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Nigeria Tax
Data Card
2012/2013
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2
TAX DATA CARD 2012/2013
Introduction
This publication is a summary of the major tax laws in Nigeria prepared
for general purpose only. It is not a replacement for circumstance
specinc udvice. We uccept no liubility loi uny uction tuken oi not tuken
based on the contents of the publication.
Except otherwise indicated, references to tax laws in this publication
are from the Laws of the Federation of Nigeria (LFN) 2004 as amended.
Tle uveiuge exclunge iute used is USS1 ~ N1SS
1. Companies Income Tax (CIT)
CIT is levied on pionts ucciuing in, deiived liom, biouglt into oi
ieceived in Nigeiiu.
Company liable Any company doing business in Nigeria, whether
resident (registered in Nigeria) or non resident
(foreign company registered outside Nigeria)
Taxable income A resident company is liable to tax on its
worldwide income being its profits accruing in,
deiived liom, biouglt into oi ieceived in Nigeiiu.
A non resident company is liable to tax on its
income deiived liom Nigeiiu, tlut is, income
attributable to its Nigerian operation.
Basis of
assessment
The basis of assessment for both resident and non
resident companies is preceding year basis. This
means tax is charged on profits for the accounting
year ending in the preceding year of assessment.
Foi exumple, il u compuny mukes up its uccounts
to 31 December each year, in 2012 tax year, it
will be assessed to tax on the profits computed
for the accounting year ended 31 December 2011.
Different rules apply during commencement
of business, change of accounting date and
cessation.
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Due date for
filing income
tax returns
Witlin 6 montls ol tle compuny's uccounting
year end. A new company must file its returns
within 18 months from the date of incorporation
oi 6 montls ultei its liist uccounting peiiod,
wliclevei is euiliei. In piuctice, tux ietuins
muy be deluyed until tle liist woiking duy ol
the following calendar year for companies with
financial year end between January and 30 June.
Tlis is to ulign tle tux ietuins witl tle ielevunt
fiscal year.
Due date for
payment of CIT
2 months from the filing due date in case of a
lump sum payment or in such instalments as may
be uppioved by tle FIRS, not exceeding tliee
instulments. In tle cuse ol instulments, evidence
of payment of the first instalment must be
submitted along with the tax returns.
Puyment muy be deluyed until tle liist woiking
day of the following calendar year for companies
with financial year end date between January and
30 June.
Company
income tax rate
30%
Small company
tax rate
20%.
Applicable to manufacturing companies and
companies engaged wholly in exports, within
tle liist live yeuis ol opeiution, und wleie tle
tuinovei does not exceed N1 million (ciicu USS
6,4S0).
Minimum tax Minimum tax is imposed where a company has
no taxable profit or the tax payable is less than the
minimum tax computed as follows:
The highest of:
0.S% ol gioss piolit
0.S% ol net usset
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Minimum tax
(continued)
0.2S% ol puid up sluie cupitul
0.2S% ol tuinovei up to NS00,000
Plus
0.12S% ol tuinovei in excess ol NS00,000.
Exemption from
minimum tax
A company is exempted from minimum tax if it
meets any of the following conditions:
It is still within its first four calendar years
of business
It lus ut leust 2S% ol its puid up cupitul us
imported equity
It carries on agricultural trade or business
Excess dividend
tax
Wleie u compuny puys dividend liom piolit on
which tax is not payable because:
It has no taxable profit; or
Its tuxuble piolit is less tlun tle dividend
paid;
The company would be charged to tax on the
dividend decluied oi puid us il tle dividend is
the total taxable profit of the company for the
ielevunt yeui ol ussessment.
Non-resident
companies and
deemed profit
tax
Non-resident companies are liable to tax on the
piolit oi income deiived liom Nigeiiu. Geneiully,
the tax authority applies a deemed profit rate of
20% on tuinovei deiived liom Nigeiiu. Tlis is
then taxed at the corporation tax rate of 30%,
iesulting in un ellective tux ol 6% ol tuinovei.
Statute of
limitation
The tax authority may carry out tax audits
and issue additional assessments within six
yeuis liom tle ielevunt tux yeui. Howevei, tle
limitution does not upply in tle event ol u liuud,
willful default or neglect by the company.
Tax Treaties Nigeria currently has in-force double tax treaty
for taxes on income and capital gains with
Belgium, Cunudu, Clinu, Czecl Republic, Fiunce,
Netleilunds, Pukistun, Plilippines, Romuniu,
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Tax Treaties
(continued)
Slovukiu, Soutl Aliicu, und tle United Kingdom.
There is a shipping and air transport double
taxation agreement with Italy.
Nigeria has pending double tax treaties with
Muuiitius, Polund, Soutl Koieu, Spuin und
Sweden wlicl uie yet to be concluded oi iutilied.
Uniluteiul tux ieliel is uvuiluble by wuy ol
deduction for income tax suffered on foreign
profits.
Nigeria is a party to the following multilateral
treaties:
197S ECOWAS Tieuty
1931 League of Nations Motor Vehicle
Convention und Finul Piotocol
1961 Viennu Convention on Diplomutic
Relutions
1969 Viennu Convention on tle Luw ol
Treaties
1997 Diult Piotocol on tle ECOWAS Vulue
Added Tax (pending)
1997 Diult Piotocol on tle ECOWAS
Community Levy (pending)
Commonwealth
tax relief
Avuiluble in iespect ol piolits euined liom u
commonwealth country which is also liable to
tux in Nigeiiu piovided tlut tle Commonweultl
country has a similar tax relief in place.
In respect of a Nigerian company, the relief to be
giunted is S0% ol tle commonweultl tux iute
subject to u limit ol S0% ol tle Nigeiiun tux iute.
In respect of a nonresident company, the relief
is S0% ol tle commonweultl tux iute piovided
it is not moie tlun S0% ol tle Nigeiiun tux iute
otherwise the relief is the rate by which the
Nigeiiun tux iute exceeds S0% ol tle
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Commonwealth
tax relief
(continued)
commonwealth tax rate.
*Commonwealth tax rate means the income tax
rate applicable in the relevant commonwealth
country to which the tax relief relates.
Capital allowances
Capital allowances are granted on tangible non-current assets in lieu
ol uccounting depieciution. Otlei tlun ieseuicl und development,
intangible non-current assets are not regarded as qualifying capital
expenditures for capital allowance purpose. The applicable rates on
qualifying assets are stated below:
Qualifying Expenditure Initial
rate (%)
Initial
rate (%)
Buildings (Industrial & Non-Industrial) 1S 10
Mining 9S Nil
Plant:
Agricultural Production
Otleis
9S
S0
Nil
2S
Furniture and Fittings 2S 20
Mining 9S Nil
Motor Vehicles
Public transportation
Otleis
9S
S0
Nil
2S
Plantation Equipment 9S Nil
Housing Estute S0 2S
Runcling und Pluntution 30 S0
Reseuicl und Development 9S Nil
Investment allowances
This is granted at the rate of 10% to companies that incur expenditure
on plunt und equipment. Investment ullowunce is culculuted on cost und
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Gas Utilization incentives
Companies engaged in gas utilization (downstream operations) are
giunted tle lollowing incentives:
Tax free period of 3 years which may be renewed for a further 2
yeuis oi 3S% investment ullowunce.
Additionul investment ullowunce ol 1S%.
Accelerated capital allowance after the tax free period.
Tux liee dividend duiing tle tux liee peiiod.
Tax deduction for interest payable on any loan obtained with the
piioi uppiovul ol tle linunce ministei loi u gus pioject.
Tax Waiver on Bonds
Bused on tle Compunies Income Tux (Exemption ol Bonds und Sloit
Teim Goveinment Secuiities) Oidei 2011, tle lollowing uie exempt
liom compunies income tux loi 10 yeuis ellective liom 2 Junuuiy 2012:
1. Sloit teim Fedeiul Goveinment secuiities sucl us Tieusuiy Bills
and Promissory Notes:
2. Bonds issued by Fedeiul, Stute und Locul goveinments und tleii
agencies;
3. Bonds issued by corporate and supra-nationals; and
4. Inteiest euined by loldeis ol bonds und secuiities listed ubove.
Note: A bill to amend the infrastructure investment relief above is
underway.
No facilities at all 100%
No electricity S0%
No water 30%
No tuiied (puved) ioud 1S%
is giunted in tle yeui ol ussessment in wlicl tle usset is nist put into
use. It is not tuken into uccount in deteimining tle tux wiitten down
vulue ol tle usset.
Sepuiute investment tux ieliel is uvuiluble to businesses wlicl uie
locuted not less tlun 20km uwuy liom tle lollowing lucilities on
infrastructure costs at the rates shown below:
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Rates 8S% loi petioleum opeiutions cuiiied out
under a Joint Venture (JV) arrangement with
the Nigerian National Petroleum Corporation
(NNPC) oi uny non Pioduction Sluiing Contiuct
(PSC) ovei S yeuis
6S.7S% loi non PSC opeiution in its liist S
years during which the company has not fully
amortised all pre-production capitalised
expenditure
S0% loi petioleum opeiutions undei Pioduction
Sluiing Contiucts (PSC) witl tle NNPC
Returns Tax is payable on actual year basis
Estimated tax returns must be filed within
two months of the fiscal year (which runs
from January 1st to December 31st)
Actual tax returns must be filed within
live montls ultei tle end ol tle uccounting
period, that is, not later than 31 May
Due date for
payment of PPT
Payable in 12 equal monthly installments
with a final 13th installment (if there is an
underpayment). The first installment for the year
is due by the end of March
Penalties Late submission of returns: Initial penalty of
N10,000 and N2,000 for each day such failure
continues
Late payment of tax: S% ol tle tux puyuble
2. Petroleum Prots Tux (PPT)
PPT is levied on tle income ol compunies enguged in upstieum
petioleum opeiutions. A new tux iegime will tuke ellect upon tle
passage of the Petroleum Industry Bill.
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Royalties Tle loldei ol un Oil Piospecting License (OPL) oi un
Oil Mining Leuse (OML) is iequiied to puy ioyulties to
tle Fedeiul Goveinment us soon us pioduction begins.
This is usually in form of monthly cash payments at
the prescribed rate or by way of royalty oil.
The rates are:
In respect of JV Operations
Area Rute (%)
Onsloie pioduction 20
Ollsloie pioduction up to 100 meties
water depth
18.S0
Ollsloie pioduction beyond 100 meties
water depth
16.66
In respect of PSCs
The royalty rates applicable are graduated according
to the depth of water from which the oil is mined.
These are:
Area Rute (%)
Fiom 201 to S00 meties wutei deptl 12
Fiom S01 to 800 meties wutei deptl 8
From 801 to 1,000 metres water depth 4
In excess of 1,000 metres water depth 0
Investment
allowance
Petioleum Investment Allowunce (PIA) is giunted to
u petioleum compuny in tle nist yeui u Quulilying
Cupitul Expendituie (QCE) is incuiied. Tle lollowing
PIA rates are applicable to companies in JV operation:
QCE loi Rute (%)
Onsloie opeiutions S
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Investment
allowance
(continued)
Ollsloie opeiutions:
Up to und including 100m ol wutei
depth
Between 100m and 200m water
depth
Beyond 200m water depth
10
1S
20
PSC opeiutois uie entitled to Investment Tux Ciedit
(ITC) ut S0% ol QCE loi PSC executed piioi to July
1998 und PIA ol S0% loi PSC executed witl ellect
from July 1998.
Annual
allowance
Annual Allowance is granted in addition to PIA, in
lieu of depreciation. The current rates are 20% for
ull cutegoiies ol QCE in tle liist loui yeuis und 19%
in the fifth year. The balance of 1% is retained in the
books until tle QCE is disposed.
Tax
Incentives
In uddition to investment ullowunces, tle lollowing
incentives uie uvuiluble to E&P compunies
Dividends puid by E&P compunies uie exempted
from withholding tax.
Giuduuted ioyulty iutes und lowei PSC tux iutes
to encourage offshore production
Education tax is treated as a tax deductible
expense for E&P companies
Statute of
Limitation
The tax authority may carry out tax audit and issue
additional assessment within six years from the
ielevunt tux yeui. Howevei, tle limitution does not
upply in tle event ol u liuud, willlul deluult oi neglect
by the company.
Petroleum
Industry
Legislation
Legislutive piocess is ongoing to combine 16 dilleient
petroleum laws into a single document called the
Petioleum Industiy Bill. Wlen pussed, tle luw will
iepluce tle cuiient PPT iegime witl Hydiocuibon Tux
and Company Income Tax.
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Local
Content Act
Tle Nigeiiun Oil und Gus Industiy Content
Development Act 2010 otleiwise known us tle
Locul Content Act, wus enucted to piovide loi tle
development ol Nigeiiu Content in tle oil und gus
industiy. Tle Act imposes u levy ol 1% on eveiy
contract awarded to any operator, contractor,
subcontractor, alliance partner or any other entity
involved in uny pioject, opeiution, uctivity oi
transaction in the upstream sector of the Nigeria oil
and gas industry.
3. Education Tax
Educution Tux is puyuble by ull Nigeiiun compunies und is levied on
ussessuble piont, tlut is, tux udjusted piont beloie cupitul ullowunces.
Rate 2%
Exemption Non resident companies and all unincorporated
entities are exempted from education tax.
Due date for
filing Education
Tax Returns
Tleie is no specilic liling iequiiement. Howevei,
in practice, the tax is self assessed and filed
together with company income tax.
Due date for
payment of
Education Tax
Bused on tle Educution Tux Act, tle FIRS is
required to issue assessments for the tax which
must be puid witlin 60 duys ol tle seivice ol
notice of assessment. In practice, the tax is self
ussessed und puid 6 montls ultei tle uccounting
year end date.
Penalty for non
compliance
S% ol tle tux, in uddition to tle piincipul tux,
loi luiluie to puy ultei 2 montls ol seivice ol
assessment notice.
Il ultei 2 montls ol seivice ol ussessment notice
loi tle unpuid tux plus tle S% penulty on tle
company, the failure to pay still continues, the
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Penalty for non
compliance
(continued)
following additional penalties shall apply:
First offenders N10,000 or imprisonment
for a term of 3 years;
Second oi subsequent ollendeis N20,000
oi impiisonment loi u teim ol S yeuis oi
both.
Statute of
Limitation
Tle FIRS muy iuise udditionul ussessment witlin
six yeuis liom tle ielevunt yeui ol ussessment.
Howevei, in tle event ol u liuud, willlul deluult oi
neglect by the company, the statute of limitation
will not apply.
4. Information technology (IT) Tax
Puyuble by specined compunies witl tuinovei ol N100 million und
ubove. Tle tux wlen puid is tux deductible loi compuny income tux
purposes.
Rates 1% of Profit Before Tax
Entities liable GSM seivice piovideis und ull
telecommunications companies;
Cybei compunies und inteinet piovideis;
Pension managers and pension related
companies;
Bunks und otlei linunciul institutions; und
Insurance companies.
Returns and
Payment
IT Tux is ussessed by tle FIRS und is puyuble
witlin 60 duys ol seivice ol u notice ol
assessment.
Penalty for non
compliance
2% of the tax payable.
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5. Capital Gains Tax (CGT)
CGT is tux on cupitul guins ucciuing to uny peison (compuny oi
individuul) muking u cluigeuble disposul ol ussets
Rates 10%
Chargeable
assets
Options, debts und incoipoieul piopeity
generally
Any currency other than Nigeria currency
Any form of property created by the person
disposing of it , or otherwise coming to be
owned without being acquired
Goodwill
Copyrights
Buildings
Chattels etc
Exempt assets
and gains
These include gains from disposal of shares
und stocks, Nigeiiun goveinment secuiities,
life assurance policies, main residence or
dwelling-louse ol un individuul, compensution
loi wiong oi injuiies sulleied by un individuul,
meclunicully piopelled ioud velicle not suituble
loi piivute use und decoiutions uwuided loi
vuloui oi gullunt conduct.
Allowable
deductions
Initial cost of the asset;
Stump duties;
Cost ol enluncing tle vulue ol tle usset;
Expenditure incurred in establishing,
pieseiving oi delending tle title to, oi iiglt
ovei tle usset;
Incidental expenses for the purpose of
acquiring or disposing of the assets, such
as fees, commission or remuneration paid
loi piolessionul seivices ol uny suiveyoi, oi
vuluei, oi uuctioneei, oi uccountunt, oi
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Allowable
deductions
(continued)
ugent, oi legul udvisei und cost ol tiunslei oi
conveyunce; und
Cost ol udveitisement to lind u sellei duiing
ucquisition und udveitisement cost to lind u
buyer during disposal.
Non Allowable
deductions
Premiums paid under a policy of insurance
tuken uguinst uny iisk, oi dumuge to, oi
injury to, or depreciation of or loss of an
asset.
Expenses that are deductible under
Companies Income Tax Act or Personal
Income Tax Act
Relief Rollovei ieliel cun be cluimed wleie pioceeds ol
disposal are used to purchase a new asset of the
same class as the disposed asset. The new asset
must be acquired (or an unconditional contract
loi its ucquisition loimed) witlin twelve montls
beloie oi twelve montls ultei tle disposul ol tle
old asset.
The classes of the assets eligible for relief are as
follows:
Class 1:
1A - (i) Building (ii) Land
1B - Plant or Machinery which does not form part
of the building
Cluss 2: Slips
Class 3: Aircraft
Cluss 4: Goodwill
Statute of
Limitation
6 yeuis except wleie un uct ol liuud, willlul
default or neglect has been committed by the
taxpayer.
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6. Withholding Tax (WHT)
WHT is un udvunce puyment ol income tux deductible ut souice on
specined tiunsuctions. It cun be upplied us tux ciedit uguinst income tux
liability.
Rates
Transactions Companies Individuuls
Dividend, inteiest & ient 10% 10%
Royulties 10% S%
Hiie ol equipment, motoi
velicles, plunts, und
machinery
10% 10%
Commission, consultancy,
technical and management
fees, legal fees, audit fees,
and other professional fees
10% S%
Construction S% S%
All types of contracts and
agency arrangements,
other than sales in the
ordinary course of business
S% S%
Diiectois' lees N/A 10%
Tle iute ol WHT on dividend, inteiest und ioyulty is
ieduced to 7.S% wlen puid to u iecipient iesident in u
treaty country.
Due date
for filing
WHT
Returns
In tle cuse ol WHT deducted liom compunies,
iemittunce is due to tle Fedeiul Inlund Revenue Seivice
(FIRS) witlin 21 duys ultei tle duty to deduct WHT
arose.
In tle cuse ol WHT deducted liom individuuls und
unincoipoiuted entities, iemittunce is due to tle Stute
Inteinul Revenue Seivice (SIRS), witlin 30 duys ultei tle
duty to deduct WHT uiose.
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Due date
for filing
WHT
Returns
For FIRS WHT, the schedule of WHT deducted must be
submitted in electronic form and must contain specific
information such as the Tax Identification Number (TIN)
of the various suppliers from whom the tax has been
deducted.
Penalties Failure to remit WHT due to the FIRS: a penalty of 10% of
tax due and interest at commercial rate (currently up to
21%).
Failure to remit WHT due to SIRS: u line ol NS,000 oi
10% ol tux due, wliclevei is liglei, in uddition to tle
piincipul tux due und inteiest ut tle bunk lending iute
(currently up to 21%).
7. Value Added Tax (VAT)
VAT is cluigeuble on tle supply ol tuxuble goods und seivices except
items specincully stuted us exempt oi zeio-iuted.
Standard rate S%
Registration Residents: Immediately on commencement of
business
Non-Residents: A non-resident company that
carries on business in Nigeria is required to
iegistei loi VAT beloie issuing its liist invoice,
using the address of the Nigerian customer with
whom it has a subsisting contract.
Due date for
filing VAT
Returns
21st day of the month following the month of
transaction
VAT deduction
at source
The following are required to deduct VAT on their
incoming invoices und iemit to tle FIRS:
Oil und gus compunies including oil seivice
companies
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VAT deduction
at source
(continued)
Goveinment, goveinment ugencies und
departments
Resident entities in iespect ol tiunsuctions
with non residents
Zero Rated
Goods &
Services
Non-oil exports
Goods und seivices puiclused by diplomuts
Goods puiclused loi lumunituiiun donoi-
funded projects
Exempted
Goods
Oil expoits
Medical and pharmaceutical products
Basic food items
Books und educutionul muteiiuls
Baby products
Plant, machinery and goods imported for
use in the export processing zone or free
trade zones
Plant, machinery and equipment purchased
for utilization of gas in downstream
petroleum operations
Transactions, ploughs and agricultural
implements purchased for agricultural
purposes
Exempt Services All expoit seivices
Medicul seivices
Seivices iendeied by community bunks und
mortgage institutions
Plays and performances by educational
institutions as part of learning
Exemption by
Policy
Additional exemption granted by the Minister of
Finance through Fiscal Policy Measures in line
with section 34 (b) of the VAT Act:
Locally manufactured biscuits
Plant, machinery and equipment (including
steel structures) for the manufacture of
cement and allied products
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Exemption
by Policy
(continued)
Vegetable oil
Motoicycle (CKD)/Bicycle (SKDs) und tleii
spare parts
Coipoiute bonds und goveinment secuiities
(10 years from 2 January 2012)
Recoverable
Input VAT
Allowable input tax is restricted to goods
purchased or imported directly for resale and
goods wlicl loim tle stock-in-tiude used loi tle
direct production of any new product on which
the output VAT is charged.
VAT on fixed assets/capital items, overhead,
service and general administration expenses are
not claimable as input VAT. Rather they should be
capitalised or expensed as the case may be.
VAT refund/
carry forward
Excess input VAT may be carried forward as credit
uguinst lutuie VAT puyuble. Alteinutively, tle
FIRS Estublislment Act piovides loi u cusl ielund
on upplicution witlin 90 duys ol FIRS decision
subject to appropriate tax audit.
Penalties Failure to register for VAT: N10,000 for the
liist montl und NS,000 loi eveiy subsequent
month in which the default continues.
Failure to issue tax invoice: Fine ol S0% ol tle
cost ol tle goods oi seivices loi wlicl tux
invoice wus not issued.
Failure to collect VAT: penulty ol 1S0% ol tle
umount not collected plus S% inteiest ubove
tle Centiul Bunk ol Nigeiiu Monetuiy Policy
Rute.
Failure to submit returns: Fine ol NS,000 loi
eveiy montl in wlicl tle luiluie continues.
Failure to remit VAT: S% pei unnum ol tle
amount of tax not remitted plus interest at
bunk lending iute.
Failure to keep proper records: N2,000 for
eveiy montl in wlicl tle luiluie continues.
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8. Personal Income Tax ( PIT)
Individuuls including employees, Puitneislips und Unincoipoiuted
Trusts are liable to tax under the PIT Act
Basis of
liability
The principal basis of liability to tax under the PIT Act
is residency. A person is considered resident if he is
physically in Nigeria for at least 183 days (including
leuve und tempoiuiy ubsence) in uny 12-montl peiiod
oi seives us u diplomut oi diplomutic ugent ol Nigeiiu
ubioud. Resident peisons uie liuble to tux on tleii
worldwide income.
In the case of employment, a non resident person is
liable to tax in Nigeria if the duties of his employment
are wholly or partly performed in Nigeria, unless:
the duties are performed on behalf of an
employer who is in a country other than Nigeria;
the remuneration of the employee in not borne
by a fixed base of the employer in Nigeria; and
the remuneration of the employee is liable to tax
in tlut otlei countiy undei tle piovisions ol tle
uvoidunce ol double tuxution tieuty witl tlut
other country.
Rate PIT rate is applied on a graduated scale on taxable
annual income as set out below:
First N300,000 7%
Next N300,000 11%
Next NS00,000 1S%
Next NS00,000 19%
Next N1,600,000 21%
Above N 3,200,000 24%
Note: Earners of above N20m, will be subject to top
marginal tax rate of 18.96% for non-routine payments
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Rate
(continued)
(e.g. bonus and 13th-month) as only 79% of income
is taxed at 24% while the top marginal tax rate for
non-routine payments for earners of less than N20m is
19.2% (see reliefs and allowances below).
Due date
for filing
Returns
Eveiy employei is iequiied to lile u ietuin ol ull
emoluments paid to his employees not later than 31st
Junuuiy ol eveiy yeui in iespect ol ull employees in
his employment in the preceding year.
In addition, a return in respect of the current year
must be filed within 90 days of the fiscal year i.e. not
later than 31 March
Employers
Obligations
Employers are required to deduct and account
for personal income tax on the employment
income of their employees through the Pay-As-
You-Earn (PAYE) system.
PAYE tax must be remitted on or before the
10th day of the month following the payment
of salary (e.g. PAYE tax deducted from January
salary should be remitted by 10th of February).
Reliefs &
Deductions
Consolidated
relief
allowance
Higlei ol N200,000 oi 1% ol gioss
income plus 20% ol gioss income
Child
allowance
N2,S00 loi eucl clild up to
a maximum of four children,
piovided tlut none is ubove 16 yis
oi muiiied. Howevei, u ieliel cun be
giunted loi u clild ovei 16 yeuis il
the child is in a recognized school,
under artisanship or learning a
trade.
Dependent
ielutive
N2,000 loi eucl dependent ielutive
up to u muximum ol two ielutives
wlo uie widowed oi innim.
Nigeria Tax Card PwC
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Reliefs &
Deductions
(continued)
Deductions
allowed
NHF contiibution, Nutionul
Heultl Insuiunce Scleme, Lile
Assurance Premium, National
Pension Scleme und Giutuities.
Reimbuisements Expenses incurred in the
performance of employment
duties from which it is not
intended that the employee
slould muke uny guin oi piont.
Interest and
dividend
Interest income earned from
debt instruments including
treasury bills and corporate
bonds now fully exempt while
withholding tax at 10% is the
nnul tux on dividend.
* gross emoluments means wages salaries
allowances (including benefits in kind), gratuities,
superannuation, and any other income derived solely by
reason of employment
Benefits in
kind (BIK)
BIK piovided to un employee by tle employei
such as official cars, accommodation, etc are
deemed to be puit ol tle employee's gioss
emoluments. Tle tuxuble benelit is S% pei
annum of the cost where the asset is owned by
the employer or the actual rent paid where the
asset is leased by the employer.
BIK on uccommodution is tuxuble bused on tle
unnuul vulue ol tle piemises us deteimined loi
purposes of local rates or as determined by the
ielevunt tux uutloiity iutlei tlun tle cost oi
actual rent paid.
Nigeria Tax Card PwC
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Penalty
for non
payment of
tax
10% per annum of the amount plus interest on annual
busis ut bunk lending iute (pieviously u one-oll iute ol
21% is applied).
Statute of
Limitation
6 yeuis except in tle event ol u liuud, willlul deluult
or neglect by the taxable person in which case there is
no limitation.
9. Pension Contribution
Employeis tlut luve S oi moie employees uie iequiied, undei tle
Pension Reloim Act 2004, to puiticipute in u contiibutoiy pension
scleme in luvoui ol tleii employees. Employeis witl less tlun S
employees muy voluntuiily elect to puiticipute.
Rate of
Contribution
1S% ol montlly emolument (witl u minimum
contiibution ol 7.S% by tle employei und up
to 7.S% by tle employee). Tle employei und/
oi tle employee muy muke udditionul voluntuiy
contribution.
Employers
Obligation
Tle employei is obliged to muke montlly
deductions ut souice liom tle employee's
emoluments and remit to the Pension Fund
Custodiun (PFC) specilied by tle employee's
Pension Fund Administrator (PFA) not later
tlun 7 woiking duys ultei tle puyment ol tle
employee's suluiy.
Expatriates Expatriate employees are not expressly
exempted from pension contribution under the
Act. Howevei, tle Guidelines on Cioss Boidei
Arrangements issued by the Pension Commission
specifically states that it is not compulsory for
expatriates to join the Nigerian pension scheme
but such employees may join at their discretion
and with the agreement of their employers.
Nigeria Tax Card PwC
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Penalty Failure by an employer to remit contributions
within the stipulated time attracts a penalty of
2% of the total contribution outstanding.
Life Insurance Tle Pension Reloim Act iequiies eveiy employei
to tuke out lile insuiunce covei loi its employees.
The sum assured should be three times each
employee's unnuul iemuneiution. Tle insuiunce
cost is to be borne solely by the employer.
monrn|y cmo|umcnrs is dcnncd us rnc uggtcgurc o| busic su|uty, nousing
and transport.
10. Industrial Training Fund (ITF) Contribution
Applicuble to employeis witl minimum ol S employees oi unnuul
tuinovei ol NS0 million
Rate 1% ol unnuul puyioll cost
Due date for
Payment
Not later than 1st April of the following year
Refund An employei could get up to S0% ielund ol
contributions made if adequate (documented)
tiuining couises weie piovided to tle employees
Penalty
for non
compliance
S% ol tle unpuid umount to be udded loi eucl montl
or part of a month after the date on which payment
slould luve been mude.
Statute of
limitation
Tle contiibution is iecoveiuble ut uny time witlin 6
years from the due date.
*Payroll is dcnncd us rnc sum roru| o| u|| busic puy u||owunccs und ornct
entitlements payable within and outside Nigeria to any employee in an
establishment, public or private.
**Employees mean all persons whether or not they are Nigerians employed
in any establishment in return for salary, wages or other consideration,
and whether employed full-time or part-time and includes temporary
employees who work for periods of not less than 30 days in a year.
Nigeria Tax Card PwC
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11. Employee Compensation Scheme
Repeuls tle woikmen's compensution Act und piovides compensution
for employees for any death, injury, disease or disability arising from or
in the course of employment.
Scope All employeis, including individuuls, uie iequiied
to iegistei witl tle Nigeiiu Sociul Insuiunce Tiust
Fund (NSITF) und contiibute to tle scleme.
Contributions Employeis uie iequiied to muke montlly
contiibutions to tle NSITF not lutei tlun tle lust
day of the month.
Rate 1% of total monthly payroll or amount assessed
by tle NSITF. Wleie tle cluim cost in iespect
ol un employei exceeds 10S% ol tle oidinuiy
ussessment ol tlut employei, tle NSITF Bouid
muy witlin 4 yeuis levy u supei ussessment on
the employer not exceeding 133% of the ordinary
assessment for the year.
Returns Employers are required to file statements of
actual earnings of their employees for the
preceding year and budgeted earnings for the
cuiient yeui not lutei tlun 28 Febiuuiy ol eveiy
year.
An employer who has just commenced a business,
recommences or ceases to be an employer is
iequiied to piovide tle stutements witlin 30 duys
of commencement, recommencement or cessation
as the case may be.
Penalty Penalty and interest for default are to be charged
ut u iute to be deteimined by tle NSITF Bouid.
*Employee - means a person employed by an employer under oral
or written contract of employment whether continuous, part-time,
temporary, apprenticeship or casual basis and includes a domestic servant
who is not a member of the family of the employer.
Nigeria Tax Card PwC
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12. National Housing Fund Contribution
Applicable to Nigerian employees earning a minimum of N3,000 per
annum
13. Customs and Excise Duties
Custom duties uie levied on Cost, Insuiunce und Fieiglt (CIF).
Rate 2.S% ol busic suluiy
Employers
Obligations
The employer is required to deduct the
contribution from the salary of its employees and
iemit it to tle Fedeiul Moitguge Bunk ol Nigeiiu
within one month of the deduction.
Penalty for non
compliance
Penulty iunges liom NS,000 to NS0,000 und S
years imprisonment.
Rates Rutes vuiy loi dilleient items, und uie ussessed
witl ieleience to tle pievuiling Huimonized
Commodity und Coding System (HS code).
Some Goods
exempted from
Customs duty
Aircrafts or airlines registered in Nigeria and
pioviding commeiciul seivices in Nigeiiu;
Films, film-strips, microfilms, newsreel,
slides und similui visuul und uuditoiy
material of educational, scientific or
cultuiul cluiuctei impoited by tle United
Nations, any of its specialized agencies or an
uppioved educution oi science oigunizution;
Fuel, lubricants and similar products, which
the Minister is satisfied are necessary for
and will be used solely in the operation of
an aircraft of the armed forces of a foreign
power; or an aircraft registered in any
recognized country;
Goods Impoited loi tle leud ol stute,
Commander-in-Chief of the Armed Forces;
Nigeria Tax Card PwC
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Some Goods
exempted from
Customs duty
(continued)
Goods Impoited loi tle consului Olliceis;
Diplomutic piivileged impoitutions;
Goods obtuined liee us teclnicul ussistunce
from international donors;
Passengers baggage;
Lile suving Appliunces;
Milituiy Huidwuie und Uniloims; und
Arms and Ammunition imported by the
Nigeria Police Force.
Other rates &
charges
7% suicluige (Poit development levy)
calculated on the customs duty
0.S% tiude libeiulizution scleme levy,
calculated on customs duty (where import is
liom countiies outside tle ECOWAS iegion);
1% Compielensive Impoit Suspension
Scleme (CISS) udministiutive cluige loi
destinution inspection bused on tle FOB
vulue ol goods
Value Added Tax (VAT) calculated at the
iute ol S% on tle CIF vulue ol tle impoit,
customs duty und tle cluiges stuted ubove.
Some goods
prohibited from
importation
Beef & beef products
Fresh or dried fruits, fruit juice in retail
pucks
Detergent
Toothpaste
Vegetable oil (excluding linseed and castor
oils, lydiogenuted vegetuble luts used us
industiiul iuw muteiiuls und olive oil in
bottles)
All sort of foot wears, bags of leather and
plastics and briefcase (excluding safety and
sports wears)
Sugui conlectionuiies
Telephone recharge cards
Used motoi velicles ubove 1S yeuis liom tle
year of manufacture
Nigeria Tax Card PwC
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Some goods
prohibited from
importation
(continued)
Muize & Wleut lloui
Biscuits
Beer
Certain medicaments
Bagged cement
Live oi deud biids including Fiozen poultiy
Bird eggs
Cocou buttei, powdei und cuke
Wutei, Mineiul wuteis, Aeiuted wuteis
Mosquitoes repellent coils,
Sunituiy wuie ol plustic
Ball point pen
Used compiessois
Hollow gluss bottles ol cupucities exceeding
1S0mls
Goods liable to
Excise duty
Beei & Stout
Wines
Spiiits
Cigarettes and Tobacco
Manufactured and sold in Nigeria
ECOWAS Trade
Liberalisation
Scheme (ETLS)
Appioved pioducts munuluctuied by beneliciuiies
ol tle ETLS uie ullowed liee uccess to muikets
witlin tle ECOWAS iegion witlout uny impoit
duties in the destination countries.
Pioducts uppioved loi tle scleme must sutisly
tle iules ol oiigin wlicl iequiie ut leust 60%
locul iuw muteiiuls content (volume) oi 40% locul
iuw muteiiuls vulue (monetuiy) oi u minimum ol
3S% locul vulue udded. Tle cost, insuiunce und
lieiglt (CIF) vulue ol impoited iuw muteiiul must
not exceed 60% ol tle totul cost ol iuw muteiiuls
used.
ETLS is not lully opeiutionul going by tle low
level ol implementution by membei countiies.
Nigeria Tax Card PwC
28
2012 Budget
Fiscal Policies
Review ol tle 2008 to 2012 Customs und
Excise Tariffs to correct anomalies and
introduce policies that will encourage
industialisation.
Ellective 31 Junuuiy 2012, duty on
machinery and specific equipment for use in
the agricultural sector to attract zero import
duty.
All equipment for processing of high quality
cussuvu lloui und composite lloui blending
to be duty free.
From 1 July 2012, wheat flour to attract
import duty of 100%, wheat grain 20%,
biown iice 30% und polisled iice S0%.
Rice milleis uie encouiuged to move towuids
domestic production and milling of rice.
Impoit duty will tlus be incieused liom S0%
to 100% ellective 31 Decembei 2012.
No wuiveis oi concessions will be giunted
for rice and wheat production.
Introduction of import prohibition for
cussuvu lloui.
Equipment and machinery in the power
sector will attract zero duty.
Review ol tle Expoit Expunsion Giunt
(EEG) to stieumline tle scleme und
muke it moie ellective us un instiument loi
promotion of exports.
Review ol Nigeiiu's position on tle ECOWAS
Tiude Libeiulisution Scleme (ETLS) to
uvoid dumping.
*Note - The Ministry of Finance reviews Customs and Importation
Guidelines & Policies from time to time. Sometimes, the practice is not
consistent with the law and policies. It is therefore recommended that you
keep abreast of developments in this area and seek professional advice
where necessary.
Nigeria Tax Card PwC
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14. Stamp Duty
Stump duty is tux on documents evidencing tiunsuctions between
persons.
Instruments
liable to
Stamp Duty
All instruments relating to an act to be performed in
Nigeria must be stamped, except such instrument is
specifically exempted.
When to
Stamp
Instruments which are required to be stamped under
tle Stump Duties Act must be stumped witlin 40 duys
of first execution.
Rate Stump duty is cluigeuble eitlei ut lixed iutes oi
ud vuloiem (i.e., in piopoition to tle vulue ol tle
consideration) depending on the class of instrument.
Penalty The penalty for late stamping of instruments is N20;
but where the unpaid duty exceeds N20, there is a
further penalty in the form of interest on the stamp
duty payable at the rate of 10% per annum subject to a
maximum of the unpaid duty.
Also, unstamped documents are generally not
udmissible us evidence in civil pioceedings.
Nigeria Tax Card PwC
30
PwC is a global market leader for tax services. We assist businesses,
individuals and organisations with tax strategy, planning, and
compliance, whilst also delivering a wide range of business advisory
services with 23,000 dedicated tax professionals in over 140 countries.
This means that we can support you both locally and globally, wherever
you require our services.
We take a holistic view, combining industry insight with the technical
sli||s o| nnunciu| und rux pto|cssionu|s, cconomisrs, |uwycts und out ornct
in-house resources as necessary, to develop comprehensive integrated
solutions.
We have experience of working with an expansive and diverse client-base
comprising all types of businesses multinationals, local companies,
privately-owned organisations, entrepreneurs, family businesses, trusts,
partnerships and private individuals.
According to Global Tax Monitor PwC is the leading provider of tax
services worldwide. Our reputation as global market leader extends to
the various tax service areas, where we have a very strong lead over the
competition in domestic and cross-border tax compliance, domestic and
international corporate tax planning, indirect tax/VAT, M&A, transfer
pticing, compcnsurion 8 bcncnrs, rux tisl minimisurion, rux uccounring,
tax function effectiveness and expatriate tax planning and compliance.
Contacts:
Kenneth Aitken
Head, Tax & Corporate
Advisoiy Seivices, PwC
Nigeria
Email:
ken.uitkengng.pwc.
com
Telephone:
27112700 ext 3101
Russell Eastaugh
Tax Director, Tax &
Coipoiute Advisoiy
Seivices, PwC Nigeiiu
Email:
iussell.eustuuglg
ng.pwc.com
Telephone:
27112700 ext 3102
Taiwo Oyedele
Tax Partner / Director,
Tax & Corporate
Advisoiy Seivices, PwC
Nigeria
Email:
tuiwo.oyedelegng.pwc.
com
Telephone:
27112700 ext 3100
Caveat
We luve issued tlis Tux Dutu Cuid to piovide u ligl level insiglt
into key uieus ol tuxution in Nigeiiu. It coveis coipoiute und
individuul income tux, Cupitul Guins Tux, witllolding tux, sociul
secuiity contiibutions, VAT, Excise duty und Stump duty. Tleie
uie u numbei ol otlei tuxes und levies puyuble to ledeiul, stute oi
locul goveinments, wlicl luve not been included. Altlougl we
luve tuken ull ieusonuble cuie in compiling tle dutu cuid, we do
not accept responsibility for any errors or inaccuracies contained
in tle document. Tlis dutu cuid is ulso uvuiluble electionicully.
Il you would like un electionic copy, pleuse visit oui website ut
www.pwc.com/ng
2012, PwC. All rights reserved. PwC refers to the PwC network and / or one or
more of its member frms, each of which is a separate legal entity. Please see www.
pwc.com/structure for further details.