The new Nigeria Tax Law is now in effect, and many business owners are still confused about which taxes apply to them.
Let us quickly look at the 8 key taxes every business owner in Nigeria must know, so you can avoid penalties, stay compliant, and run your business with peace of mind.
WHAT CHANGED IN THE NEW TAX LAW
First, let me quickly explain what has changed.
The new tax law is focused on wider compliance, digital reporting, and proper tax identification.
Government wants every business — small, medium, or large — to understand what they should pay and where to pay it.
Now, let’s look at the taxes you must know.
1) Companies Income Tax, also known as CIT.
This tax applies to registered companies, meaning businesses registered with the Corporate Affairs Commission as limited liability companies.
Companies Income Tax is paid on profit, not turnover.
If your company does not make profit, you do not pay Companies Income Tax.
Small companies with turnover of N100m or less with fixed assets of N250m or less are exempted. Small companies excludes businesses that offer professional services.
2) Personal Income Tax and PAYE.
If you are a sole proprietor, freelancer, or partner, you pay Personal Income Tax to your State Internal Revenue Service.
If you have employees, you must deduct PAYE from their salaries every month and remit it to the state government.
Failure to remit PAYE can attract penalties and interest.
3) Value Added Tax, also known as VAT.
VAT is a consumption tax, currently charged at 7.5 percent.
If you sell goods or provide services, you are expected to charge VAT, collect it from customers, and remit it to FIRS.
Remember, VAT is not your money.
You are only collecting it on behalf of the government.
4) Withholding Tax, Also known as WHT.
Withholding Tax applies when you make payments such as rent, professional fees, consultancy fees, interest, or dividends.
You deduct tax at source and remit it to the relevant tax authority.
This tax is not a final tax — it is an advance payment that can be used as credit later.
5) Capital Gains Tax, also know as CGT.
This tax applies when your business sells an asset and makes profit, such as land, buildings, or shares.
The gain made from the sale is what is taxed, not the total selling price.
6) Stamp Duties.
Stamp duty is paid on legal documents and agreements, such as contracts, leases, and share transfers.
Under the new system, both physical and electronic documents are now subject to stamp duties.
7) Development Levy.
This is a levy charged on assessable profits of medium and large companies.
It replaces multiple older levies and simplifies compliance under the new tax structure.
8) State and Local Government taxes.
These include Business Premises Levy, signage fees, and local council levies.
If your business has a physical location, you must comply with these charges to avoid harassment or closure.
Conclusion
In summary, understanding your tax obligations is not optional — it is a requirement for business survival in Nigeria.
For professional tax, accounting, and compliance support, contact Calvary Digital and Associate.