My company has only one employee, should the company remit PAYE tax for 1 staff? +
Yes, except where the employee is exempt under the law.
Is a worker with a monthly income of NGN30,000 or below liable to PAYE tax +
No
What is the tax rate for an employee in the Federal Capital Territory +
The tax rate has not changed. It is the same as the figures in the pre-Finance Act 2020.
What is the rate for foreign persons working in Nigeria+
The tax rate for nationals and expatriates are the same
I am an expatriate about to commence an assignment in Nigeria. How much tax will I pay?+
The tax for an expatriate will depend on whether the taxpayer is tax-equalized.
Should an employee pay tax on other allowances apart from basic salary?+
Yes. An employee should pay tax on all employment income.
Can I deduct children and dependent relative allowance in calculating PAYE tax?+
No
Can I claim employee and employer contributions as a personal income tax relief?+
An employee cannot use an employer’s contribution to reduce tax.
How do I remit PAYE tax?+
PAYE tax remittance is through the designated banks in Nigeria.
What can serve as proof that an employer paid the tax of an employee?+
A person may use a tax clearance certificate (TCC) of the employee or an extract of the Form H1 return.
If an employer deducts my PAYE tax, how do I collect my TCC card? Is it from the employer, or do I apply to get one?+
An employer will apply for a tax card on behalf of all employees.
Who should pay tax in Nigeria?+
Payment of taxes in Nigeria is a legal requirement for individuals and business owners. So if you are thinking of starting a business, then you should understand that your business is required to make a contribution to Government’s revenue.
What is Value Added Tax (VAT)?+
Value Added Tax is a consumption tax that is levied at each stage of the supply chain, from production to consumption.
On what type of Goods and Services do you pay VAT?+
VAT is paid on all goods and services except those that are exempted by law.
What is the VAT Rate?+
The VAT rate in Nigeria is 7.5%.
What is the due date of VAT payment?+
VAT payments are due on or before the 21st day of the month following the month of transaction.
Who is obligated to deduct VAT at source and remit directly to the tax authority?+
Under the Nigerian VAT regime, some taxpayers are obligated to deduct VAT at source and remit directly to the tax authority. These are Oil&Gas companies, Telecommunications companies and some other designated companies,government ministries, departments, and agencies in Nigeria
What is Withholding Tax? -
It is a Payment on Account for Company Income Tax (CIT) or a deposit for Personal Income Tax for those in business.
Why is Withholding Tax (WHT) Important in Nigeria? +
WHT plays a crucial role in the Nigerian tax system:
– Combating Tax Evasion: By collecting tax at the source, WHT makes it harder for individuals and businesses to avoid their tax obligations.
– Simplifying Tax Compliance: WHT takes the guesswork out of tax filing. Instead of calculating and paying taxes yourself, your payer handles the initial deduction and remittance.
– Boosting Government Revenue: WHT provides the government with a predictable and steady stream of income.
Who is Affected by Withholding Tax (WHT)?+
WHT touches both individuals and businesses.
Individuals:
– Individuals receiving dividends from investments
– Individuals receiving interest income from savings or loans
– Individuals receiving rental income from property
– Receiving other payments like contracts etc.
Businesses:
– Banks and other financial institutions receiving interest on deposits
– Businesses receiving dividends to shareholders
– Businesses receiving rental payments for office or commercial space
– Receiving other payments like contracts etc.
The Different Types of Withholding Tax+
Here is a list of the different items that may attract Withholding Tax in Nigeria:
– Dividends
– Interest Income
– Rent and Property Income
– Royalties
– Management/Technical Fees
– Commission, Consultancy, Service Fees
– Construction (roads, buildings, bridges)
– Contracts etc.
What is a tax return?+
A tax return is a form used to disclose a taxpayer’s affairs for a definite period and filing in the prescribed format with the relevant tax authority.
What is a companies income tax return?+
A companies income tax return is a return that shows the companies income tax (CIT) payable of a company.
What is the companies income tax rate in Nigeria?+
The CIT rate in Nigeria ranges between 0% to 30% based on a company’s annual turnover.
Who is the relevant tax authority for CIT?+
The relevant tax authority for CIT is the Federal Inland Revenue Service (FIRS).
What are the requirements for filing a CIT return?+
An audited accounts, tax computation and evidence of payment of CIT that was self assessed.
How do I file a CIT return?+
The taxpayer must have registered for tax with FIRS, prepare the accounts of the company for the financial year, appoint an external auditor to review the accounts and issue an audited financial statement, visit the taxpayer’s account on FIRS portal TaxPro Max and pay the CIT amount at any of the banks designated for tax collection.
A company reported accounting loss and taxable loss in a year, should the company still file a CIT return?+
Yes, every company is required to file a return with Federal Internal Revenue Service (FIRS) even if the company reports a taxable loss.
When is the deadline for filing Companies Income Tax Returns?:+
For existing companies, CIT returns should be filed within six (6) months after the accounting year-end. For new companies, CIT returns should be filed within eighteen (18) months from the date of incorporation or six (6) months after accounting year end whichever is earlier.
Can a taxpayer request for an extension of time to file a CIT return or TP returns?+
Yes, a taxpayer may request for an extension of time, in writing, to file a CIT return or TP return
What is the penalty for late filing of CIT returns?+
The penalty for failure to file CIT returns on the due date is ₦25,000 for the first month of default and ₦5,000 for each succeeding month.