Personal Income Tax

Tax is imposed on individuals who are either in employment or are running their own small businesses, under a business name or partnership.

Though collection of Personal Income Tax is a federal responsibility, this tax is generally collected by state governments from those that are resident in their various states, regardless of whether they are federal, state, local government, or private sector workers. The Federal Inland Revenue Service also collects this tax but only from residents of the Federal Capital Territory as well as what may be described as highly mobile federal worker; staff of the Ministry of Foreign Affairs, other Nigerians and foreigners outside the country but earning income in Nigeria (non-residents), expatriate workers resident in Nigeria, Police Officers, and Military Officers. Civilians working in Police and Military formations, however, pay to their respective States of residence.

The current law guiding the taxation of personal incomes is the Personal Income Tax Act (Amendment) 2011. Under the law, Federal and States’ tax boards are empowered to identify persons living in or earning income from Nigeria who are required to pay tax, and to assess incomes and tax their incomes using specified guidelines and rules. This law also guides the tax official in identifying the residence of potential taxpayers, as well as the sources and origins of their incomes for the purpose of taxing the income.

Types of PIT

• • Pay-As-You-Earn (PAYE) i.e. taxes from employment

PAYE is an acronym for “Pay as You Earn”. It is a method of collecting personal income tax from employees’ salaries and wages through deduction at source by an employer as provided by the relevant sections of the Personal Income Tax Act

• • Taxes from self employed persons (Direct Assessment)

Direct Assessment is an assessment raised directly on self-employed persons (eg. Professionals, Contractors, Traders, Landlords etc).

• • PRESUMPTIVE TAX

A tax imposed on all persons whose income cannot be ascertained for purposes of tax assessment because they do not keep financial records of their business.

Promotional Lottery, Gaming, Casino, Sport Betting and Tombola Tax

This is tax imposed on who desires to operate any promotional lottery, gaming, casino, sport betting or tombola facility, franchise or agency in the State.

Land Use Charge

Land Use Charge shall be payable on all real property situated in the State.

Education, Hotel, Restaurant and Entertainment Tax

A tax imposed on any person who provides private educational services at all levels, or pays for the use or possession or for the right to the use or possession of any hotel, hotel facility or events centre; or purchases consumable goods or services in any restaurant whether located within a hotel or anywhere in the State.

Capital Gains Tax (Individuals only)

It is a tax on the profit made from the sale or exchange of capital assets like land shares, machinery e.t.c.

Stamp duties

It is a tax imposed on legal instruments/documents executed by individuals, this tax is usually placed on the transfer of homes, buildings, copyrights, land, patents and securities.

Business Premises levy

It is a tax on property used for the production of income including rental houses, office buildings, factories etc.

Withholding Taxes

It is the specified amount deducted at source from payment accruing or made to individuals or corporate entities in respect of income receivable for service(s) rendered or from investment and remittance of same to the Relevant Tax Authority in line with the provisions of Personal Income Tax (PITA) and Companies Income Tax Acts (CITA).