Tax Revenue in Nigeria: All You Need to Know

The three tiers of Government are responsible for the enforcement of taxation in Nigeria.

Under the current Nigerian law, the Federal, State and Local Government each have a clearly spelt out spree for the collection of taxes and levies.

Tax revenue, in Nigeria, is defined as the compulsory transfer to the central Government for public purposes .Tax revenue constitutes a major component of national income in a modern economy.

Types of Taxes Levied in Nigeria

The following is a list of relevant tax levied either to an individual of corporate body by the Government.

1. Value added tax

A taxable person upon registration with the Federal Board of Inland Revenue, is expected to charge and collect a flat rate of 5% of all invoiced amounts of taxable goods and services.

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2. Capital Gains Tax

This form of tax accrues yearly and pertains to all gains accruing to a taxpayer from the sale or lease or other transfer of proprietary rights in a chargeable interest which are subject to a capital gains tax of 10%.

3. Education Tax

An education tax of 2% of assessable profits is imposed on all companies that are incorporated in Nigeria. This tax is considered to be a social obligation placed on all companies in ensuring that they contribute their own quota in developing educational facilities in Nigeria.

4. Personal Income Tax

This is tax paid on the aggregate amount of a persons’ income whether derived from within or outside Nigeria.These include salaries, wages, fees, allowances, and other gains or benefits, given or granted to an employee. The Employers of labor are responsible for the remittance of taxes deducted from salaries due to employees.

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5. Companies Income Tax

This is the tax payable for each year of assessment of the profits of any company and it has a fixed rate of 30%.

The generated revenue has over time proven to be a strong booster of economic growth and development in Nigeria.

Several bodies have also been put in place to ensure compliance with the tax policies.

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