P8 lfn 2004 and related matters connected therewith. P8, lfn 2007 as amended the bill also seeks to provide clarity and efficiency in the administration of the individual income taxes. Personal income tax in nigeria free download as word doc. Pdf assessing the productivity of personal income tax system in. 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. Te tax law regulating taxation of individual is the income tax management act itma of 1961 which was replaced with the personal income tax decree pitd 104 of 1993. Pdf tax evasion and the law in nigeria researchgate. The rate of tax payable is not a fixed sum, depending on the gross income of the taxable employee, and the tax relief granted to him under personal income tax act pita. This act may be cited as the income tax amendment act 2014, and commences on the pt day of july 2014. Federal republic of nigeria official gazette tax matters nigeria.
Act 2015, which establishes a new tax authority for the federal capital. Capital gains tax act 1990 world intellectual property. The personal income tax act in this act referred to as the principal amendment of cap. Method of calculating relief to be allowed for double taxation. The charging section section 3 of the amended personal income tax act pita. The personal income tax act cap p8, lfn 2004, is now amended by the personal income tax amendment act, 2011.
Personal income tax in nigeria indirect tax progressive tax. These entities may be required to register for taxes and file income tax returns in nigeria. Highlights of the personal income tax amendment act 2011 gazzeted by the federal government of nigeria by oluseyi awe fca. The origin of the pit can be traced to the personal income tax act no 30 of 1996. The calculator is a very simple application that helps to calculate tax due in line with the nigerian income tax law. 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. Petroleum profits tax act an act to impose a tax upon profits from the winning of petroleum in nigeria, to provide for the assessment and collection thereof and for purposes connected therewith. The chartered institute of taxation of nigeria chartered.
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. How to calculate personal income tax in nigeria legit. The countrys legal system is based on the english legal tradition. 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. 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. Assets situated outside nigeria without prejudice to the foregoing provisions of this act, as respects any chargeable.
Corporate tax 2020 laws and regulations nigeria iclg. The bill also seeks to provide clarity and efficiency in the administration of the individual income taxes in nigeria. Printed and published by the federal government printer. Relevant tax authority may assess and charge tax on the turnover of a business, etc. Any person or individual, corporate sole, organizations who consumes or buys any taxable product or service will have to pay a tax levy known as value added tax vat in nigeria. Doc the effect of personal income tax amendment act on. Overview of personal income tax in nigeria explained oasdom. Companies resident in nigeria are assessable to tax on their worldwide income, whilst nonresident companies are subject to tax on profits accrued in or derived from nigeria, to the extent that the profits are not attributable to operations outside nigeria. 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.
The paper in discussing the subject has focused on the principal tax legislations in the country, namely, the personal income tax act. The act also supports governments intention to implement a shift in focus from direct to indirect taxation, by lowering the overall income tax. Personal income tax act is a topic everyone should know, whether you are an employee or an employer. The minimum pit rate is 1% if the annual income is less than. The income tax act 2004 world intellectual property. Taxation is a crucial part of the everyday life of every person.
Individuals are subject to tax under the personal income tax act as amended. Tax law amendments, income tax liabilities, tax compliance level, tax revenue introduction taxation is the price paid for government services. Personal income tax pit is a compulsory tax charged on the income earned by an individual. 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. 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. The purpose of this clause is to ensure that no taxable profits escaped the tax net of the board. Yes, general antiavoidance rules gaar in tax legislations in nigeria are contained specifically in section 17 of the personal income tax act 2004, section 22 of the companies income tax act 2004 and section 15 of the petroleum profits tax act 2004.
The finance act is a wholesale amendment of seven 7 different tax laws, to wit. Personal income tax amendment act, 2011 pitam is the principal act for the taxation of employees in nigeria. The personal income tax pit is the most common tax type in the country. Nigeria imposing tax on the income of persons other than companies, shall. It is payable by companies that are registered in nigeria and non resident entities carrying on business in nigeria. The nigeria income tax calculator nitc shows in one click a. Overview of nigerian income tax administration unit 1 meaning, types and functions of taxation in nigeria unit 2 tax administration instruments in nigeria unit 3 structure and procedures of. The personal income tax act is one of the three tax laws enacted by the national. This act shall apply to mainland tanzania as well as tanzania zanzibar. Types of organizations nigeria is a federal republic. In this act, unless the context requires otherwise adjusted assessment means an assessment adjusted in accordance. Fees, dues and allowances whenever paid for services. Restrictions on effect of the personal income tax act and other acts. Federation of nigeria, 2004 6 section 22 of the companies income tax act, cap c21.
In addition to the reliefs and allowances, personal income tax amendment act, 2004 as amended, also provides that certain deductions shall be tax exempted under the sixth. Assets situated outside nigeria without prejudice to the foregoing provisions of this act, as. Self employed individuals are expected to file annual returns annually and pay the taxes due. Overview of personal income tax in nigeria explained. A personal income tax act amendment bill 2018 was presented before the house of representatives for deliberation. 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. Reliefs and allowances are deductions available to individual taxpayer under the personal income tax act cap p8 lfn 2004 as amended to lighten his tax burden. An expatriate is now liable to tax in nigeria if his. Nigerias 2019 finance bill the bill was passed on 28 november 2019 by. The income tax act hereinafter referred to as the principal act is amended in section 2 cap. Companies income tax act cita 2004 was used as a tool. The new act supports the use of taxation as a tool for income redistribution and wealth creation by imposing lower tax burden on low income earners and higher tax burden on the higher income earners.
Tax provisions in finance act, 2020 kpmg united states. 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. If your income is larger than that, here are the rates you need to know about for your calculations. 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. This, in relation to what they do, where they live or any other issues reconized by the law. A thesis on personal income tax in nigeria written by osho olumide t. Companies income tax act, petroleum profit tax act, personal income tax act, value added tax act, customs and. 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. This follows many years of agitation for the personal income tax law in nigeria to be brought in line with present day economic realities. Many employers are yet to commence implementation while some. Company income tax cit the principal law is the companies income tax act cita which imposes cit on profits accruing in, derived from, brought into or received in nigeria.
Get wellresearched legal information in quick, clear, and concise words for issues concerning nigerian law. Double taxation arrangements with other territories. P8, lfn 2007 as amended the bill also seeks to provide clarity and efficiency in the administration of the individual income taxes in nigeria. 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. Assessing the productivity of personal income tax system in nigeria. This act may be cited as the income tax act, 2004, and shall come into operation on the 1st july, 2004. The personal income tax act, 2004 is now amended by the personal income tax amendment act, 2011. Companies income tax act an act to consolidate the provisions of the companies income tax act 1961 and to make other provisions relating thereto. Personal income tax in nigeria is a tax levied on all incomes of an individual employed by a business or organization. This follows many years of agitation for the personal income tax law in nigeria to be brought in line with presentday economic realities. 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.
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