You should be aware that businesses operating in Nigeria are required to pay taxes to the government. Around the world, this is the norm. It is applicable unless your company makes less than a specific amount, in which case it would not be required to pay all of those taxes. Knowing what business taxes you should be paying in Nigeria as an entrepreneur is important.
We’ll outline the nine taxes that businesses must file in this post. To know which ones you should deduct from your income, you must be familiar with them.
BrandSpur Nigeria news today reports here they are:
Company Income Tax (CIT)
Profits earned by businesses operating in Nigeria are subject to company income tax. It is subtracted from the earnings from the prior fiscal year. Businesses with an annual revenue of ₦25 million or less are free from paying CIT as of the writing of this article. Companies with turnovers between ₦25 million and ₦100 million are subject to a 20% CIT rate, while those with turnovers over ₦100 million are subject to a 30% CIT rate.
Value Added Tax (VAT)
In Nigeria, the majority of goods and services are subject to value-added tax. At the moment, the VAT rate is fixed at 7.5%. Nonetheless, certain items are “zero-rated,” meaning they are exempt from VAT. These consist of pharmaceutical and medical goods.
Pay as You Earn (PAYE)
Income tax withheld from workers’ pay cheques and sent to tax authorities by their employers is known as PAYE. PAYE rates start at 7% for those making less than ₦300,000 per year and go up to 24% for those making more than ₦3.2 million.
Petroleum Profit Tax (PPT)
This is gathered from businesses that engage in upstream petroleum activities, like exploration and extraction. PPT rates vary from 30% (for upstream gas revenues) to as high as 60% (the highest headline tax rate for businesses in Nigeria’s upstream oil and gas industry), depending on the type of operations being examined.
Capital Gains Tax (CGT)
Gains from the sale of assets, including real estate, buildings, and stock, are subject to CGT. All gains from the sale of eligible assets are subject to a flat 10% CGT tax.
Education Tax
Nigerian-incorporated businesses must pay 3% of their yearly assessable profits in education tax. After receiving an assessment notification from the Federal Inland Revenue Service (FIRS), it must be paid within two months. The government uses the money it collects in this way to assist the nation’s educational advancement.
National Housing Fund (NHF)
By taking 2.5% of their employees’ monthly pay and sending it to the Federal Mortgage Bank of Nigeria, Nigerian employers contribute to the NHF on their behalf. Keep in mind that private employees are not required to make NHF contributions; instead, businesses in this industry may choose to do so freely.
National Information Technology Development Levy
This fee, which is 1% of their profit before taxes, is due from specific businesses with yearly sales of at least ₦100 million. Companies that are subject to this charge include banks, insurance companies, pension managers, Internet service providers (ISPs), and telecommunications firms. The government uses the money raised from this fee to support IT development.
Stamp Duty
Stamp duty is imposed on contracts that are signed in Nigeria or on real estate located there. The rate is either fixed or proportional to the value of the item under consideration, depending on the type of instrument for which it is charged. The authorised share capital of a recently registered business is subject to a stamp duty rate of 0.75%.
Remittances and contributions mandated by law are covered by this list of Nigerian corporate taxes. To fulfil your responsibilities to the nation as an entrepreneur, you must file these taxes on time if you are starting a business.
