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Direct Assessment Tax Administration

Direct Assessment Tax Administration

Direct Assessment Tax Administration

It is a system through which self-employed persons are assessed and charged to pay tax based on their personal income generated. The self-employed include but not limited to: Professionals (Lawyers, Architects. Accountants, Surveyors, Consultants etc). Contractors, Politicians, Mechanics, Traders, Welders, Vulcanizes, Farmers, Carpenters, Tailors, Butchers, Hairs Dressers, Bricklayers, Dyers, Traders, Artisans, Musicians, Comedians, Athletes  and all residents in a particular State who have any source of income.

The Personal Income Tax Act (Cap P8 LFN 2004) as Amended in 2011 imposed tax on individuals who are either in employment or are running their own small businesses, under a Business Name or Partnership or as a Director in an Organisation.


The Acts empowered the Federal and States Tax Agency/Boards to identify persons living in or earning income from Nigeria who are required to pay tax, and to assess incomes and tax their incomes using specified guidelines and rules. This law also guides the tax official in identifying the residence of potential taxpayers, as well as the sources and origins of their incomes for the purpose of taxing the income.

Direct Assessment -SOW

Direct Assessment – SOW

Though collection of Personal Income Tax is a Federal responsibility, this tax is generally collected by State governments from those that are resident in their various States, regardless of whether they are Federal, State, Local Government, or Private Sector workers. The Federal Inland Revenue Service, also collects this tax but, only from residents of the Federal Capital Territory as well as what may be described as highly mobile Federal Workers, Staff of the Ministry of Foreign Affairs, other Nigerians and foreigners outside the country, but earning income in Nigeria (non-residents), Expatriate Workers resident in Nigeria, Police Officers, and Military Officers. Civilians working in Police and Military formations, however, pay to their respective States of residence.


Under the Act, Personal Income Tax for Individuals are divided into 2 types:

  1. Pay As You Earn (PAYE): This is imposed on individuals, who are in employment and is expected to be deducted at source and remitted monthly, by the employers of such employee.


Direct Assessment: This is imposed on individuals who are in self-employment or Partnership. The process and procedures guiding this type of payment are discussed in further


Direct Assessment Tax Administration

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