There are several tax laws in Nigeria that most citizens are unaware of. This section of the Beehive enlightens readers on tax laws in the country and how to pay your taxes.
Tax laws include:
1) The Personal Income Tax: This stipulates that all Nigerians (and non-Nigerians who make their earnings in Nigeria) pay tax from their earnings. Liability to Personal Income Tax is dependent on whether one is resident in Nigeria or whether one is a non-Nigerian. You pay this tax if:
2) Company Income Tax: This is the provision for the taxation of corporate bodies. If a company is incorporated, it is treated as a legal entity separate from its owners or shareholders. Nigerian companies are taxed on their worldwide income while foreign companies are taxed only in terms of their profit. The Education Tax Act provides that all incorporated companies pay 2% of their assessable profit into an Education Tax Fund.
3)Tax Reliefs: In cases where a particular profit or income is taxable in Nigeria and another country, the income tax statutes indicates the possibility of the tax payer getting double tax relief. The Federal Government of Nigeria has signed a number of income tax treaties with the governments of some countries of the world.
4) Petroleum Profit Tax: Special taxes are imposed on those who engage in activities in the petroleum, oil and gas industry in compliance with the Petroleum Profit Tax Act (PPTA). Any income which is taxed under the Companies’ Income Act is exempted under the Petroleum Act.
5) Value Added Tax (VAT): This provides that purchasers of chargeable products and services pay 5% of the purchase price as tax. The Federal Inland Revenue Service (FIRS) handle VAT on behalf of federal, state and local governments. Proceeds from VAT are shared among the three tiers of government.
6) Excise Duties: The Customs and Excise Management Act provides for the imposition of customs duties on importers of specified goods. This tax is collected by the Nigeria Customs service on behalf of the federal government which has the sole entitlement to it.
7) The Stamp Duties Act: This provides for the imposition of tax on a range of documents and transactions.
8) Tenement rates: These are imposed on building in particular local government areas.
9) Land tax: This occurs when real property is transferred, before the governor grants his consent in accordance with the Land Use Act of 1978, the property owner has to pay some charges to the state government.