Tax legislations & tax policy tax legislation is the act or process of enacting tax laws and the body of laws that provide for the levying of taxes and tax administration the following are the existing tax legislation in nigeria, as at 2016. Productivity of personal income tax system in nigeria is the purpose of this study 20 literature review ariyo (1997) points out that the proportion of self- employed relative to the total working population is substantial, yet tax authorities have not devised. Re: what is pay as you earn(paye) tax system in nigeria reply by felix okoli on thursday march 15, 2012 at 9:28:22: paye means pay as you earn it is a tax system derived from the personal income tax act in nigeria which is a method of tax calculation on the income of persons. In nigeria, the taxation system dates back to 1904 when the personal income tax was introduced in northern nigeria before the unification of the country by the colonial masters it was later implemented through the native revenue ordinances to the western and eastern regions in 1917 and 1928, respectively. Personal income tax in nigeria: all you need to know abass 1 comment share 2 tweet 2 shares the personal income tax (pit) is the most common tax type in the country interestingly, many taxpayers don’t understand the way this tax is deducted and as a result, there are often questions about it.
Personal income tax rate in nigeria averaged 2400 percent from 2011 until 2016, reaching an all time high of 2400 percent in 2012 and a record low of 2400 percent in 2012 in nigeria, the personal income tax rate is a tax collected from individuals and is imposed on different sources of income like labor, pensions, interest and dividends. The personal income tax act, 2004 is now amended by the personal income tax (amendment) act, 2011 this follows many years of agitation for the personal income tax law in nigeria to be brought in line with present-day economic realities and also to assist to increase the compliance levels and the amount of tax voluntarily paid and or collected by the nigerian government. Method to pay personal tax in nigeria pay-as-you-earn (paye) this is how people in paid employment pay their taxes the employer deducts the tax at source. An overview of the nigerian tax system: implications for foreign investors by mark anthony c dike, fcti 20 the tripod of the nigerian tax system the nigeria tax system, like any tax system, is a tripartite structure which personal income tax act (pita) cap 8 lfn, 2004 (as amended).
How much is personal income tax in nigeria the rate of personal income tax payable is dependent on the amount of ‘taxable income’ which the person is liable for t axable income refers to the base upon which the income tax system imposes and decides on how much tax a person is to pay in a given calendar year. State internal revenue offices administer personal income tax individuals resident in nigeria are to pay their taxes to the state\tax office where they are resident on 1 st january of each year 2 non-resident individuals, staff of the nigerian armed forces, officers of the self assessment tax system. Nigerian naira minimum income tax where a taxpayer has no taxable income because of personal reliefs and allowances or total income produces a tax lower than the minimum tax, a minimum tax rate of 1% of the total income is payable.
Nigeria corporate tax rate in nigeria, the corporate income tax rate is a tax collected from companies its amount is based on the net income companies obtain while exercising their business activity, normally during one business year. Companies income tax in nigeria / personal income tax in nigeria / business and income tax rates in nigeria (1) how developed a payroll application that automatically generates payroll schedule monthly for a company based on the personal income tax act 2011. Personal income tax: the legal basis for this tax is found in the provisions of the personal income tax decree [now act] 104 of 1993 every taxpayer in nigeria is liable to pay tax on the aggregate amount of his income whether derived from within or outside nigeria, the salaries, wages, fees, allowances, and other gains or benefits, given or. Different taxes contribute to the attainment of different objectives thus, some taxes would help in the it is intended to offer suggestion at improving the overall nigeria tax system in order to enhance taxation as a fiscal policy instrument for income redistribution among lagos state civil servants. Companies are mandated by law to pay company income tax (cit) in nigeria based on the profit the amount charged is 30% o the profit earned in the year preceding assessment.
Nigeria tax guide 2013 pkf worldwide tax guide 2013 i foreword all companies operating in nigeria outside the oil and gas sector of the economy are required to pay income and education tax the rate is 30% of total profit for income tax and 2% of assessable profit for education tax total profit is profit after deducting. Under nigeria’s new income tax rate, a first earning of n300, 000 will attract 7% tax, while subsequent income of the same amount will be taxed at 11% those who earn n500, 000 would be made to pay 15% of the income as tax in the first instance, while 19% would be charged on subsequent earnings of the same amount earnings of n16m will. The latest representations of these tax laws are the personal income tax act 2004 and the companies income tax act 2004 current tax situation in nigeria according to the nigerian laws, there are three legal bodies that can levy the taxes on nigerians. In nigeria, personal income tax for employees was based on a ‘pay as you earn’ (paye) system, with a number of amendments been made up to 1961 itma act for example, in 1985 pit was changed from 10 per cent of earned income to 125 per cent of income exceeding n 6,000.
This paper conceptually critiques the progressivity of the current personal income tax in nigeria by drawing on the equity concept of taxation vis-à- visincome redistributionandtaxpayers’ ability t o pay tax. 51 problems of personal income taxation in nigeria it has long been evident that personal income tax in nigeria has remained the most unsatisfactory, disappointing and problematic of all the taxes in the tax system today. The nigeria income tax calculator (nitc) shows in one click a summary of incomes, allowances, deductions and net income both monthly and annual the plus value of the nitc is its accessibility once downloaded on your device, you do not need data service to make use of it. The enabling legislation, which is the personal income tax (pit) act, provides the conditions for deeming income taxable in nigeria it provides, among others, that the gain or profit from an employment shall be deemed to be derived from nigeria if the duties of the employment are wholly or partly performed in nigeria or the employer is in.
Finding out about the tax rate in nigeria is absolutely essential if you’re considering working in the country the tax system in nigeria can be broken down into company tax, income tax, payroll tax and sales tax, and learning about these various components gives you a good idea of how much you’ll be paying during your stay. The nigerian tax system has undergone several reforms geared at enhancing tax collection and administration with minimal enforcement cost the recent reforms include the introduction of tin. The nigerian personal income tax is based on a pay-as-you-earn system (paye) and the scale is graduated from a minimum percentage of 7 percent of taxable income to a maximum of 24 percent of. A situation where an individual pays rates and licenses to local government, pays sales tax and personal income to the state government and at the same time pays vat is not one that will encourage.
Personal income tax in nigeria employees simply pay their income tax through the pay as you earn (paye) system, whereby employers deduct the due tax at source from the salaries and transfer it directly to the firs on a monthly basis, while independent workers and beneficiaries of additional income are required to file their own tax returns.