Income tax in Nigeria

October 23, 2017

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Married couples are taxed separately, joint filing and taxation is not allowed.

INCOME TAX

The taxable income of individuals includes the following: (1) gains or profits from any trade, business, profession, or vocation, (2) salaries, wages, fees, allowances and other benefits arising from employment, (3) gains or profits, including premiums, from real property, (4) dividends, interest, and discounts, (5) any pension, charge or annuity, and (6) other income.

Taxable income is computed as total income from any source less allowable deductions. Income tax is levied at progressive rates.


INCOME TAX

TAXABLE INCOME, NGN (US$) MARGINAL TAX RATE
Up to 300,000 (US$1,508) 7%
300,000 – 600,000 (US$3,015) 11% on band over US$1,508
600,000 – 1,100,000 (US$5,528) 15% on band over US$3,015
1,100,000 – 1,600,000 (US$8,040) 19% on band over US$5,528
1,600,000 – 3,200,000 (US$16,080) 21% on band over US$8,040
Over 3,200,000 (US$16,080) 24% on all income over US$16,080

An individual with annual gross income of less than NGN30,000 (US$190) is subject to a so-called minimum tax. The applicable tax rate is 0.5% on gross income.

RENTAL INCOME
Resident individuals earning rental income from real property are liable to pay an advance tax payment amounting to 10% of the gross rent. This is not a final tax for residents and may be credited against the final tax assessment.

CAPITAL GAINS
Capital gains tax is levied at a rate of 10% on the gains realized from the disposal of real property. Property acquisition costs and incidental costs in transferring property ownership (i.e. stamp duty, professional costs, and advertising) are deductible from the market value of the property.

Residents are exempt from paying capital gains tax from the disposal of their only or main residential property.

PROPERTY TAX

Mansion Tax

Mansion tax is levied at a flat rate of 1% on residential properties located in the Federal Capital Territory Abuja. It is a luxury tax levied on properties worth at least NGN300 million (US$1,507,538).


CORPORATE TAXATION

INCOME TAX

Income earned by companies is subject to the corporate tax at a flat rate of 30%. Expenses that are necessarily incurred in the production of income are deductible against gross income.

CAPITAL GAINS TAX

Capital gains tax is levied at a rate of 10% on the gains realized from the disposal of real property. Property acquisition costs and incidental costs in transferring property ownership (i.e. stamp duty, professional costs, and advertising) are deductible from the market value of the property.

Education Tax

Since 1995, an education tax of 2% of assessable profits is imposed on all companies incorporated in Nigeria.

 

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