IN D E X

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LCCI BUSINESS YEAR BOOK 2012
urban area of the state,
x. Market taxes and levies where
state finance is involved.
Taxes and Levies Collectible by the
Local Governments
i. Shops and Kiosks rates
ii. Tenement rates
Iii. On and off liquor license fees
iv. Slaughter slab fees
v. Marriage, birth and death
registration fees
vi. Naming of streets registration fee,
excluding any street in the state
capital.
vii. Right occupancy fees on lands in
rural areas, excluding those
collectable by the Federal and
State.
Viii.Market taxes levies excluding any
market where state finance is
involved,
ix. Motor park levies
x. Domestic animal license fees
xi. Bicycle, truck, canoe, wheel barrow
and cart fees, other than
mechanically propelled truck.
xii. Cattle tax payable by cattle farmers
only
xiii. Merriment and road closure levy
xiv. Radio and television license fees
(other than radio and television
transmitter)
xv. Vehicle radio license fees (to be
imposed by the local government of
the state in which the car is
registered)
xvi. Wrong parking charges
xvii. Public convenience, sewage and
refuse disposal fees
Xviii. Customary burial ground permit
fees
xix. Religious places establishment
permit fee
xx. Signboard and advertisement
permit fee.
TRANSACTION TAXES
Withholding Tax Rates And Items
Chargeable
For both the individual and company,
there is a system of withholding tax in
lieu of the taxpayers making the final
tax returns. The system is to help the
taxpayers to fulfill their tax obligation
in a gradual process. It also helps the tax
office to build information bank to
combat tax evasion. The widening of
the tax base has been the harvest the
system since it was introduced in
Nigeria. The prevailing rates of
withholding tax for individuals and
companies are specified below:
Applicable rates
Types of payment
Individual Companies
Dividend, Interests Rent 10%
10%
Royalties 15% 15%
Commission, Consultancy
Technical & Management fee 5% 10%
Construction 5% 5%
Contract of Supplies 5% 5%
Director's fee 10% 10%
Capital Gains Tax
As from 1996, gains accruing to a
taxpayer on the disposal of a
"Chargeable asset: are subject to a
capital gains tax at 10 per cent
Chargeable assets are defined to include
all forms of property whether situated in
Nigeria or not including:
1. Options, debits and incorporeal
property generally;
2 Any currency other than Nigerian
currency;
3. Any form of property created by
the person disposing of it, or
otherwise coming to be owned
without being acquired (Shares and
stocks of every description with
effect from January 1998).
Value Added Tax (VAT)
Government has approved the
introduction with effect from January
1994 of a value-added tax to replace the
existing sales tax. It is tax of 5 per cent
for specified categories of taxable
goods and services.
Education Tax
Since 1995; an education tax of 2 per
cent of assessable profits is imposed on
all companies incorporated Nigeria. The
tax is a social obligation by all
companies to improve the standard of
education facilities in the country.
Stamp Duties
The administration of stamp duties is
jointly carried out by the state and
federal authorities, depending on the
type and nature of document. Stamp
duties are regarded as transactions
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taxes, and the rates chargeable would
depend on the classification of
document. Some documents attract
stamp duties on flat rate basis while
other are assessed ad valorem.
PERSONAL INCOME TAX
Basis of liability to personal income tax
A tax payer is liable to tax in Nigeria on
the aggregate amount of his incomes
from sources inside or outside Nigeria,
that is, on his global income. Under the
present law, income earned overseas by
a Nigeria or foreigner resident in
Nigeria would appear to be liable to
local taxation whether or not such
income is remitted into Nigeria, if for
example, the income can be related to
an employment exercise in Nigeria.
Residency test
From 1990, the 183 day test utilized to
establish the taxability of employment
income is to be calculated on a twelve
month period commencing in a calendar
year and ending within the same
calendar year or the following calendar
year.
Income from employment
As regards the taxation of income form
employment, the law is concerned with
the totality of the remuneration earnings
or benefits in cash kind obtained by an
employee. The particular nomenclature
or description of what an employee gets
is irrelevant. What is crucial is whether
or not such earnings or benefits beer mo
due to an employee as a result of his
employment. Consequently, any salary,
wages, fees, allowances of other gains
or profits from an employment,
including gratuities compensation,
bonuses, premiums, benefits or other
gains or prerequisites allowed, given or
granted by an employer to an employee
are taxable. However, to this general
rule, are a number of exceptions, in
cementing the income or loss of an
individual, certain outgoings and
expenses are specifically allowed.
Tax clearance certificate
The possession of a tax clearance
certificate (TCC) for three years
immediately preceding the current year
of assessment by individual and
companies is now a legal requirement
for most transactions with any ministry
department or agency of government.