ReMaps

The development of any nation depends on the amount of revenue generated by the government for the provision of infrastructural facilities. Taxation is the key to unlocking the resources required for public investment and infrastructure growth.
Taxation and tax management is a stressful activity for everyone, especially for business owners and entrepreneurs. If you’re selling taxable goods or services in any state in Nigeria or you earn some income from working in the country, you almost always have tax obligations. This means you are legally required to collect, file and remit sales and use tax.

Why do we pay taxes in Nigeria?

In the smallest of nutshells, taxes are paid because the state or federal governments implement tax laws. Taxpayers’ money pays for government services of all kinds.
Although taxes are considered as a legal requirement, paying taxes is also considered a civic duty. If you neglect to pay, the mediating body that oversees taxes (the Federal Inland Revenue Service) will require that you do so, otherwise, you might face penalties such as large fines or jail time.
In 2015, the federal government of Nigeria collected over 3.7 trillion Naira in taxes. This could come from several sources such as Personal Income Tax, Payroll Tax, Corporate Tax, Tariffs and many more.
The government requires these funds to discharge its numerous responsibilities for the development of the country, betterment of society as a whole and other non-developmental but essential obligations to the citizens of the country.

Common types of taxes in Nigeria.

Tax types in Nigeria is what many Nigerians are not aware of. This is in spite of the fact that ignorance is not an excuse of the law. As an individual or a business in Nigeria, you are liable to the payment of any tax and you fail to pay it, ignorance of the law cannot be used as a genuine excuse for such act of omission.
This is the reason we shall try to do justice to explaining each type of taxes in Nigeria.

1. Companies Income Tax (CIT):

Under Companies Income Tax Act you have to pay Companies Income tax if you are a resident or non-resident company incorporated in Nigeria.

2. Petroleum Profit Tax (PPT):

The Petroleum Profit Tax is subject to any resident company or person in charge of a non-resident company who are exploring for petroleum or producing it in Nigeria.

3. Value Added Tax (VAT):

Any person or individual, corporate sole, organizations who consumes or buys any taxable product or service will have to pay a tax levy known as Value Added Tax (VAT) in Nigeria.

4. Personal Income Tax (PIT):

The Personal Income Tax (PIT) is the most common tax type in the country. A Personal Income Tax is a tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income). Personal Income Tax generally is computed as the product of a tax rate times taxable income.

5. Withholding Tax (WHT):

The Withholding Tax deductions are regarded as advance payments (or payments on account) of the relevant tax liability that will arise from the tax returns of the period concerned.

6. Educational Tax (EDT):

Stamp Duties (STD): Items or persons subject to Stamp Duties tax are written documents relating things between individuals or companies or group of soles. Stamp Duties may include instruments such as financial transaction, article of association between companies, statements, deals, bonds etc.

7. Capital Gains Tax (CGT):

All the companies registered in Nigeria which earn any capital gains are liable to Capital Gains Tax. Capital Gains Tax is calculated and submitted with Companies Income Tax to FIRS through Designated Bank.