To begin with, this piece is aimed towards creating a brief insight into the types of taxes in Nigeria. In our subsequent publications, critical examination would be undertaken to give a better understanding to the types of taxes operating in Nigeria. For those in search of something brief, this if for you.
According to the Federal Inland Revenue Service of Nigeria, there are 9 types of taxes collected in Nigeria viz;
1. COMPANIES INCOME TAX (CIT): this type of tax is payable by all incorporated companies in Nigeria. It is 30% of the profits accrued by the company less allowable deductions. It is regulated by the Companies Income Tax Act, 1990.
2. PETROLEUM PROFIT TAX (PPT): this type of tax is imposed on a resident company or person in charge of a non-resident company who are operating in the petroleum sector. This type of tax is used in place of CIT for companies who carry out petroleum operations i.e. these companies would not pay CIT. It is regulated by the Petroleum Profit Tax Act, 1990.
3. VALUE ADDED TAX (VAT): this is a tax payable by any person, corporate sole, organizations at 5% of the net value added on all taxable product or service. It is required that all registered business in Nigeria to have a VAT registration certificate and dis[lay their number on all invoices. It is regulated by the Value Added Tax Act, No 102 of 1993.
4. PERSONAL INCOME TAX (PIT): this is the type of tax that is imposed on the income of persons and is imposed on different sources of income. Person in this regard includes; an individual, a sole proprietorship, communities and families. Generally, PIT is determined based on the taxable income of the taxpayer. It is regulated by the Personal Income Tax Act, No 104 of 1993.
5. WITHOLDING TAX (WHT): writers do not really categorize this as a type of tax. It is seen as an advance payment of tax wherein the tax is deducted from the invoices of the taxpayers. It is a mechanism for the collection of other taxes; as the person making a particular payment to another would deduct and remit to the collecting authority. WHT are usually 10% or 5% depending on the type of transaction and collecting authority.
6. EDUCATIONAL TAX (EDT): all companies registered in Nigeria; that are subject of CIT are subject to this type of Tax. It is 2% of assessable profits of a company contributed towards the development of Education in Nigeria. It is regulated by the Education Tax Act, 2004.
7. STAMP DUTIES (STD): stamp duties are taxes levied on instruments i.e. documents executed by both companies and individuals. STD are payable on instruments such as tenancy agreements, bills of exchange, promissory notes, receipts, transfer agreements, mortgage, insurance policies, share capital amongst others. Stamp duties are chargeable according to a scale determined. It is regulated by the Stamp Duties Act, 2004.
8. CAPITAL GAINS TAX (CGT): this is a 10% tax payable by any company registered in Nigeria on capital gains or gains gotten from the disposal of chargeable assets. It is regulated by the Capital Gains Tax Act, 1990.
9. NATIONAL INFORMATION TECHNOLOGY DEVELOPMENT FUND (NITDF) LEVY: The National Information Technology Development Act, 2007 imposes on telecommunication companies, cyber companies and internet service providers, pension managers, banks, insurance companies and other financial institutions which have an annual turnover of N100,000,000 and above a levy amounting to 1% of their profits before Tax.
MOSHOOD ABDULMAJEED ADENIYIis currently a final year student of law, Univeristy of Ilorin. He is passionate about legal research and a diligent tax euthusiast. He can be reached via Email: firstname.lastname@example.org
Mobile No: 09030528182