All you need to know about Tax in Nigeria
Even before Nigeria became a republic, Nigerians have been paying tax.
Why you may ask? Because tax is necessary for many things we see in the state, like; infrastructure, roads, highways, subsidies, and even the solar street lights they just installed on your street.
Every country needs tax to function properly and Nigeria and its citizens cannot be exempted from this interchange.
We do not want to bore you with all the long talk and history of tax, so we will go ahead and tell you some MAJOR things you should know about tax as a Nigerian Business owner.
Nigeria’s tax system is progressive. There are 3 types of tax systems, Regressive- the more you earn the less tax you pay, Proportional – the same tax rate is paid by everyone. And there’s the Progressive tax system – This means that the more you earn, the more tax you pay. The progressive tax system affects higher income earners more than it does lower income earners.
There are 3 major types of tax you have to pay as an income earner/business owner – Personal Income tax (PITAM), Corporate tax (CITA) and Sales Tax. Personal income tax comes in the form of tax on your salaries and pension. Corporate tax is levied on the revenue your business makes, and all CITA in Nigeria is collated and collected by the Federal Inland Revenue Service ’(FIRS)’ on behalf of the Federal Government. Sales tax is levied on those who produce goods, rather than those who provide services, so your sales tax would be levied on the goods your company produces. Depending on the elasticity of your product, you can either make your customers pay for the tax or you have to pay for your tax yourself.
Questions you may have about tax
Q: Does my business have to pay tax?
A: Yes. As long as your business is up, running, and legal, you have to pay tax. So if you haven’t, we suggest you get yourself to the nearest FIRS office. Else, you could be facing the same charges like Ronaldo for tax evasion‼️
Q: How much tax do I have to pay?
A: For a large business, the current Corporate tax rate is 30%. Personal income tax and Sales tax rates are 24% and 7.5% respectively.
Q: Do I need to pay VAT?
A: Value Added Tax (VAT) is a form of consumer tax. Although VAT is not charged on the business, the business is responsible for collecting it, sometimes you pay for it without knowing. So yes you need to pay for VAT. And yes, you pay for VAT on your beloved sodas
Q: I still don’t completely understand tax, what should I do?
A: That’s okay. Even people in ‘first world countries’ don’t completely grasp the understanding of why and how we pay tax – and that’s why we are here. To help you.
First off, you need to get an accountant to make sure your books are in order. The next step is to get your Tax Identification Number (TIN) from the FIRS.
Then last but not the least, get a trusted Consulting company (like End2End Acquisitions Limited) to advise you on your Personal Income Tax, Corporate Income tax and VAT.
If you have any other questions for us, you can either book a financial advisory session on our financial advisory page, or fill out the contact form on the ’contact us‘ page so we can reach out to you and start a project together.
