923,768 sq km
A mixed legal system of English common law, Islamic law (in 12 northern states), and traditional law.
Personal Income Tax | Local & Expatriate
This is tax imposed on the gross income of individuals, communities and families or arising or due to a trustee or estate, after the deduction of consolidated allowances of N200,000 plus 20% of gross earnings. Expatriates are taxed the same as locals. A residency rule of 183 days on a 12-month basis is applied.
|A graduated tax rate is applied as follows:
First N300,000 – 7%
Next N300,000 – 11%
Next N500,000 – 15%
Next N500,000 – 19%
Next N1,600,000 – 21%
Above N3,200,000 – 24%
Corporate Income Tax
This is tax imposed on the profit of any company in respect of any trade or business.
|The applicable rate is as follows:
This represents direct deductions made from certain payments to companies and individuals. The payment is taken as advance payment on tax and are used to offset subsequent tax income tax liabilities.
|All building construction and related activities – 2.5%
All contracts and agency arrangements – 5%
Consultancy/professional services – 10% (individuals 5%)
Management Services – 10% (individuals -5%)
Technical Services – 10% (individuals 5%)
Commission – 10% (individuals 5%)
Capital Gains Tax
|This tax is charged on capital gains accruing to any person on disposal of assets. It is based on the total amount of chargeable gains accruing to any person in a year after making such deductions as may be allowed under the Act in the computation of the capital gain.||The applicable rate is 10%.|
|There is no general Environmental Levy in Nigeria except for the one imposed under the Environment Management (Sea Protection Levy) Regulation 2012 by the Nigeria Maritime Administration & Safety Agency (NIMASA) on foreign-flagged vessels as well as Nigeria-flagged vessel.||Foreign vessels are subject to a rate of USD0.10/GT for vessels of up to 1,000GT, a rate of USD0.15/GT for vessels up to 10,000GT, USD0.20/GT for vessels up to 100,000GT, or USD0.30/GT beyond this threshold.
Nigerian-flagged vessels will pay an annual levy, of NGN500/GT (USD3.17/GT) for vessels up to 1,000GT, NGN350/GT for vessels up to 10,000GT, NGN300/GT for vessels up to 100,000GT, or NGN250/GT for vessels above 100,000GT. Vessels with a gross tonnage of less than 100 will be exempt from the levy.
|This represents tax on dividends payable by individuals or companies. It is a final tax.||10%|
All goods and services are subject to VAT except those exempted in First Schedule of the Value Added Tax Act. Part I of the First Schedule deal with Goods while Part 11 deals with Services.
|The rate is 7.5% while some items are subject to VAT at zero (0.00) rate.|
Bilateral Tax Treaties and DTAAs
|Nigeria has Bilateral Tax Treaties for the avoidance of double taxation with respect to taxes on income with-
Peoples Republic of China
United Kingdom; South Africa, Mauritius, Netherlands, Canada, Philippines, Belgium; France, South Korea and Italy.
|All except Italy are comprehensive double taxation agreements. Italy covers only Air and Shipping.|
|3- 5 years on income tax for companies in pioneer industries
2 year tax deduction of qualifying expenses.
Initial 5 years exemption from income tax may be extended by another 3 years
Exemption from taxes for manufacturing and other companies operating in Export Processing Zones (EPZ) or Free Trade Zones (FTZ)
Grant for settlement of taxes – CIT, VAT, WHT
Up to 5 years tax holiday
25% of income from foreign currency made by hotels etc. provided it is reinvested.
Tax free interests on deposits accounts of non-residents
10% for qualifying expenditure on plant and machinery, in addition to other capital allowances
Based on Double Taxation Treaties.
Tax Rulings and Directives
|There are several tax rulings both at the Tax Appeal Tribunals (TAT); Federal High Court (FHC) and Court of Appeal (CA) covering VAT; WHT, deductions of expenses etc.||Examples:
Warm Spring Waters Nigeria Ltd & 8 Ors. Vs FIRS ( Bottled Water is a basic food item and not subject to VAT – FHC);
TAT/ABJ/APP/0301/2014: (Foreign companies providing services outside Nigeria to Nigerian companies are not carrying on business in Nigeria for the purposes of VAT)
Al-Maseer Law Firm Vs FIRS – Legal services and Law Firms not exempted from VAT or VAT registration (CA)
Tetra Pak Vs FIRS (Sales in the ordinary course of business not subject to WHT – TAT)
Nigeria Agip Oil Company Vs FIRS (Interest on inter-company loans is an allowable expense for tax provided it is based on arm’s length terms – TAT)
Nigeria is Sub Saharan Africa’s largest economy and relies heavily on oil as its main source of foreign exchange earnings and government revenues. Following the 2008-09 global financial crises, the banking sector was effectively recapitalized and regulation enhanced. Since then, Nigeria’s economic growth has been driven by growth in agriculture, telecommunications, and services. The government also is working to develop stronger public-private partnerships for roads, agriculture, and power.