Paying Tax

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In Nigeria taxation is enforced by the three tiers of Government, namely. Federal, State, and Local Government with each having its sphere clearly spelt out in the Taxes and Levies (approved list for Collection) Decree, 1998.

The Federal Inland Revenue Service (FIRS)

FIRS's mission is to operate an efficient and transparent tax system that optimises tax revenue collection and voluntary compliance.

The service also has a vision to deliver quality service to taxpayers in partnership with other stakeholders and make taxation the pivot of national development.

However, one of the biggest problems facing Nigeria's government is to persuade more people to pay their taxes in a country where the people feel that majority of public money has been misused by public officials.

The main reasons cited by Nigerians reluctant to pay taxes are the fact that the huge oil revenue the country makes everyday is not utilised. Also top on the list are the lack of infrastructure, such as power and water. People with means end up buying their own water, getting generators to guarantee constant electricity.

With the exception of those who work for the government and blue chip companies - where tax is deducted at source - it has been an uphill task to convince people to make honest tax returns.

At an interview with the BBC, Ifueko Omoigui-Okauru, chairman of the Federal Inland Revenue Service (FIRS) states, "Most Nigerians do not pay, including the public servants. Let me correct an impression. There is no doubt, as salary earners, it is easier to capture your tax from salary. There is no doubt about it. Now, that cuts across whether you are a civil servant, or a salary earner within a private enterprise. It is a lot easier to deduct at source through the Pay-As-You -Earn mechanism.

But I accept that the government also needs to win the trust and confidence of the people if we are to get them to pay taxes.

If the hard-earned money they pay to the government's coffers is being stolen or misused, they will do everything to evade tax."

However, she adds "The payment of tax is a civic duty that we must all meet, as long as we live in this society."

Types of tax payable in Nigeria

• Companies Income Tax
• Petroleum Profits Tax
• Capital Gains Tax
• Value Added Tax
• Personal Income Tax
• Education Tax
• Stamp Duties
• Information Technology Development Levy

Tax Payer Categories

• Foreign Investors
• Agents/ Consultants
• Individuals
• Employer

Further detailed information about tax types and tax payers can be found on the FIRS website:
http://www.firs.gov.ng

Tax Clearance Certificates

A Tax Clearance Certificate is a document certifying that all taxes due for the three preceding years of assessment have been settled in full.

For Businesses or companies wanting to carry out any transactions with any Nigerian Ministry, department, or government agency, it is important to have a current Tax Clearance Certificate, as the transaction cannot be concluded without evidence of tax clearance.