In Nigeria, the right to administer and collect taxes is distributed between the three tiers of Government; Federal, State and Local Governments. The Taxes and Levies (Approved List for Collection) Act (as amended), dictates the taxing rights allocated to each tier of Government. 

Taxes due to Federal Government

There are nine (9) taxes currently being administered by the Federal Government.  These taxes are highlighted below:

S/N

Tax or mandatory contribution

Frequency

Applicability

Rates

1

Companies income tax

Annually

Companies

30%/ 20% of total profit

2

Tertiary education tax

Annually

Companies

2% of assessable profit

3

National Information Technology Development Levy

Annually

Companies  with annual turnover of N100m and above operating in Telecoms and financial services

1% of profit before tax where turnover exceeds N100m

4

Capital gains tax

Per transaction

Companies, individuals resident in FCT Abuja, and foreign nationals

10% of chargeable gains

5

Withholding tax

Monthly

Corporate entities

Ranging from 5% – 10% on qualifying transactions

6

Value added tax

Monthly

Corporate entities

5% of value of goods/ services supplied

7

Personal income tax

Monthly

Individuals resident in the FCT, Members of the Armed Forces; Members of the Nigeria Police Force; Staff of the Ministry of Foreign Affairs, and Non-resident individuals

Ranging from 7% – 24% of taxable emoluments

8

Stamp duties

Per transaction

Companies, individuals resident in FCT Abuja, foreign nationals

Variable

9

Petroleum profits tax

Annually

Companies operating in the upstream sector of the oil and gas industry

85%/65.7%/ 50% of chargeable profit

Glossary of terms

S/N

Terminology

Definition

1

Profit before tax

Revenue less all expenses including interest expenses and operating expenses except for income tax

2

Assessable profit

Profit for a period after adjusting for non-deductible expenses and non-taxable income

3

Total/ chargeable profit

Assessable profit after adjusting balancing charges/ allowances, capital allowances (initial and annual) and investment allowance

4

Chargeable gains

Refers to the increase in an asset’s value between the time it is purchased and the time it is sold, which becomes subject to capital gains tax. It is calculated as the sales proceeds of chargeable assets less historical cost and certain expenses associated with buying, selling or improving the asset, such as fees or commissions

Please note that a company operating in the oil and gas industry would struggle to qualify as MSME in Nigeria.

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