, trust or estate deemed to be resident in the State at a particular year. |
| Who Collects it: |
| State Boards of Internal Revenue collect taxes of |
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individuals in their various states of residence; |
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Body of individuals such as communities, families that run a business; |
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Business names and partnerships; |
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Executors of estates of deceased persons and trustees of trusts. |
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| Federal Inland Revenue Service collects Personal Income Taxes of |
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Persons employed in the Nigerian Army, the Nigerian Navy, the Nigerian Air Force and the Nigerian Police other than in a civilian capacity; |
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Officers of the Nigerian Foreign Service; |
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Non-residents who derive income or profit from Nigeria. |
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| Method of Payment: |
Tax on the income of self-employed individuals or that of communities, families, trustee or executor is paid directly to the tax authorities while the employers deduct appropriate tax from the income of their employees and remit same to the tax authorities on monthly basis. |
| Consolidated Allowance: |
A consolidated relief allowance shall be granted on income at a flat Rate of N200,000.00 plus 20% of gross income. |
| Tax Exempt: |
The following deductions are tax exempt
a) National Housing Fund Contribution
b) National Health Insurance Scheme
c) Life Assurance Premium
d) National Pension Scheme
e) Gratuities |
| Rate: |
After the relief allowance and exceptions had been granted,
the balance of income shall be taxed as specified in the
following tax table:
- First N300,000 at 7%
- Next N300,000 at 11%
- Next N500,000 at 15%
- Next N500,000 at 19%
- Next N1,600,000 at 21%
- Above N3,200,000 at 24% |
| • Minimum Tax: |
1% of Gross Income |
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| Witholding Tax in Nigeria |
| What it is |
It is a payment of tax on account to be applied as tax credit against the income tax liability of the year to which the income that suffered the deduction relates. It is deductible at the point of payment or when credit is taken whichever comes earlier for the specified activity. |
| Enabling Law |
Sections 60, 61 62 of Companies Income Tax Act and Sections 69 to 72 of Personal Income Tax Act 1993 and Gazette Extraordinary No 74 Vol. 84 Part B of 12th August, 1997
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| Who Pays it |
Individuals who are either in employment or are running their own businesses under a business name or partnership and communities, families and any trustee or executor under any settlement, trust or estate deemed to be resident in the State at a particular year. |
| Who Deducts it |
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Body corporate or unincorporated; |
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Government Ministries, Departments or Agencies, Local Governments; |
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Statutory bodies, Public Authorities, Institutions and Organizations. |
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| Who Collects it |
| State Boards of Internal Revenue collect WHT taxes of: |
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individuals and unincorporated bodies in their various states of residence; |
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| Federal Inland Revenue Service collect WHT of: |
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Limited and Public Liability Companies all over the country. |
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| Method of Payment |
Tax withheld shall be remitted within 30 days or the date the duty to deduct arises whichever is earlier. |
| Rates: |
See table of Applicable Rates below |
| Incomes exempted from WHT |
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Where a manufacturer buys raw materials from a supplier of those products which the manufacturer uses in his production line; |
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Where the manufacturer delivers its normal line of products to its distributors and agents for sale. |
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| Offence and Penalties: |
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Failure to deduct WHT attracts a fine of 200% of the tax not withheld; |
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Failure to remit withheld tax within the stipulated time attracts a fine of 200% of the tax withheld but not remitted. |
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| TABLE OF APPLICABLE RATES (WITHHOLDING TAX) |
| Transaction type |
Tax rate for companies |
Tax rate for individuals |
• All aspects of building
construction and related
activities |
5% |
5% |
• All types of contracts
other than sale and
purchase of goods |
5% |
5% |
| • Consultancy services |
10% |
5% |
| • Management services |
10% |
5% |
| • Technical Services |
10% |
5% |
| • Commissions |
10% |
5% |
• Rent
(including equipment hire) |
10% |
10% |
| • Royalties, Director’s fees |
10% |
10% |
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