1. What is personal income tax in Nigeria?

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.

2. What law enables personal income tax in Nigeria?

Personal Income Tax Act 2011 as (Amendment)

Who pays personal income in Nigeria?

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.

Does state board of internal revenue (OYIRS) collect personal income tax?

OYIRS collects Income Tax from the following set of tax payers:

(a.) Individuals in their various states of residence,

(b.) Body of individuals such as communities, families that run a business;

(c.) Business names and partnerships

(d.) Executors of estates of deceased persons and trustees of trusts.

Federal inland revenue service collects personal income tax?

Yes. FIRS collect Income Tax from the following set of tax payers:

(a.) Persons employed in the Nigerian Army, the Nigerian Navy, the Nigerian Air Force and the Nigerian Police other than in a civilian capacity;

(b.) Body of individuals such as communities, families that run a business;

(c.) Officers of the Nigerian Foreign Service;

(d.) Non-residents who derive income or profit from Nigeria.

What is the mode of payment of personal income tax?

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.

what are consolidate allowance in personal income tax?

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.

what items are tax exempted from my emolument? The following deductions are exempted from PITA.

(a.)      National Housing Fund Contribution

(b.)      National Health Insurance Scheme

(c.)      Life Assurance Premium

(d.)      National Pension Scheme

(e.)      Gratuities.

what are the rate of computing personal income tax calculated in Nigeria?

After the relief allowance and exceptions had been granted, the balance of income shall be taxed as specified in the following Sixth Schedule Table:

(a.)      First N300,000 at 7%

(b.)      Next N300,000 at 11%

(c.)      Next N500,000 at 15%

(d.)      Next N500,000 at 19%

(e.)      Next N1,600,000 at 21%

(f.)       Above N3,200,000 at 24%

what is deadline for submitting annual returns?

Every employer shall be required to file a return with the relevant tax authority of all emoluments paid to its employees, not later than 31st January of every year in respect of all employees in its employment in the preceding year.

What is minimum Tax?

1% of Gross Income.

.How do I confirm that tax deducted from my monthly emoluments are remitted to the state government?

You can officially obtain information on all taxes paid on your behalf through the Executive Chairman of OGIRS.

What is self assessment?

It is the ‘do it yourself’, easier and convenient approach recently introduced by OGIRS which enable a new tax payer to assess him/herself, make payment through any of the designated banks and obtain his/her e-TCC without visiting any tax office or officer.

What is the difference between pay as you earn (PAYE) and direct assessment?

PAYE and Direct Assessment are two ways of assessing individuals to tax. PAYE is for individuals under paid employment while Direct Assessment is for Self Employed individuals.

Is a temporary/casual worker meant to pay Tax?

Yes. The Personal Income Tax (Amendment) Act, 2011 combined with the provisions of S.3 (1)(b) and S.3(1)(b)(i) particularly defining the taxpaying employee as either a temporary or permanent employee.

Is it compulsory for a full time house wife or jobless individual to pay Tax to OYSIR?

Yes. The position of the law is that all taxable adults must pay Personal Income Tax except those exempted by the law as stipulated in the Third Schedule of PITA 104 CAP P8 LFN 2004 & (Amendment) at 2011.

Can I use withholding taxes deducted from me to offset my personal income tax liability?

Yes. Withholding Taxes is recognized as part of taxes paid and can be net off from liability assessed for the year and balance is paid.

What are the rates of withholding taxes in Nigeria.

See table of Applicable Rates below

Transaction type                                                Tax rate for companies                           Tax rate for individuals

All aspects of building construction and related activities 5% 5%
All types of contracts other than sale and purchase of goods 5% 5%
Consultancy services 10% 5%
Management services 10% 5%
Technical Services 10% 5%
Commissions 10% 5%
Rent (including equipment hire) 10% 10%
Royalties, Director’s fees 10% 10%