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Back To Top 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 1251 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.
Back To Top LCCI BUSINESS YEAR BOOK 2012 COMPANIES INCOME TAX 4.1 Basis of liability to companies income tax Tax is payable for each year of assessment on the profits of any company accruing in, derived form, brought into or received in Nigerian respect of all kinds of income; that is, income derived from a trade, business or investments. Thus, the tax holiday of companies in Nigeria is primarily on species of income having their source or deemed sourced within the country as well as on remittances. From 1996, the rate of companies income tax in Nigeria is 30 per cent. 4.2 Dividends and other company distribution A company paying dividends to its shareholders is first of all obliged to pay tax on its profits at the companies tax Only business people with knowledge, information and understanding will be the ones able to prosper in the emerging global world that has reduced the geographical boundary lines between nations to a very thin are. This information will briefly outline all the dollar-earning products that can be produced in large quantities in Nigeria. Product: Ginger Destination: Germany, Holland, Finland Product: Chillies Destination: Germany, Finland, USA Product: Benniseed Destination: Netherlands, Switzerland Product: Kenaf-UK, USA Product: Sheanut Destination: UK, USA Product: Cashew nut Destination: Netherlands Product: Cotton Lint Destination: UK, Belgium, Sweden, Netherlands Product: Cotton Seed Destination: Taiwan, Yugoslavia, Tunisia Product: Gam Arabic Destination: Taiwan Yugoslavia. rate before paying dividends to its shareholders. As a general rule, any dividend or other company distribution whether or not of a capital nature made by a Nigerian company is liable to a withholding tax at source of 10 percent- However, any dividend paid by a company in the form of bonus/scrip shares issue is not taxable in the hands of individual shareholders and is excluded from the profile of any other company that is n shareholder in such company. DOUBLE TAXATION AGREEMENTS In the last few years, double taxation agreements have been entered into by Nigeria with a number of countries. These agreements are entered into with a view to affording relief from double taxation in relation to taxes imposed on EXPORT POTENTIALS FOR INVESTORS Tunisia Product: Ceramic Destination: USA. India Product: Alum Destination: Sweden Product: Galvanized Pipes ECOWAS market Product: Industrial Wires & Ropes Destination: ECOWAS market Product: PVC pipe and fittings Destination: Dubai Product: Paper & Paper Products Destination: CoteD'Ovpire Product: Bitumen Destination: Mail Product: Building Materials Destination: ECOWAS Market, Malta Product: Towel & Napkins Destination: Senegal, Guinea Product: Electrical Car Components and Spare Parts Destination: Ghana, Namibia. Mali Tchad, UK Product: Blankets and Upholstery Destination: Burkina Faso, Cameroon and Chad Product: Dry Cell Batteries Destination: European Union Product: Furniture Cement Klinker Destination: Mali, Niger Product: Foam Products Destination: ECOWAS Product: Rug and Carpets 1252 profit taxable in Nigeria and any taxes of similar character imposed by the laws of the country concerned. The method of relief from double taxation under Nigeria's tax treaties is by way of a "tax credit". The mechanism of tax credit is such that the tax payable in Nigeria on profits of a Nigerian company being remitted into the country is reduced by the amount of "foreign tax" paid abroad, the converse position is equally true where an overseas company receives profits from Nigeria that, have already been taxed in Nigeria. Product: Plastic Products Destination: ECOWAS Product: Tea Destination: Europe and Bangladesh Product: Cotton Yarn Destination: Europe and USA Product: Confectioneries Destination: Niger, Cameroon, Chad Congo, Cameron, Benin Republic Product: Insecticides Destination: Congo, Cameroon, Benin Republic Product: Tropical Fruit Juices Destination: Sweden Product: Leather & Leather Products Destination: Belgium, Holland Product: Grinding Machines Destination: Benin Republic, Niger, Chad Product: Tarpaulin Products Destination: Tunisia and Niger Product: Electrical Meters and Circuit Breakers Destination: Mali, Ghana, Senegal, Togo, Cote D'lvoire Product: Furniture Destination: European Union Product: Nail and Wire Products Destination: Zaire (Dr of Congo) and Congo Product: Biscuits & Confectionery Destination: Germany, UK Product: Vegetable Oil
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Page 1325 and 1326: Back To Top SECTION THREE: VITAL TR
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Page 1363: Back To Top LCCI BUSINESS YEAR BOOK
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