Before venturing into that business of yours, you need to understand a few things about taxes that are applicable to you and your business. This way, you will be able to make informed decisions about your business. Business In Nigeria
It is vital that you know that there are 2 major categories of taxes: Federal taxes and State taxes. We also have a Body of Appeal Commissioner that serves as a law court in charge of appealing for tax cases.
Be that as it may, let’s plunge right into the different taxes operational in Nigeria, and how to choose the best one that suits your business needs.
Company income tax
This type of tax applies to all companies except those in the petroleum industry. It is usually paid on a yearly basis. It is always 30% of a company’s taxable income. However, companies in the oil & gas industry pay Petroleum Profit Tax charged 85% of the taxable income.
Value-added tax (VAT)
This is unarguably, the most controversial tax in Nigeria. Value Added Tax (VAT) is a type of tax paid by a consumer. It is enforced on the consumer by the supplier after the successful delivery of a goods. Companies are expected by the government to collect the VAT from consumers for onward remittance to relevant tax agency.
If you are a supplier, you must take care to collect VAT from your clients. Failure to collect the VAT attracts serious penalty from the government and it is usually filed every 21st day of the preceding month. However, there are goods that do not attract VAT. They include agricultural products, medicines, educational materials, pharmaceutical items, and veterinary drugs. Business In Nigeria
Capital gains tax
Capital gains tax is a 10% tax of the profits realized from the sales of a landed property. Emphasis is on the profit an investor realizes after the sales of an asset, not the real sale price.
Education tax Business In Nigeria
It is a compulsory tax from every company. It is a 2% of the accessible gains of all company. It is mandated that all companies pay this quota to contribute to the educational sector of the country.
Personal income tax
Personal Income tax are taxes imposed on the incomes of individuals, communities and families, etc., with different sources of income like labour, pensions, interest and dividends. All working individual and companies are mandated to pay this type of tax. However, incorporated companies under Part A of Companies and Allied Matters Act 1990 are exempted from this kind of tax.
This is the rate of calculating personal income tax;
Annual Taxable Income Rate
First N300, 000 7%
Next N300, 000 11%
Next N500, 000 15%
Next 500, 000 19%
Next 1,600,000 21%
Over N3, 200, 000 24%
Hotel occupancy and restaurants consumption tax
All owners of hotels, fast food outlets and restaurants are required to pay 5% on all goods and services that are consumed by the company’s customers. Failure to pay as at when due attracts a further 10% penalty on taxable profits.
There we go! Knowing the different taxes help you to stay guarded before setting out for any business. So, choose wisely!