The purpose of this clause is to ensure that no taxable profits escaped the tax net of the board. Federal republic of nigeria official gazette tax matters nigeria. The personal income tax act in this act referred to as the principal amendment. The origin of the pit can be traced to the personal income tax act no 30 of 1996.
The tax is governed by the petroleum profits tax act, cap p lfn 2004 as amended. The following are the existing tax legislation in nigeria, as at 2016. Charge of tax on interest relating to foreign and agricultural loans and certain reliefs. Find out how to calculate personal income tax in nigeria today. The personal income tax act, 2004 is now amended by the personal income tax amendment act, 2011. These entities may be required to register for taxes and file income tax returns in nigeria. There is however no similar provision with respect to any unutilised wht credit notes for individuals under the personal income tax regime.
The principal law is the companies income tax act cita which imposes cit on. Deletion of provisions that grant certain personal reliefs it is unclear if the amendment seeks to eliminate claim of child benefit or other surrounding provisions. Deletion of provisions that grant certain personal. This page provides the latest reported value for nigeria personal income tax rate plus previous releases, historical high and low, shortterm forecast and. The income tax act hereinafter referred to as the principal act is amended in section 2 cap. This bill is to among other things amend the following tax provisions and make them more responsive to the tax reform policies of the federal government and enhance their implementation and effectiveness. Nigeria updated october 2017 nigeria transfer pricing country profile updated october 2017 summary reference the arms length principle 1 does your domestic legislation or regulation make reference. Module 2 taxation of income and taxation of capital unit 1 personal income tax in nigeria unit 2 law and practice of income tax relating to individuals unit 3. Self employed individuals are expected to file annual returns annually and pay the taxes due. Printed and published by the federal government printer. This is the portion of your salary exempteddeductible. In nigeria, the main factor for determination of tax residence of nonnationals is physical presence.
By taiwo oyedele the personal income tax amendment act 2011 was officially gazetted on tuesday 31 january 2012 with an effective date of 14 june 2011. The personal income taxamendent act 2011 amended personal income tax cap. Itll seek to amend the personal income tax act or the principal act by providing that pit deduction on a workers income should be remitted to the tax authority of the state where the individual works. Fourth schedule warrant and authority to levy by distress under the companies income tax act fifth schedule funds, bodies and institutions in nigeria to which donations may be made under section 25 of this act sixth schedule warrant and authority to enter premises, offices, etc.
C21, laws of the federation of nigeria, 2004 as amended to date. Hence, individuals are required to produce their tax identification numbers tins before they can operate new or existing banking accounts in nigeria. It provides, among others, that the gain or profit from an employment shall be deemed to be derived. Personal income tax act pita 1993, which repealed the income tax management act itma 1961 and the income tax armed forces and other persons special provisions act 1972. The first major amendment to the income tax law since 1979. Nigeria personal income tax rate 20112018 data 20192020. Basically, pit is deducted as a result of trade, business, profession, vocation for a period of time and. Tax credit allowable against tax payable on income derived from outside nigeria. Download companies income tax act, lfn 2004 eclinicq. Personal income tax pit is a tax levied on individuals including employees. Personal income tax amendment act, 2011 pitam is the principal act for the taxation of employees in nigeria. Any amount deemed to be income under a provision of the act or, with respect to any benefit arising from a pension or provident fund of the personal income act vi.
Any amount deemed to be income under a provision of the act or, with respect to any benefit arising from. This publication is a summary of the major tax laws in nigeria, prepared for. Many employers are yet to commence implementation while some. A personal income tax act amendment bill 2018 was presented before the house of representatives for deliberation. It is a method of collecting personal income tax from employees salaries and wages through deduction at source by an employer as provided by the relevant sections of the personal income tax act. Taken on its own this would appear to be the real test of deductibility of expenses in nigeria in the sense that once it is shown that. With the help of our article, you will be able to finally figure out how it all. The personal income tax act is one of the three tax laws enacted by the national. The personal income tax pit act, provides the conditions for deeming income taxable in nigeria. Section 3 of personal income tax amendment act 2011 pitam empowers states tax authority to impose and. General implications of the finance act on the nigerian. Federation of nigeria, 2004 6 section 22 of the companies income tax act, cap c21. Nigeria with a view to affording relief from double. The applicable income tax rate depends on income level and corresponding tax rate for each income bracket.
You can read the full provisions of the law here personal income tax act 1993 this act was amended in 2011 by the personal income tax amendment act 2011. Sep 05, 2018 personal income tax amendment act, 2011 pitam is the principal act for the taxation of employees in nigeria. Personal income tax in nigeria personal income tax is a direct tax on the income from all sources of an individual adult, communities and families, and on executors and trustees. It provides, among others, that the gain or profit from an employment shall be deemed to be derived from nigeria if the duties of the employment are wholly or partly performed in nigeria or the employer is in nigeria, unless the duties of the employment are wholly performed, and the remuneration. The personal income tax rate in nigeria stands at 24 percent. No fewer than 41 clauses, including amendments to cap. Fees, dues and allowances whenever paid for services. Personal income tax is paid by individuals who are either employed or running their own businesses under a business name or partnership and communities, families and any trustee or executor under any settlement, trust or estate deemed to be resident in the state at a particular year. Also, the finance bill 2019 amends sections 33, 49, and 58 of the personal income tax act and ensure that immediately it becomes operational, those without the tax identification numbers tin. Nigeria personal income tax rate 20112018 data 2019. An expatriate is now liable to tax in nigeria if his employment costs are recharged to a nigerian company or borne by a fixed base. It provides among other things for taxes and levies. Personal income tax the bill amends sections 33, 49, and 58 of the personal income tax act. The personal income tax act in this act referred to as the principal amendment of cap.
Fourth schedule warrant and authority to levy by distress under the companies income tax act fifth schedule funds, bodies and institutions in nigeria to which donations may be made under section 25. Tax provisions in finance act, 2020 kpmg united states. Personal income tax in nigeria is a tax levied on all incomes of an individual employed by a business or organization. What personal income tax should mean to me andersen tax nigeria. This follows many years of agitation for the personal income tax law in nigeria to be brought in. The bill also seeks to provide clarity and efficiency in the administration of the individual income taxes in nigeria. This act shall apply to mainland tanzania as well as tanzania zanzibar. Nigerias 2019 finance bill the bill was passed on 28 november 2019 by. Personal income tax is paid by individuals who are either employed or running their own businesses under a business name or partnership and communities, families and any trustee or executor under. This act may be cited as the income tax amendment act 2014, and commences on the pt day of july 2014. This follows many years of agitation for the personal income tax law in nigeria to be brought in line with presentday economic realities. P8, lfn 2007 as amended the bill also seeks to provide clarity and efficiency in the administration of the individual income taxes in nigeria.
Personal income tax is calculated after some reliefs have been given and or certain expenses exempted according to a graduated rate specifies by pit. The personal income tax act was amended in june, 2011, to address some of the issues with the previous act, especially as it affects deductions and reliefs. Provided that where any other income accrues to a person serving as other rank not bein g income by way of personal emoluments. P8 lfn 2004 and related matters connected therewith. Nigeria imposing tax on the income of persons other than companies, shall. By yomi olugbenro taxpayers in nigeria heaved a sigh of relief when the news of the amendment to the personal income tax act pita spread across the length and breadth of the country. The calculator is a very simple application that helps to calculate tax due in line with the nigerian income tax law. Tax law amendments, income tax liabilities, tax compliance level, tax revenue introduction taxation is the price paid for government services. Thank you for reading this post, if you have found it useful please share with your network using one of the share buttons below. Introduction the president of the federal republic of nigeria in line with national tax policy signed into law the bill for an act to amend the provisions of the personal. Introduction the president of the federal republic of nigeria in line with national tax policy signed into law the bill for an act to amend the provisions of the personal income tax act, cap. The nigeria income tax calculator nitc shows in one click a summary of incomes. The nigeria income tax calculator nitc shows in one click a summary of incomes, allowances, deductions and net income both monthly and annual. The companies income tax amendment act, 2007 now allows all unutilised withholding tax credits to be setoff against the future tax obligations of the beneficiary of such withheld taxed income.
Companies income tax act arrangement of sections part i repealed part 11 imposition of tax and profits chargeable section 9. Click here to download companies income tax act, lfn 2004. Self employed individuals are expected to file annual returns annually and pay the taxes. How to calculate personal income tax in nigeria legit. By taiwo oyedele the personal income tax amendment act 2011 was officially gazetted on tuesday 31.
This act may be cited as the income tax act, 2004, and shall come into operation on the 1st july, 2004. Basically, pit is deducted as a result of trade, business, profession, vocation for a period of time and applies to personal emoluments such as wages or salaries, gratuity, superannuation or pension schemes as well as any other income derived by reason of employment. The history of taxation in nigeria started with personal income tax in 1904, when lord lugard introduced. Finally, the finance act amends several onerous tax provisions which have impeded investment in nigeria, such as the complex insurance tax rules and the excess and interim dividend tax rules that. Income of an individual derived from sources such as employment, business, asset, investments etc. Jan 30, 2018 personal income tax what you need to know. The finance act, 2020 introduces changes to various tax regimes in.