7 Payable Taxes You Should Beware of As A Business Owner

Have You Been Paying Your Business Taxes Correctly?

As a business just starting up, your aim for the next few years is usually on how to
make a profit and get wider coverage in your industry. In Nigeria, most small
business owners do not understand that upon registration with the Corporate Affairs
Commission they are to remit a certain amount to the government for profit made
as if one is paying income tax from working for another company.       

According to a conducted research, over 70% of small businesses in Nigeria are not
paying their regular taxes to the government I hope your business is not among
that number of businesses??

Below are the different taxes which are relevant to all businesses in Nigeria.

Companies Income Tax

This is a tax chargeable on all companies (other than Companies engaged in

petroleum operations) registered in Nigeria. It is an annual tax on the profits of
registered companies, which profits must accrue in, be derived from, brought into,
or received in Nigeria. The good news is for companies whose annual gross
turnover of not more than N25 million would be completely exempted from paying
CIT subject to timely filing of the company’s income tax returns.

Personal Income Tax

This is a tax payable by all individuals and registered businesses and partnerships
except those registered under Part A of Companies and Allied Matters Act 1990
(incorporated companies). The State Inland Revenue Service administers the tax.
This tax is however relevant to your business even if you are a registered company
because one of the obligations of companies is to collect what is known as Pay as
You Earn (PAYE) from their employees’ salaries and then remit to the state tax
body.

Value Added Tax

This is a tax payable by the consumer at 7.5%. It is a tax imposed on the supply of
goods and services. Although companies do not pay VAT, they are mandated by the
government to collect the VAT from consumers and then remit to the relevant tax
body. So, in essence, the business is an agent for the government for the purposes
of collecting VAT.

Withholding Tax

This is an advanced payment of income tax deducted at source of specific

transactions. The recipient of the income is entitled to utilize the withheld tax credit
note or receipt, against the final tax obligations. For instance, when paying
dividends withholding tax is charged on the amount.

Education Tax

All registered companies in Nigeria are required to pay a percentage of their

assessable profit into an Education Tax Fund. The tax is charged at 2%. It is a tax
chargeable on all companies registered in Nigeria at chargeable profits as a
contribution to the Education Tax Fund.

Capital Gains Tax

Capital gains are the profits that an investor realizes when he or she sells the
capital asset for a price that is higher than the purchase price. Capital gains taxes
are only triggered when an asset is realized/sold. This is a 10% tax imposed on
Capital Gains arising from a sale, exchange or other disposition of properties known
as chargeable assets.

Business Premises Tax

In Lagos state, business owners are charged a fee for their business premises,
failure to pay might lead to the premises being locked up.

Failure to pay tax as at when due means that your business is liable to pay
compound interest which will be way more than the initial amount due.  

A legal expert will help you avoid tax penalties. Let Proville take off the task of filing
your taxes.

You can book a free consultation here

If you would like to find out more about our consultation, contact us today via
info@proville.ng and +234 (0) 906 000 6542.