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NIGERIA TAX POLICY

NIGERIA TAX POLICY

NIGERIA TAX POLICY

Nigeria’s tax policy is a critical component of its economic framework, playing a significant role in revenue generation, economic planning, and the provision of public services. The Nigerian tax system is governed by a mix of federal, state, and local taxes, with various regulations and reforms aimed at enhancing compliance, broadening the tax base, and improving economic efficiency. Here’s an in-depth look at the key aspects of Nigerian tax policy.

Historical Context and Structure

Nigeria’s tax system is a mix of federal, state, and local taxes, reflecting the country’s federal structure. The primary taxes include:

  1. Company Income Tax (CIT): Levied on the profits of companies and businesses.
  2. Personal Income Tax (PIT): Applied to individual earnings, with rates varying by state.
  3. Value Added Tax (VAT): A consumption tax on goods and services.
  4. Petroleum Profit Tax (PPT): Specific to the oil and gas sector, crucial given Nigeria’s dependence on oil revenues.
  5. Customs Duties: Taxes on imported goods.

Each tier of government has its own tax authority, leading to a complex system of compliance and enforcement.

Recent Reforms and Initiatives

In recent years, Nigeria has undertaken several reforms to enhance tax collection and compliance. Key initiatives include:

  1. The Finance Act (2019): This act introduced significant changes, such as increasing VAT from 5% to 7.5% and revising the CIT for small businesses. It also aimed to improve the tax code’s clarity and efficiency.
  2. The Tax Administration System: The Federal Inland Revenue Service (FIRS) has made strides in digitalizing tax administration. The introduction of the Integrated Tax Administration System (ITAS) is a step towards simplifying tax filing and payment processes.
  3. Voluntary Assets and Income Declaration Scheme (VAIDS): This initiative encourages tax defaulters to declare previously undisclosed assets and income, offering a chance to regularize their tax affairs without facing penalties.

 

Read more on Nigeria’s Tax Policy ; https://drive.google.com/file/d/1CWPVqLycAD_Srz-hc9XENJ4Ur2KI9FTj/view?usp=sharing

 

For more enquiry on Nigeria’s Tax Policy, kindly contact us at SOW Professional Services Ltd.

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