Taxation in Nigeria

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TAXATION AND FISCAL REGULATIONS IN NIGERIA

INTRODUCTION

The Nigerian Tax System has undergone significant changes in recent times. The Tax Laws are being reviewed with the aim of repelling obsolete provisions and simplifying the main ones. Under current Nigerian law, taxation is enforced by the 3 tiers of Government, i.e. Federal, State, and Local Government with each having its sphere clearly spelt out in the Taxes and Levies (approved list for Collection) Decree, 1998. Of importance at this juncture however are tax regulations pertaining to investors both foreign and local.

The importance of tax regulations cannot be over-emphasized, as most transactions with any Ministry, department, or government agency cannot be concluded without evidence of tax clearance. i.e. a Tax Clearance Certificate certifying that all taxes due for the three immediately preceding years of assessment have been settled in full.

LIST OF APPROVED TAXES AND LEVIES FOR THE THREE TIERS OF GOVERNMENT

A list of taxes and levies for collection by the three tiers of government has been approved by government and published by the Joint Tax Board (J.T.B.) as follows:

(A) Taxes collectible by the Federal Government
1) Companies income tax;
2) Withholding tax on companies;
3) Petroleum Profit Tax;
4) Value-added tax (VAT);
5) Education tax;
6) Capital gains tax - Abuja residents and corporate bodies; 7) Stamp duties involving a corporate entity;
8) Personal income tax in respect of: 
- Armed forces personnel;
- Police personnel;
- Residents of Abuja FCT;
- External Affairs officers; and
- Non-residents.  

(B) Taxes/Levies Collectible by State Governments
1) Personal income tax:
- Pay-As-You-Earn (PAYE);
- Direct (self and government) assessment;
- Withholding tax (individuals only);
2) Capital gains tax;
3) Stamp duties (instruments executed by individuals); 4) Pools betting, lotteries, gaming and casino taxes; 5) Road taxes;
6) Business premises registration and renewal levy; - urban areas (as defined by each state):
▪ maximum of N 10,000 for registration and N5 ,000 for the renewal per annum   - rural areas
- registration N2,000 per annum
- renewal N 1,000 per annum
7) Development levy (individuals only) not more than N100 per annum on all taxable individuals; 8) Naming of street registration fee in state capitals 9) Right of occupancy fees in state capitals;

10) Rates in markets where state finances are involved.  

(C) Taxes/Levies Collectible by Local Governments
1) Shops and kiosks rates;
2) Tenement rates;
3) On and off liquor licence;
4) Slaughter slab fees;
5) Marriage, birth and death registration fees;
6) Naming of street registration fee (excluding state capitals): 7) Right of occupancy fees (excluding state capitals);
8) Market/motor park fees (excluding market where state finance  are involved); 9) Domestic animal licence;
10) Bicycle, truck, canoe, wheelbarrow and cart fees;
11) Cattle tax;
12) Merriment and road closure fees;
13) Radio/television (other than radio/tv transmitter) licences and vehicle radio licence (to be imposed by the local government in which the car is registered); 14) Wrong parking charges;

15) Public convenience, sewage and refuse disposal fees; 16) Customary, burial ground and religious places permits; and 17) Signboard/advertisement permit.
 

SOME OF THE RELEVANT TAX REGULATIONS AND FISCAL  ISSUES IN NIGERIA

These are categorised as Follows:

TRANSACTION TAXES

a. Capital Gains Tax
This accrues on an actual year basis and it pertains to all gains accruing to a taxpayer...
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