| What it is: |
It is a tax that is imposed on the gain or profit from any trade, business, profession or vocation; or any salary, wage, fee, allowance or other gain or profit from employment of individuals. |
| Enabling Law: |
Personal Income Tax Act 1993 as amended to date. |
| Who Pays it: |
Individuals who are either in employment or are running their own businesses under a business name or partnership and communities, families and any trustee or executor under any settlement, trust or estate deemed to be resident in the State at a particular year. |
| Who Collects it: |
State Boards of Internal Revenue collect taxes of
• individuals in their various states of residence;
• Body of individuals such as communities, families that run a business;
• Business names and partnerships;
• Executors of estates of deceased persons and trustees of trusts. |
| |
Federal Inland Revenue Service collects Personal Income Taxes of
• Persons employed in the Nigerian Army, the Nigerian Navy, the Nigerian Air Force and the Nigerian Police other than in a civilian capacity;
• Officers of the Nigerian Foreign Service;
• Non-residents who derive income or profit from Nigeria. |
| Method of Payment: |
Tax on the income of self-employed individuals or that of communities, families, trustee or executor is paid directly to the tax authorities while the employers deduct appropriate tax from the income of their employees and remit same to the tax authorities on monthly basis. |
| Rate: |
After making adjustments for reimbursable allowances, personal reliefs and Capital Allowances, chargeable income is taxed on a graduated basis as follows:
- First N30,000 at 5%
- Next N30,000 at 10%
- Next N50,000 at 15%
- Next N50,000 at 20%
- Above N160,000 at 25% |
| Incomes exempted from the tax: |
• Official emoluments of the President, Vice President, State Governors and Deputy Governors;
• Income of any Trade Union registered under the Trade Union Act,
provided such income is not derived from a trade or business carried on by such Trade Union;
• Income of any Statutory or registered Friendly Society in so far as such income is not derived from a trade or business carried on by such Society; and
• Income and profits of Cooperative Societies. |
| Reimbursable Allowances (Applicable to employed individuals only) |
| • Housing |
Amount of Housing Allowance paid up to a maximum of N150,000 per annum. |
| • Transport |
Amount of Transport Allowance paid up to a maximum of N20,000 per annum. |
| • Meal |
Amount of Meal Allowance paid up to a maximum of N5,000 per annum |
| • Utility |
Up to a maximum N10,000 per annum. |
| • Entertainment |
Up to a maximum N6,000 per annum. |
| • Leave |
Amount of Leave Allowance paid Up to a maximum of 10% of Annual Basic Salary. |
| Personal Reliefs (Applicable to employed individuals only) |
| • Personal |
Allowance N5,000 Plus 20% of Earned Income. |
| • Children Allowance |
N2,500 for each child up to a maximum of four children, provided that none is above 16yrs or married. However, a relief can be granted for a child over 16yrs if he is in a recognised school, under articleship or learning a trade. |
| • Dependant Relative |
N2,000 is granted for each dependent relative up to a maximum of two. |
| • Disability |
The higher of N3,000 and 20% of earned income. |
| • Life Assurance |
100% of premium paid not exceeding 10% of earned income. |
| • Pension Deductions, NHF |
100% of amount deducted |