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It can be regarded as the first and foremost form of income tax in Nigeria. It makes sure that all Nigerians and the expats who earn their livelihood in Nigeria pay a part to the government in form of tax. Liability to pay income tax solely depends upon the fact that whether a person is a Nigerian or Non Nigerian and the amount that is earned while the entity is settled in Nigeria. The most common points that are to be noted are as follows:
It is the second form of income tax in Nigeria that can be easily calculated. According to this law the purchasers of goods and services had to make sure that 5% of tax is paid on top of the sale price of the good. The Federal Inland Revenue Service or FIRS is the sole authority which makes sure that this form of income tax is collected. The mentioned authority also collects the VAT on behalf of the central, local and state governments. The sharing of the tax proceedings is also done by this authority.
Income tax in Nigeria is a relatively broad term and it includes several types of incomes taxes that have been imposed on the individuals as well as the companies that are working in Nigeria. Following are some of the mist important income tax terms that are used when it comes to Nigeria:
Rental income tax
Rental income tax in Nigeria is calculated annually according to the income that has been generated from apartment, property or land within the country. Following are most important assumptions that are made by the government while calculating taxes in this regard:
Taxation of Expats
Income tax in Nigeria is also collected from the people who are non residents and are earning their livelihood within the country. In the recent years all the advanced countries of the world have their focus on Africa for business expansion and establishment of new facilities. In this regard the Nigerian economy is one of the main factors that are considered by large corporate organizations and it is all due to the fact that the country now has a stable political structure as well as immense population that has been estimated over 165 M. In relation to taxation of expats there are no rules and regulations clearly defined by the government instead the income tax structure with respect to Nigerian personal income tax is applied to all expats living in the country. It is however to be noted that with the increase in the number of expats the government is now taking steps to set up an act or legislation which is yet to be announced in this regard.
Personal Income tax
Personal income tax in Nigeria is calculated at a rate of 24%. It is solely related to the individuals who are working within the country. It is also to be noted that under the personal income tax in Nigeria the sources of income charged are labor, pension, interest and dividends. The benchmark that has been set by the taxation authorities is also known as Top Marginal Tax Rates. The government is taking serious measures to ensure that PITA or Personal Income Tax Act is enforced due to the fact that it is one of the major sources of government’s income.
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