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FEDERAL TAX LAWS OF NIGERIA

  



NIGERIA TAXATION LAW FRAMEWORK

TAXATION IN NIGERIA

Taxation in Nigeria is strictly by way of formal legislation. In other words, every tax in Nigeria, to be legal and enforceable, has to be one enabled by an identifiable piece of legislation which imposes taxing obligations which are clear and unambiguous. Currently, these legislations uphold the different tax regimes and practices in Nigeria.



SCHEDULE OF TAXES ALLOWED IN NIGERIA UNDER DIFFERENT LEVELS OF GOVERNMENT

FEDERAL GOVERNMENT

Companies Income Tax

Withholding Tax on Companies

Withholding Tax of Residents of the Federal Capital Territory, Abuja

Withholding Tax on Non-resident Individuals

Petroleum Profits Tax

Value Added Tax

Education Tax

Capital Gains Tax on Residents of the Federal Capital Territory

Capital Gains Tax on Corporate Bodies

Capital Gains Tax on Non-resident individuals

Stamp duties on bodies corporate

Stamp duties on residents of the Federal Capital Territory

Personal Income Tax in respect of members of the armed Forces of the Federation and the Nigerian Police Force

Personal Income Tax of residents of the Federal Capital Territory

Personal Income Tax in respect of Staff of the Ministry of Foreign Affairs and non-resident individuals

STATE GOVERNMENTS

Personal Income Tax in respect of Pay-As-You-Earn, PAYE

Personal Income Tax in respect of direct taxation (self-assessment)

Withholding Tax (Individuals) only

Capital Gains Tax (Individuals only)

Stamp Duties on instruments executed by individuals

Pools Beting and Lotteries, Gaming and Casino taxes

Road Taxes

Business Premises Registration Fee in respect urban areas (maximum of N10,000 for registration, N5,000 per annum for renewal of registration)

Business Premises Registration Fee in respect of rural areas

Development levy (individuals only) not more than N100 per annum on all taxable individuals

Naming of street registration fees in the State Capital

Right of Occupancy fees on lands owned by the State in urban areas of the State

Market levies and taxes where State finance is involved

TAXES AND LEVIES TO BE COLLECTED BY THE LOCAL GOVERNMENT

Shops and Kiosks

Tenement rates

On and Off Liquor Licence Fees

Slaughter Slab fees

Marriage, birth and death registration fees

Naming of street registration fee, excluding any street in the State capital

Right of Occupancy fees on lands in rural areas, excluding those collectible by the Federal and State Governments

Market taxes and levies excluding any market where state finance is involved

Motor park levies

Bicycle, truck, canoe, wheelbarrow and cart fees, other than a mechanically propelled truck

Cattle tax payable by cattle farmers only

Merriment and road closure levy

Radio and television licence fees (other than radio and television transmitter)

Vehicle radio licence fees (to be imposed by the local government government of the State in which the car is registered)

Wrong parking charges

Public convenience, sewage and refuse disposal fees

Customary burial ground permit fees

Religious places establishment permit fees

Signboard and advertisement permit fees

 

TAX LEGISLATIONS, REGULATIONS AND GUIDELINES IN NIGERIA (FEDERAL)

Associated Gas Re-Injection Act

Capital Gains Tax Act

Companies Income Tax Act

Deep Offshore and Inland Basin Production Sharing Contracts Act

Tertiary Education Trust Fund Act

Federal Inland Revenue Service (Establishment) Act

Income Tax (Authorised Communications) Act

Industrial Development (Income Tax Relief) Act

Industrial Inspectorate Act

National Information Technology Development Act

Nigerian Export Processing Zones Act

Nigeria LNG (Fiscal Incentive Guarantees and Assurances) Act

Oil and Gas Export Free Zones Act

Personal Income Tax Act

Petroleum Profits Tax Act

Value Added Tax Act

Stamp Duties Act

Taxes and Levies (Approved List for Collection) Act

Casino Act

 

OTHER TAX REGULATION AND GUIDELINE DOCUMENTS

Transfer Pricing Regulations 2012

Requirements for Funds, Bodies, Etc Regulations 2011

Amendment of the 5th Schedule to the CIT Act

National Tax Policy (Document)

NOTE: Reviews, amendments and modifications to tax legislations are continuous, evolving with global best practices and in keeping with the local socio-economic realities.

 

 

TAXATION LAW BILLS BEFORE THE NATIONAL ASSEMBLY

The Petroleum Industry Bill

 

 

TAX STATUTES, REGULATIONS, REGULATORS AND GUIDELINES FOR THE 37 FEDERATING UNITS (STATES/FCT) OF NIGERIA

ABIA

ADAMAWA

AKWA IBOM

ANAMBRA

BAUCHI

BAYELSA

BENUE

BORNO

CROSS RIVER

DELTA

EBONYI

EDO

EKITI

ENUGU

GOMBE

IMO

JIGAWA

KADUNA

KANO

KATSINA

KEBBI

KOGI

KWARA

LAGOS

NASARAWA

NIGER

OGUN

ONDO

OSUN

OYO

PLATEAU

RIVERS

SOKOTO

TARABA

YOBE

ZAMFARA




 

WITH-HOLDING TAX, WHT, RATES IN NIGERIA

Nigeria requires companies and individuals to pay With-Holding Tax, WHT, on applicable or specified transactions connected to Nigeria. There is no distinction between the WHT rates for resident companies or individuals and non-resident companies or individuals.

 

PAYMENT OF WITH-HOLDING TAX

Nigeria requires companies to file WHT on any transaction within 21 days after the duty to deduct arose for deductions from companies. 10% of the amount not deducted and remitted is the statutory fine for failure to deduct or remit tax.

For effective compliance, companies are required to submit, in electronic form, a schedule of all their suppliers for the month showing the tax identification number (TIN), address of the suppliers, the nature of the transaction, WHT deducted, and invoice number.

 

Find applicable WHT on specified transactions below:


Payment/Transaction Type

WHT - Companies (%)

WHT -  individuals (%)

Dividends, interest, and rents

10

10

Directors fees

N/A

10

Hire of equipment

10

10

Royalties

10

5

Commission, consultancy, technical, service fees

10

5

Management fees

10

5

Construction/building (excluding survey, design, and deliveries)

5

5

Contracts other than sales in the ordinary course of business

5

5



DOUBLE TAX TREATIES (DTTS)

Nigeria has concluded Double Tax Treaties, DTTs with several countries. A DTT, to be binding on Nigeria must not only be signed by the appropriate authority, but needs to approved by the Federal Executive Council and then ratified by both chambers of the Nigerian National Assembly. A company resident in a country with no Double Tax Treaty with Nigeria pays a flat With-holding Tax, WHT rate of 10% of the value of any revenue from a dividend, interest, royalties, management or technical fees transaction while their contemporaries from a DTT country pays only rate prescribed in the treaty.


Dividend

Interest

Royalties

Management or Technical fees

Non-treaty

10

10

10

10










Below is a list of countries Nigeria has concluded DTT with. Some of the DTT, even though signed, are yet to be ratified by the National Assembly and so not fully applicable on the Nigerian side – even though it could be applicable to Nigerian companies in that country where prescribed steps for putting it into force has been concluded and was not made contingent on reciprocal ratification on Nigeria’s part.



S/N

      Country

Date/Place of Signing

Date of Entry into Force

Effective Date

1.

Canada

4th August, 1992 in Abuja

16th November, 1999

1st January, 2000

2.

Pakistan

10th October, 1989 in Lagos

7th March, 1990

1st January 1991

3.

Belgium

20th November, 1989 in Brussels

1stJanuary, 1990

1st January, 1991

4.

France

27th February, 1990 in Paris

2nd May 1991

1st January, 1992

5.

Romania

21st July, 1992 in Abuja

18th April, 1993

1st January, 1994

6.

Netherlands

11th December, 1991 in Lagos

9th December, 1992

1st January, 1993

7.

United Kingdom

9th June, 1987 in London

1st January,1988

1st January, 1989

8.

China

15th April, 2005 in Abuja

21st March, 2009

1st January, 2010

9.

South Africa

29th April, 2000 in Cape Town

5th July, 2008

1st January, 2009

10.

Italy

22nd February, 1976 in Lagos

1977

1st January, 1978

11.

Philippines

30th September, 1987 in Manila

18th August 2013

1st January, 2014

12.

Czech Republic

31st August 1989 in Lagos

2nd December, 1990

1st January, 1991

13.

Slovakia

31st August 1989 in Lagos

2nd December, 1990

1st January, 1991

14.

United Arab Emirates

19 January, 2016

NA

NA

15.

Kenya

September 6, 2013.

NA

NA

16.

Mauritius

Nigeria and Mauritius signed a DTA on August 10, 2012.

NA

NA

17.

Poland

12 February, 1999

NA

NA

18.

South Korea

6 November 2006

(Legislative Ratification Pending)

NA

19.

Spain

18 November 2004

NA

NA

20.

Sweden

Signed, November 2004.

[Sweden completed ratification procedures in 2005]

December 12, 2012 (Ratified by Nigeria)

 

 

 

 

 

21.

Singapore

November 16, 2016.(Approved by Nigeria’s Federal Executive Council)

Yet to be approved by the National Assembly

NA

22.

Qatar

February 28, 2016 (Approved by Federal Executive Council)

Yet to be approved by the National Assembly

NA

 

 

NIGERIA: DOUBLE TAXATION RATE FOR TREATY COUNTRIES

Country-Recipient

WHT (%)

Dividend

Interest

Royalties

Management or Technical fees

Belgium

7.5

7.5

7.5

10

Canada

7.5

7.5

7.5

10

China

7.5

7.5

7.5

10

Czech Republic

7.5

7.5

7.5

10

France

7.5

7.5

7.5

10

Netherlands

7.5

7.5

7.5

10

Pakistan

7.5

7.5

7.5

10

Philippines

7.5

7.5

7.5

10

Romania

7.5

7.5

7.5

10

Slovakia

7.5

7.5

7.5

10

South Africa

7.5

7.5

7.5

10

South Korea *

7.5

7.5

7.5

10

Spain *

7.5

7.5

7.5

10

Sweden *

7.5

7.5

7.5

10

United Kingdom

7.5

7.5

7.5

10

Non-treaty Countries

10

10

10

10

Country-Recipient

WHT (%)

Dividend

Interest

Royalties

Management or Technical fees

Belgium

7.5

7.5

7.5

10

Canada

7.5

7.5

7.5

10

China

7.5

7.5

7.5

10

Czech Republic

7.5

7.5

7.5

10

France

7.5

7.5

7.5

10

Netherlands

7.5

7.5

7.5

10

Pakistan

7.5

7.5

7.5

10

Philippines

7.5

7.5

7.5

10

Romania

7.5

7.5

7.5

10

Slovakia

7.5

7.5

7.5

10

South Africa

7.5

7.5

7.5

10

South Korea *

7.5

7.5

7.5

10

Spain *

7.5

7.5

7.5

10

Sweden *

7.5

7.5

7.5

10

United Kingdom

7.5

7.5

7.5

10

Non-treaty Countries

10

10

10

10



* The tax treaties with South Korea, Spain, and Sweden are still being ratified.
 

TREATIES - NIGERIAN DOUBLE TAXATION AGREEMENTS, DTA WITH OTHER AFRICAN COUNTRIES**

 

Country

Status

Date of Signature

Date of Entry into Force

Text (Access)

1.

Kenya

 

September 6, 2013.

 

 

2.

Mauritius

 

August 10, 2012.

 

 

3.

South Africa

Comprehensive

29th April, 2000

5th July, 2008

[1st January, 2009] (Effective Date)

 

 

 

TAXATION LAW BODIES

FEDERATION TAX BODY

Joint Tax Board

FEDERAL TAX AUTHORITIES IN NIGERIA

Federal Inland Revenue Service (FIRS)

Federal Capital Territory Internal Revenue Service

 

STATE TAX BODIES

ABIA

Abia State Board of Internal Revenue (BIR)

ADAMAWA

Adamawa State Board of Internal Revenue

AKWA IBOM

Akwa Ibom State Board of Internal Revenue

ANAMBRA

Anambra State Internal Revenue Service

BAUCHI

Bauchi State Board of Internal Revenue

BAYELSA

Bayelsa State Board of Internal Revenue

BENUE

Benue State Board of Internal Revenue

BORNO

Borno State Internal Revenue Service

CROSS RIVER

Cross River State Internal Revenue Service

DELTA

Delta State Board of Internal Revenue

EBONYI

EDO

Edo State Internal Revenue Service

EKITI

Ekiti State Internal Revenue Service

ENUGU

Enugu State Board of Internal Revenue

GOMBE

Gombe State Internal Revenue Service