Hi Zainab,

I’d like to make inquiries about interns and taxes. I have a small business I run, which deals in book-keeping/accounting for small businesses. My team is made up of me, myself & I. My nephew and 3 of his friends, just ambushed me with letters for internship placement, as they are accounting majors at a private university.

Since I’ve been managing myself, I have been dodging all this tax things you always talk about, If I accept them as interns what implications would it have on me tax-wise? If i’m just paying them a small stipend is there a need to remit taxes on their behalf? I earnestly need your reply, because the semester is almost over and he has been bugging me with calls.

Regards,

Dodgy Founder.

Dodgy Founder,

First, let me say a prayer for you. May the long arm of the law not catch up with you.

And to answer your question, an employer is expected to deduct taxes (known as PAYE, i.e. Pay As You Earn) from an intern’s pay and remit the deducted taxes to the tax office closest to the intern’s residence or where the employer’s place of business is located.

Employing interns does not absolve you of your tax obligations.

PAYE is based on a graduating scale in Lagos depending on how much is earned. However for income that is less than N300,000 annually, PAYE is at a flat rate of 1% so if you pay your intern N10,000 monthly (i.e. N100,000 annually), you should deduct N100 monthly and pay to the tax authorities.

You are supposed to deduct PAYE from your earnings (whether profit or salary) from your business. You can read more about paying and remitting taxes here