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    ARTICLE - Nigeria

    Corporate Tax in Nigeria – High Level Summary

    31 Mar

    Corporate Tax in Nigeria - Introduction

    Corporate taxation is a fundamental aspect of operating a business in Nigeria, with tax revenues contributing significantly to public infrastructure, social services, and developmental projects. This guide aims to elucidate the intricacies of corporate taxation and regulatory compliance in Nigeria, fostering a transparent and conducive business environment.

    The Nigerian Tax System

    General

    The Nigerian tax landscape comprises various taxes mandated by law for companies conducting business activities in the country:

    Company Income Tax (CIT)

    Governed by the Finance Act 2019 and the Company Income Tax Act, CIT is an annual federal income tax levied at a rate of 30% for most companies. However, companies with gross revenue below NGN 25 million enjoy a reduced rate of 0%, while those with revenue between NGN 25 million and NGN 100 million are taxed at 20%. Additional state-level income taxes may also apply.

    Filing Deadline

    Varies based on company status and accounting period.

    Capital Gains Tax

    Imposed on profits from the sale of chargeable assets, governed by the Capital Gain Tax Act, and levied at a rate of 10% on gains.

    Petroleum Profit Tax (PPT)

    Applicable to upstream petroleum operations, with rates ranging from 50% to 85% based on contract type and operational phase.

    Withholding Tax (WHT)

    Required by law to be withheld from payments made to contractors and remitted periodically to tax authorities. Rates vary based on the nature of transactions.

    Value Added Tax (VAT)

    A consumption tax levied at a rate of 5% on goods and services consumed, with returns filed monthly.

    Industrial Training Fund (ITF) Deductions

    Mandated for companies employing five or more workers or with turnovers above a certain threshold, contributing 1% of annual payroll to ITF.

    Education Tax

    Imposed at a rate of 2% of assessable profit, payable within two months of assessment notice.

    Key Aspects of Compliance

    Tax Registration

    Mandatory for businesses and individuals with tax authorities to obtain Tax Identification Numbers (TINs) for identification purposes.

    Tax Filing and Reporting

    Timely submission of accurate tax returns, detailing income, deductions, and liabilities, is imperative to avoid penalties.

    Payment of Taxes

    Ensuring prompt and accurate tax payments within specified deadlines to avert interest charges or penalties.

    Penalties for Tax Evasion

    Tax evasion attracts severe penalties, including fines, imprisonment, or both, depending on the severity of the offense. Failure to remit taxes may result in penalties and interest charges.

    Incentives for Tax Payment

    Companies complying with tax obligations may enjoy incentives such as investment tax credits, tax allowances, and exemptions provided by the Federal Government to encourage investment and economic growth.

    Corporate Tax in Nigeria - Conclusion

    Navigating corporate taxation and regulatory compliance in Nigeria is essential for businesses to thrive and contribute to sustainable economic development.

    Final thoughts

    If you have any queries about Corporate Tax in Nigeria, or any tax matters in Nigeria, then please get in touch.  
    ComplianceCorporate tax

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