All the companies registered in nigeria, in other words, all the companies subject to companies income tax cit are also liable to educational tax edt. Nigerian value added tax system and its position on basic food items. Examples of indirect taxation in nigeria are value added tax vat and custom duties. Many countries including nigeria have recognized the significant role being played by these organizations in building a strong, caring and well. Value added tax vat in nigeria is levied on all products and services traded within the country and payable to government at a 5% rate, one of the lowest in the world.
The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. National tax policy and inheritance taxation deloitte nigeria. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. If levied on the price of a good or service, then it is called an indirect tax, a consumption tax. Dike, fcti president and chairman of council of the chartered institute of taxation of nigeria citn at the nigerians in despora organisation nido uk south investment conference on the 17th 18th march 2014.
Taxation laws in nigeria are laws and regulations guiding the collection and administration of taxes. Taxation in nigeria plus history of taxation in nigeria. Taxation of foreign companies operating in nigeria matters. Impact of tax administration on government revenue in a. A practical problem arises when we try to translate the idea or notion into practice. Obviously, everything about the nigerian taxation cannot be covered in. Understanding taxation in nigeria small business ideas. This book discusses the evolution of taxation in nigeria within the framework of eight broad themes i. Development of tax law, administration and practice is a joint and several responsibility of the. By taiwo oyedele the personal income tax amendment act 2011 was officially gazetted on tuesday 31 january 2012 with an effective date of 14 june 2011. Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. The relevant legislation for taxation of companies in nigeria, the companies income tax cit act, provides that the profits of a nonresident company shall be deemed to be derived from and therefore taxable in. Nigeria has a number of tax treaties referred to as double taxation agreements with a number of countries, these are designed to ensure that the tax payable in nigeria on the profits of a. This study analyses tax morale and tax compliance in nigeria.
Overview of personal income tax in nigeria explained. Tax practice before tax courts range from the relatively simple to the complex across both direct and indirect tax. A performance analysis of nigerian tax objectives actualization. Under current nigerian law, taxation is enforced by the.
Introduction taxation is machinery or process in which society and communities or group of individuals are contributing into an agreed sum which is important for the resolution, development and administration of the public ogundele, 1999. Taxation of foreign companies operating in nigeria matters arising from deemed profit basis of taxation and the way forward for a government seeking to simplify the tax system and improve tax. Double taxation relief between the federal republic of nigeria and the united kingdom of great britain and northern ireland order under section 451 commencement. This work examined the nature of tax system, benefits of tax. This edition of the nigerian tax journal summarizes the decided tax cases and administrative pronouncements by rtas and tax administrators in 2018. Corporate tax 2020 laws and regulations nigeria iclg.
According to soyode and kajola 2006, the problems of tax administration in nigeria are as follows. Part three would consider the enforcement of the tax laws by the government, the tax payers and the tax professionals and lastly, part four would discuss remedies available to the three categories of stakeholders. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. But partnership arrangements affect the computation of the tax liability of partners. In practice, however, approved enterprises are often the subject of tax audits, especially regarding vat and withholding tax. Iclg corporate tax laws and regulations nigeria covers common issues in corporate tax laws and regulations including capital gain, overseas profits, real estate, antiavoidance, beps and the digital economy in 33 jurisdictions. Taxation of partners and partnerships in nigeria by ololade olukowi partners, not partnerships, are taxed in nigeria.
This study a nalyses the impact of non oil tax revenue on economic growth from 1993 to 2012 in nigeria. Improved double tax arrangements in nigeria deloitte nigeria. The extent of firss jurisdiction over companies operating in sezs is unclear. Carrying on business in nigeria may be at profit or loss. The paper is aimed at awakening the tax authority and the government of kano in revisiting its tax policy and operation guides to counter the challenges forced by the modern economic development. Tax incentives a performance analysis of nigerian tax. The incidence of tax in nigeria is borne directly or indirectly. The tax revenue collection in nigeria faces some formidable problems which includes the high tax rates and complex filing procedures, multiple taxation and lack of proper enlightenment, lack of statistical data, poor tax administration, and inability to prioritize tax effort, multiplicity of taxes and increase in underground economy. This information is useful for policy makers, implementation and for research purposes. Tax system in nigeria the tax system in nigeria is made up of the tax policy, the tax. Property tax is generally a tax imposed by municipalities upon owners of real property within their jurisdiction based on the value of such property.
At 4 nigeria is far behind a number of other african countries such as mauritius 12, south africa 24, zambia 37, and ghana 78 all competing for foreign direct investments. The law and practice of electronic taxation in nigeria. The types of taxes collectable in nigeria, as well as the bodies in charge of collecting, managing and regulating taxation, are stipulated by the following tax laws in nigeria. Taxation in nigeria understanding nigerian tax system. Let us consider the three alternative income tax plans listed in table 3.
As is the case with several tax types, the personalincome tax pit which is made up of direct assessment for selfemployed enterprises and payasyouearn paye for salary earners has. Adopting and implementing a more definitive and rigorous inheritance tax regime could complement all other existing anticorruption regulatory frameworks and help to strengthen the middle class in nigeria. Taxmanagement overview nigeria is all about, problems of taxation in nigeria. The ongoing reform of the tax system should include a proposal for a more definitive inheritance tax regime. In this post we look at the problems and prospects of taxation in nigeria. The only way to avoid such tax is to refrain from buying the items on which tax is levied. Fatai is the ceo of deloitte nigeria and the regional leader of deloitte west africa. State internal revenue offices administer personal income tax. Many employers are yet to commence implementation while some. This paper does not pretend to cover everything about vat, but some specifics that addresses the imperatives which are. In july 2014, the federal inland revenue service firs sent letters to some tax consultants requesting their nonresident clients operating in nigeria to file complete tax.
Research reveals that the adoption of e taxation in some countries has increased tax compliance amongst taxpayers. This is an automated tax system and it helps to track the tax position of every nigerian that has the tin and those who do not have are compelled to go for theirs in order to make tax tracking very easy. Taxation in nigeria following the extent laws is enforced by the 3 tiers of government, that is, federal, state, and local. In achieving the objective of the study, the researcher adopted also primary sources of data to present and analyze the information for the study. Taxation of partners is governed by the personal income tax act pita. At this time, it most farm produce and other primary goods. Pdf an assessment of the prospects of property tax.
Therefore, it encompasses historical background of taxation in nigeria, nigerian tax system and. Taxation of partners is governed by the personal income 1tax act pita. Smith 1776 cannon of taxation cited in nightingale 2002. Te tax law regulating taxation of individual is the income tax management act itma of 1961 which was. Challenges and prospects, a case study of lagos state board of internal revenue service, largest undergraduate projects repository, research works and materials. Project muse a comprehensive tax history of nigeria. Tax refers to a compulsory contribution, imposed by government, and while taxpayers may receive nothing identifiable in return for their contribution, they. The taxation revenue on nigeria economic growth comes to lime light considering the incidence of overdependent on oil revenue in nigeria. Taxation is one of the most volatile subjects in governance both in the developing and developed nations. Introduction floating, production, storage and offloading vessels are.
Tax issues in nigerian oil and gas contracts a critique of floating, production storage and offloading vessels contracts. This means you are legally required to collect, file and remit sales and use tax. The role of taxation in promoting economic growth in nigeria is not fully felt, and optimal tax is not been realized that can engine economic growth primarily because of its poor administration. If tax is levied directly on personal or corporate income, then it is a direct tax. Nigeria has a number of tax treaties referred to as double taxation agreements with a number of countries, these are designed to ensure that the tax payable in nigeria on the profits of a nigerian company being remitted into the country are reduced by the amount of foreign tax paid abroad and vice versa where an. The regressive tax system is not commonly used,even in developed countries since this will mean revenue from taxes to the government will only continue to reduce. History of taxation in nigeria dates back to even when the name nigeria wasnt coined. For example, in income taxation, the measure of ability is income. Looking at the history of taxation in nigeria, the beginning of the colonization period was connected with various trading posts and companies in the west africa. If you earn an income in nigeria whether as an individual or a business, its expected that you remit a given amount. Interestingly, many taxpayers dont understand the way this tax is deducted and as a result, there are often questions about it. Equitability, neutrality, efficiency, flexibility and simplicity. A brief examination tax practice and procedure in nigeria.
Pdf nigerian value added tax system and the concept of. Corporation tax is charged by reference to profits. We highlight our disagreement with ademolas decision and proffer suggestions for the future of tax appeals in nigeria. In nigeria, a taxpayer individual or corporate that is aggrieved by the assessment by a relevant tax authority rta may file an objection to the assessment issued by the. Taxation and fiscal regulations in nigeria introduction the nigerian tax system has undergone significant changes in recent times. Aug 09, 2016 taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. Taxation of partners and partnerships in nigeria by.
To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. Part three would consider the enforcement of the tax laws by the government, the. The most commonly used ones in nigeria are the proportional tax system and the progressive tax system. The sale of real estate properties is subject to a 10% tax on the gains. The separate taxation of income should be abolished in line with global best practice as many countries have even gone beyond this level to permit group consolidated tax returns. Obviously, everything about the nigerian taxation cannot be covered in this article, so try to click the links provided on certain text to get a wider scope and explanation.
Arekhandia, zebedee, legal framework for taxation in nigeria. Issues, challenges and prospects research project at university of ibadan, 2015. Double taxation relief between the federal republic of. In practice, the firs while assessing nonresident companies to tax, prescribes a deemed profit of 20% of turnover derived from nigeria assuming all tax deductible expenses and capital allowance of 80%. The personal income tax pit is the most common tax type in the country. The purpose was to simplify the process so tax collection in nigeria. Individuals resident in nigeria are to pay their taxes to the state\ tax office where they are resident on 1 st january of each year. During this time, the tax administrators then were the traditional chiefs tax agents. The nigerian tax regulation defines a nigerian resident as an individual who is living in nigeria for more than 6 months a year. Challenges with taxation system in nigeria the nigerian. Current law and practice of value added tax in nigeria abiola sanni, department of commercial and industrial law, university of lagos, nigeria abstract the value added tax vat was introduced in. Nonresident individuals, staff of the nigerian armed forces, officers of the nigeria foreign services, persons resident within the federal capital. Besides, nigerian system of taxation does not operate.
All the companies registered in nigeria, in other words, all the companies subject to companies income tax cit are also liable to educational taxedt. This, in relation to what they do, where they live or any other issues reconized by the law. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in. Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of. This form of tax is reported to be one of the most stable sources of revenue to governments however. Impact of taxation revenue on economic growth of nigeria. Educational tax is also prepared and submitted with annual self assessment of companies income tax to designated bank.
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