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Companies Income Tax in Nigeria
Income tax in Nigeria is calculated and collected according to several acts and the underlying provisions to make sure that the process remains safe and smooth for the government as well as the taxpaying entities. Following are some of the most important acts according to which the tax is calculated within the country: 1. Petroleum Profit Tax Act or PPT 2. Value Added Tax or VAT 3. Education Tax or EDT 4. Capital Gains Tax or CGT Petroleum Profit Tax Act or PPT All upstream and downstream operations in this regard are taxed by the government of Nigeria. The companies therefore engaged in petroleum operations and the related operations are taxed under this act. This act also applies to all those residents who are Nigerian based but are hired by a company that is foreign so that they can aid them in this regard. The liquidator or the related agents of any company that is carrying the operations within Nigeria is also taxed under the rules and regulations that are defined by the government of Nigeria under the PPT. Value Added Tax or VAT The entities subjected to VAT or Value Added Tax includes all the individual consumers, companies, corporations, groups and body corporate that make purchases within the country. The current rate of VAT or sales tax is 5% in Nigeria. The payment of the tax has also been made automated in such a manner that the buyer or the consumer of the product pays the tax directly to the seller during the open market transaction which is then collected by the government. The 5% VAT is always added to the price of all goods and services that are purchased by the Nigerians whether they are residents or non residents. The VAT payments are made to the government on monthly basis not later than 21 days of every subsequent month. Education Tax or EDT EDT or the education tax is interrelated to the Companies Income Tax Act. In other words all the companies that fall under the provisions of the Companies Income Tax Act are also subjected to Education Tax or EDT. Unlike other acts the provisions of this law is only applicable to the companies that are residents of the country. The filing of the Education Tax return is also done at the same designated banks where the company files the returns of the Company Income Tax. Capital Gains Tax or CGT All companies incorporated in Nigeria when earn the capital gains by any means or by disposing off their assets should pay the capital gains tax to the government. It is also to be noted that it also includes any currency that is other than the Nigerian with options and debts. The Capital Gains tax has been clearly defined in the Companies Income Tax Act and it is also applied to the person who makes a property out of the capital gains or plans to make it.