Taxation In Nigeria and History of Taxation In Nigeria
A tax in Nigeria is a compulsory levy imposed by the Federal Government of Nigeria on individuals and corporate entities in respective of return of service expected from the government. In Nigeria, nobody can dispute the fact that though this taxes are been collected, they are not been channelled to the right directions. This not withstanding, taxation in Nigeria still exist and that is what will be discussed in this article.
History taxation in Nigeria dates back to even when the name Nigeria wasn’t coined. During this time, the tax administrators then were the traditional chiefs tax agents. At this time, it most farm produce and other primary goods. The modern taxing system by the Federal Government of Nigeria under it taxation arm; Federal Board of Inland Revenue (FBIR) could be traced back to the year 1939 when the Companies Income Tax Ordinance was created.
history of taxation in nigeria
After the creation of this first taxation body, it had always change, in response to the changes made to the tax law which are caused by several other factors. The Nigerian society is not a static one and as it experience changes, the Nigerian Federal Government need to adjust it tax law to enable it meet up with the nation’s need. In 1978, the Task Force on Tax Administration under the leadership of Alhaji Shehu Musa formed the Federal Inland Revenue Service (FIRS) as the operational arm of Federal Board of Inland Revenue (FBIR).
ADMINISTRATION OF TAXES IN NIGERIA
Taxes in Nigeria can be levied on citizens by tax authorities depending on the type of tax involved. The 3 authorities that have this power are;
- Federal Board of Inland Revenue
- States Inland Revenue Boards and
- Local Government Revenue authorities
According to the laws, all incorporated companies shall register with Federal Board of Inland Revenue while unincorporated entities and individuals including body of individuals shall register with State Inland Revenue Boards. Incorporated companies are expected to register within 18 months of incorporation or 6 month after the end of its first accounting period while the unincorporated companies and body of individuals are expected to register with the relevant tax authority within 3 months of the year.
TAX RATE IN NIGERIA
Nigerian Companies pay 30 percent of their worldwide profit while foreign companies pay 30 percent of only the profit made in Nigeria. The educational charge is pegged at 2 percent of the assessable profit while the a 10 percent withholding tax is deducted from dividend payments to companies and individuals.
Nigerians under the law are to pay 25% of their total worldwide income while foreign individuals are to pay 25% of profit made in Nigeria only.
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