Taxes in Nigeria

Taxation is basically the process of collecting taxes within a particular location. In this regard, tax has been defined as "a monetary charge imposed by the Government on persons, entities, transactions or properties to yield revenue". It has also been defined as 'the enforced proportional contributions from persons and property, levied by the State by virtue of its sovereignty for the support of Government and for all public needs".

Taxes may also be defined as a "pecuniary burden laid upon individuals or property to support government expenditure. A tax "is not a voluntary payment or donation, but an enforced and compulsory contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government", whether under the name of duty, custom excise, levy or other name.

Taxes may be direct or indirect and may be imposed on individual basis, entities, assets and transactional basis. In Nigeria, taxes are imposed on the following bases:

  • On Individuals
  • Personal Income Tax - imposed on the income of all Nigeria citizens or residents who derive income in Nigeria and outside Nigeria
  • Development Levy - a flat charge imposed on every taxable person typically within a State
  • On Companies (Corporate Entities)
  • Companies Income Tax - imposed on the profits of all corporate entities who are registered in Nigeria or derive income from Nigeria, other than those engaged in petroleum operations;
  • Petroleum Profits Tax - imposed on the profits of all corporate entities registered in Nigeria or who derive income from oil and gas operations in Nigeria;
  • Education Tax - imposed on all corporate entities registered in Nigeria;
  • Technology Levy - imposed on selected corporate entities (telecommunication companies, internet service providers, pension managers, banks, insurance companies and other financial institutions within a specified turnover range) in Nigeria to support nationwide development of technology infrastructure and capacity.
  • On Transactions
  • Value Added Tax - imposed on the net sales value of non-exempt, qualifying goods and services in Nigeria;
  • Capital Gains Tax - imposed on capital gains derived from sale or disposal of chargeable assets; and
  • Stamp Duty - imposed on instruments executed by individual and corporate entities in Nigeria.
  • Excise Duty - imposed on the manufacture of goods within the Government territory collected by the Nigeria Customs Service
  • Import Duty - imposed on the import of goods into the Government territory collected by the Nigeria Customs Service
  • Export Duty - imposed on the export of goods outside the Government territory collected by the Nigeria Customs Service
  • On Assets

This includes taxes, such as property tax and other such taxes imposed on land or landed property.

 

 

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