1. Personal Income Tax (PIT)
Key Highlights
- Exempt Annual Income: ≤ ₦800,000
- Rent Relief: Up to ₦200,000
Income & Exemptions
- Tax-Exempt Threshold: Individuals earning ₦800,000 or less per annum are exempt from paying income tax.
- Compensation Exemptions: Compensation for loss of employment or injury is exempt up to ₦50 million.
Reliefs & Deductions
- Rent Relief: Deduction of up to ₦200,000 per annum.
- Other Reliefs: Life insurance premiums, voluntary pension contributions, and specific reliefs for disabled persons are deductible.
Filing
Salaried workers with an annual income of less than ₦5 million are eligible for simplified filing procedures.
2. Corporate Income Tax (CIT)
Exemption Status (Small Company)
Companies with Turnover ≤ ₦100 million AND Assets ≤ ₦250 million qualify as "Small Companies" and are exempt from certain taxes.
Tax Rates & Levies
- Standard CIT Rate: Typically 25% of assessable profit (profit before depreciation and tax).
- Development Levy: 4% of assessable profits for non-exempt companies.
- Capital Gains Tax (CGT): 30% for companies.
- Minimum Effective Tax Rate (ETR): At least 15% required for large multinationals (Turnover ≥ ₦50bn).
Incentives & Deductions
- Economic Development Incentive: 5% tax credit per annum for 5 years on qualifying capital expenditures.
- R&D Deduction: Up to 5% of the company’s turnover may be deductible for Research & Development.
Specific Surcharges
- Fossil Fuel Surcharge: 5% levy on petroleum-related products.
- Stamp Duty: Applicable on long-term loan capital (tenure > 12 months).
- Payroll Contributions:
- Pension: Minimum 18% (10% employer / 8% employee).
- Employee Compensation Scheme: 1% of payroll.
- Industrial Training Fund (ITF): 1% of payroll (for applicable companies).
3. Value Added Tax (VAT)
7.5%
Standard VAT Rate
Applicable to all non-exempt goods and services.
- Input VAT Claims: Now recoverable on all inputs, including capital items (assets).
- Zero-Rated/Exempt Items: Basic food items, educational materials, electricity, medical goods, and exports.
- Digital Service VAT: VAT now explicitly applies to streaming services, SaaS, and digital platforms.
- Filing: Monthly e-invoicing and VAT returns are mandatory via the Electronic Fiscal System.