Content provided by Adejumo Ekisola & Ezeani: Legal Practitioners
What taxes am I liable to pay?
Taxes follow businesses as surely as night follows day. So every business must expect to pay taxes at the end of each year. But one of the frequent complaints of business owners and managers in Nigeria is that they frequently do not know what taxes they are liable for and to whom it should be paid. While ignorance of the law (taxation is a matter of law) is no excuse, our experience in Nigeria will seem to justify the complaints. Frequently, different agents of the various tiers of Government show up or accost businesses demanding one kind of tax, levy, charge or the other. It could even be a consultant retained by the government that is sending out these demand letters or making the calls on businesses. It is therefore very easy to be confused as to which tax is in fact payable and to whom it should in fact be paid.
Recognizing these difficulties, the Joint Tax Board, has harmonised the taxes payable and listed them as follows:-
Taxes to be collected by the Federal Government
1. Companies income tax
2. Withholding tax on companies, residents of the Federal Capital Territory, Abuja and non-resident individuals.
3. Petroleum profits tax.
4. Value added tax
5. Education tax
6. Capital gains tax on residents of the Federal Capital Territory Abuja, bodies corporate and non-resident individuals.
7. Stamp duties on bodies corporate and residents of the Federal Capital Territory, Abuja.
8. Personal income tax in respect of
(a) members of the armed forces of the Federation;
(b) members of the Nigerian Police Force;
(c) Residents of the Federal Capital Territory, Abuja; and
(d) Staff of the Ministry of Foreign Affairs and non-resident individuals.
Taxes and levies to be collected by the State Government
1. Personal income tax in respect of
(a) Pay-As-You-Earn (PAYE); and
(b) Direct taxation (self-assessment)
2. Withholding tax (individuals only)
3. Capital gains tax (individuals only)
4. Stamp duties on instruments executed by individuals.
5. Pools betting and lotteries, gaming and casino taxes.
6. Road taxes.
7. Business premises registration fee in respect of
(a) Urban areas as defined by each State, maximum of__
(i)N10, 000 for registration; and
(ii) N5, 000 per annum for renewal of registrations; and
(b) rural areas__
(i) N2, 000 for registration; and
(ii) N1, 000 per annum for renewal of registration
8. Development levy (individuals only) not more than N100 per annum on all taxable individuals.
9. Naming of street registration fees in the State Capital.
10. Right of Occupancy fees on lands owned by the State Government in urban areas of the State.
11. Market taxes and levies where State finance is involved.
Taxes and levies to be collected by the local government
1. Shops and, kiosks rates.
2. Tenement rates
3. On and off liquor licence fees.
4. Slaughter slab fees.
5. Marriage, birth and death registration fees.
6. Naming of street registration fee, excluding any street in the State Capital.
7. Right of Occupancy fees on land in rural area, excluding those collectable by the Federal and State Governments.
8. Market taxes and levies excluding any market where State finance is involved.
9. Motor park levies.
10. Domestic animal licence fees.
11. Bicycle, truck, canoe, wheelbarrow and cart fees, other than a mechanically propelled truck.
12. Cattle tax payable by cattle farmers only.
13. Merriment and road closure levy
14. Radio and television license fees (other than radio and television transmitter).
15. Vehicle radio licence fees (to be imposed by the local government of the State in which the car is registered).
16. Wrong parking charges
17. Public convenience, sewage and refuse disposal fees.
18. Customary burial ground permits fees.
19. Religious places establishment permit fees.
20. Signboard and advertisement permits fees.
Businesses will be liable for one or more of these taxes from time to time. A check with your accountant, Legal adviser or other tax practitioner will confirm which of the taxies is applicable to your business.