An entity may be liable to pay the following taxes depending on the type of business an entity is engaged in:
• Companies Income Tax (CIT) – This tax is paid by entities that engage in trading activities for the purpose of making profit. Entities are liable to pay CIT whether they are resident or incorporated in Nigeria or not provided that such entities earn income from Nigeria. The tax rate is 30% on taxable or total profit of the company.
• Tertiary Education Tax (TET) – This tax is paid by entities resident or incorporated in Nigeria. Non-resident companies are exempted from payment of TET. The rate of tax is 2% on assessable profit of the company.
• Capital Gains Tax (WHT) – This tax is paid by entities and individuals that made gains from the disposal of chargeable assets (Land, building, personal chattels, etc.). The tax rate is 10% on the chargeable gain.
• Value Added Tax (VAT) – This tax is paid by entities that consume taxable or vatable supplies. VAT is ultimately paid by the final consumer of goods and services except where such goods or services are exempted from VAT. The tax rate is 5%.
• Personal Income Tax (PIT) – This tax is paid on income earned by individuals as self-employed or employees. Entities or employers of labour are required to pay Pay As You Earn (PAYE), being tax on salaries, wages and allowances paid to employees. The tax rate ranges between 7% and 24% depending on the income level of the individual or employee.
• Withholding Tax (WHT) – This tax is paid by entities being tax deducted at source from payments made to companies or individuals. Any company liable to pay companies income tax will suffer tax deduction at source. Individuals that engage in business using registered business name or enterprise will also suffer tax deduction at source. Withholding tax is an advance payment of companies’ income tax or personal income tax. The tax rate is either 5%, 7.5% or 10% depending on the nature of business and the status of the tax payer.