Nigeria: Administration Of Taxes In Nigeria

Last Updated: 16 November 2018
Article by Strachan Partners

Tax administration in Nigeria is vested in the three tiers of government.   Taxes payable to the Federal Government are administered by the Federal Inland Revenue Service (FIRS), while those payable to the State Governments are administered by the State Boards of Internal Revenue (SBIRs) of the thirty- six states of the Federation.  Local Governments also administer rates and levies collectible by them through their various councils.

There are a good number of taxes payable by persons doing business in Nigeria. These include companies' income tax, personal income tax, capital gains tax, value-added tax, education tax, technology tax, stamp duties, and withholding tax.  Penalties are imposed for failure to pay taxes when due.

A Tax Clearance Certificate is issued on demand when taxes due have been fully paid for three years immediately preceding the current year of assessment. A Tax Clearance Certificate is usually required for official transactions with Government Ministries, Departments, and Agencies (MDAs).

1. Table of Taxes Applicable to Companies in Nigeria

Key taxes chargeable in Nigeria, their application and rates:





Companies Income Tax (CIT)

30 % of total profits of a company less allowable deductions

Companies Income Tax Act

Capital Gains Tax (CGT)


10% of gains realized upon disposal of a chargeable  asset

Capital Gains Tax Act


Value Added Tax (VAT)

5% on the supply of goods and services

Value Added Tax Act

Education Tax

2% of assessable profits of a company

Education Tax Act

Personal Income Tax



First N 300,000.00

7 %

Next N 500,000.00

15 %

Next N 500,000.00

19 %

Next N 1,600,000.00

21 %

Above N 3,200,000.00

24 %

3.    Stamp Duties

Stamp duty is a tax on documents, which is payable by virtue of the Stamp Duties Act, (Chapter S8), LFN 2004 (the "Stamp Duties Act"). The rate of stamp duties depends on the type of document and the value of the transaction evidenced by such a document. When a document is executed between a company and an individual, the stamp duty is payable to the Federal Inland Revenue Service, whereas, where the document is executed solely by individuals, the State Board of Internal Revenue is the appropriate collecting authority.   Some examples of stamp duty levies are as follows:

Taxable Item

Rate of Tax

Lease Agreements

16 kobo for every N 200 (0.08 %)


75 kobo for every N 200 (0.375%)

Incorporation of Limited Liability Company

0.75% of authorized share capital

4.    Withholding Tax

Nigeria's tax laws provide for the withholding of tax from payments due to any person or company (whether or not resident in Nigeria) that provides goods or services to another person or company in Nigeria. Withholding tax is not a separate category of tax but simply represents an advance payment of income tax.

Types of Payments

Rate of Tax for Companies (%)

Rate of Tax for Individuals (%)

Dividends, interests and rents






Building and construction



All types of contracts and agency arrangements, other than sales in the ordinary course of business



Consultancy and professional services



Management services



Technical services






Directors' fees



5.    Customs and Excise Duty

The Customs and Excise Management Act ("CEMA") Chapter C44 LFN 2004 imposes customs duty on specified imported goods and empowers the Customs and Excise Management Authority to restrict the movement of goods into and out of Nigeria.   Any company operating in Nigeria is liable under CEMA to pay customs duty on all goods which it imports into Nigeria for its operations, for hiring or for sale. The rates range from 5% to 30%, depending on the goods imported.

6.     Information Technology Development Levy

The National Information Technology Development Agency ("NITDA") Act, 2007 imposes on telecommunication companies, cyber companies and internet service providers, pensions managers, banks, insurance companies and other financial institutions, which have an annual turnover of N100,000,000 (One Hundred Million Naira) and above, a levy amounting to 1% of their profits before tax. The NITDA Act also empowers the Federal Inland Revenue Service (the "FIRS") to assess and collect the levy and where a company fails to pay the levy within 60 days of the being served with notice of an assessment, a penalty of 2% will be added to the levy.   In addition, failure to pay the levy will attract a fine of not less than N1, 000,000 (One Million Naira) on conviction.

7.    Contributions

Although not taxes in the proper sense, below are certain categories of mandatory contributions that would apply to a corporate employer/investor, if it were to set up a local entity in Nigeria.

a.    Pension Contributions: The Pension Reform Act 2014 ("PRA") introduced a pension scheme whereby both employer and employee are required to make a minimum of 10% and 8 % respectively of the employee's monthly emoluments to a Pension Fund Administrator as a contribution towards the employee's pension upon retirement. Emoluments include all items that are paid on a monthly basis (in addition to basic, housing and transport). The scheme is compulsory for all private sector employers that employ fifteen or more employees. The Act stipulates that where an employer chooses to bear full responsibility, the rate of employer's contribution is a minimum of twenty percent.

b.    Employees Compensation Deductions:  The Employees Compensation Act 2010 (the "ECA"), which was signed into law on 17th December, 2010, imposes an obligation on employers in both the private and public sector to deduct 1% from the monthly salary of their employees, and remit the deduction to an Employees Compensation Fund, established under the ECA for the compensation of any death, injury, disease and disability of an employee arising out of or in the course of employment. The ECA gives the Nigeria Social Insurance Trust Fund Management Board (the "NSITF Board") the power to implement the fund.

c.    National Housing Fund Deductions: The National Housing Fund Act (Chapter N45), LFN 2004 requires an employer to deduct an amount equal to 2.5% (two and half percent) of the monthly salary of any employee whose annual salary is up to three thousand Naira (N3, 000) and to remit the amount deducted to the National Housing Fund as the employee's contribution to the National Housing Fund. The Act makes it an offence for an employer to fail to remit the appropriate amount as prescribed. It is also an offence not to comply with the Act and an employer will be liable upon conviction to pay a fine of fifty thousand Naira (N50, 000).

d.    Industrial Training Fund Deductions: Every Nigerian company that employs five or more employees or, having less than five employees but with a turnover of N50 million and above per annum, is required by the Industrial Training Fund (Amendment) Act, 2011, to contribute 1% of its total annual payroll to the Industrial Training Fund not later than 1st April of every year.  Section 16 of the Act defines "Payroll" to mean the sum total of all basic pay allowances and other entitlements payable within and outside Nigeria to any employee in an establishment, public or private.

8.    Land Use Charge

Land Use Charge is payable on real property (residential and commercial) in Lagos State. The Land Use Charge Law of Lagos State 2018 consolidates all property and land-based rates/charges payable in Lagos State (i.e. the Land Rate, Tenement Rate, and the Neighbourhood Improvement Charge) into a single property charge. Public cemeteries; private and public libraries; and properties owned by religious bodies and used as a place of worship or for religious education are properties exempt from the payment of Land Use Charge.

The Income Tax (Country by Country Reporting) Regulations 2018

Multinational Enterprises (MNEs) with a total group consolidated revenue of not less than N160 billion, who have either their ultimate parent entity or a constituent entity resident in Nigeria for tax purposes will now be required to file a country by country report to the Federal Inland Revenue Service with respect to their reporting accounting year. The report shall contain:

1.    Aggregate information relating to the amount of revenue, profit or loss before income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents with regard to each jurisdiction in which the MNE group operates; and

2.    An identification of each constituent entity of the MNE group setting out the jurisdiction of tax residence of each constituent entity and where different from such jurisdiction of tax residence, jurisdiction under the laws of which such constituent entity is organized, and the nature of the main business activity or activities of such constituent entity.

For purposes of combating Base Erosion and Profit Shifting (BEPS), these reports will be exchanged with tax authorities in other jurisdictions where the MNE group has operations, under a Qualifying Competent Authority Agreement (QCAA) and an International Agreement permitting such exchange.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Banwo & Ighodalo
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Banwo & Ighodalo
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions