Ppt, rather than corporate tax, is imposed on petroleum companies. Unfortunately this means about 100% increase in tax for the poorest of the poor. A suggested framework article pdf available in mediterranean journal of social sciences november. Overview of personal income tax in nigeria explained. As africas most populous country, nigeria boasts of the continents second largest oil reserves and has a very promising growth outlook. Administration of current taxes in nigeria vanguard news. 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. The study focuses on the impact of petroleum profit tax, company income tax, personal income tax, value added tax revenue on nigerias economic growth between 1980 and 20.
The personal income tax rate in nigeria stands at 24 percent. According to the presidential committee on national tax policy 2008, the central objective of the nigerian tax system is to contribute to the. The motive to accelerate investment, saving and economic growth and development in nigeria through the use of tax administration calls for the study. Finally, our compendium is wider in scope because it chronicles not just tax, but related laws as well. Personal income tax act arrangement of sections part i imposition of tax and income chargeable section 1. The study investigated the role of tax administration in revenue generation in nigeria between 1994 and 2015. The problems of nigeria personal income tax administration includes abstract and chapter one, complete project material available the problems of nigeria personal income tax administration a case study of ministry of education abstract this project work is carried out on problem of personal income tax generation and administration taxation can be simply defined as a compulsory. The income, profit or gain of an individual shall be deemed to be derived from nigeria and liable to personal income tax in nigeria if the employer of the individual is in nigeria or has a fixed base for doing business in nigeria. By taiwo oyedele nigerias ranking has declined 3 places from 124 to 127 out of 8 countries in the latest global competitiveness index by the world economic forum. He is an author and public speaker on tax, business and economic matters. Tax credit allowable against tax payable on income derived from outside nigeria.
The law governing voluntary notforprofit organizations npos in nigeria is a product of english common law. As is the case with several tax types, the personalincome tax pit which is made up of direct assessment for selfemployed enterprises and payasyouearn paye for. The major focus of this study is to examine the impact of personal income tax administration on nige ria economy. Employers are also required by the provisions of section 81 of pita to file annual returns of all emoluments paid to their employees and taxes deducted and remitted to the relevant tax authorities.
Nigeria personal income tax rate 20112020 data 20212022. Accordingly, among other reasons, the objectives of this study include the following. Many employers are yet to commence implementation while some. Personal income tax rate in nigeria is expected to reach 24. Income tax noncompliance in nigeria and the moderating effect of public governance quality. Capital gains tax is calculated and submitted with companies income tax to firs through designated bank. Specifically, the study assessed the relationship between tax. Income tax amendment act, 2011 a 111 for an act to amend the personal income tax act, cap. The table below shows a summary of the taxable income tax bands and applicable rates of tax on an annual basis. A lower income tax rate of 20% is applicable to manufacturing or agricultural production companies and companies engaged wholly in exports within the first five years of. This follows many years of agitation for the personal income tax law in nigeria to be brought in line with presentday economic realities. Impact of tax administration on government revenue in a developing economy. Withholding tax rate table nigeria companies individuals. The regressive tax system is not commonly used,even in developed countries since this will mean revenue from taxes to the government will only continue to reduce.
The benchmark we use refers to the highest rate for corporate income. Individuals 2 in the case of an individual, other than an itinerant. Pdf income tax noncompliance in nigeria and the moderating. Problems and procedures includes abstract and chapter one, complete project material available administration of company income tax in nigeria. While some had blamed the situation on tax authorities for not living up to expectation with regards to tax administration. The personal income tax act pita as amended provides for consolidated relief allowance cra of n200,000 or 1% of gross income whichever is higher plus 20% of gross income.
Tax policy, tax legislation and tax administration. An overview of national tax policy and administration in. This is a study of the properties of the nigerias tax system particularly the bases of the company income tax, value added tax and personal income tax. Establishment and constitution of the board 1 there shall continue to be a board of which the official name shall be the. Effect of personal income tax administration on nigeria. The applicable tax rate is 30% 20% for companies with turnover less.
Edt should be paid at the point of payment for the company income tax cit or petroleum profit tax ppt as the case may be. Personal income tax in one of the types of taxes in nigeria that is levied by the federal government of nigeria. The purpose is to further enhance the process of tax collection and administration in nigeria. In nigeria, the corporate income tax rate is a tax collected from companies. Tax planning module technical note nigeria business. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. Companies income tax act arrangement of sections part i repealed part 11 imposition of tax and profits chargeable section 9. A suggested framework article pdf available in mediterranean journal of social sciences.
The rate of personal income tax payable is dependent on the amount of taxable income which the. Taxation of partners is governed by the personal income 1tax act pita. Total profit is profit after deducting previous year losses carried forward and capital allowances. This page provides the latest reported value for nigeria personal income tax rate plus previous releases, historical high and low, shortterm forecast and longterm prediction, economic calendar, survey consensus and. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. Tax evasion and tax avoidance, a problem which seems to have defied solution, had been deviled the tax system right from colonial times. Personal income tax pit can be described as the income tax payable for any year of assessment upon the chargeable income of an individual chargeable person. Nigeria personal income tax rate 20112020 data 2021. The administration of tax is vested in various tax authorities depending on the type of tax under consideration.
The nigerian tax system has been taken through several reforms and modifications. Value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of commencement of business. From the above mentioned, evasion of income tax is a serious problem in nigeria, more so as there is a big gap between actual and potential tax collections by the. 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. Under nigerian personal income tax laws all taxable persons are entitled to a consolidated relief allowance of 20% of gross income plus higher of 1% of gross income or n200,000. Aug 09, 2016 in 1978, the task force on tax administration under the leadership of alhaji shehu musa formed the federal inland revenue service firs as the operational arm of federal board of inland revenue fbir. Types of organizations nigeria is a federal republic. Relevant tax authority may assess and charge tax on the turnover of a business, etc. A delivering the lead judgement confirmed the position of the law on residency as follows. Government has equally expressed this disappointment and has accordingly vowed to expand the nonoil tax revenue.
The tax rate for petroleum companies normally is 85%, although a reduced rate of 65. In the longterm, the nigeria personal income tax rate is projected to trend around 24. The employers annual return is due not later than 31st january of every year and covers the income and taxes paid in the preceding year. In the context of personal income tax, a person means an individual, a sole proprietorship nonjuristic person, communities and families and on executors and trustees of an undivided estate. The due administration of this act and the tax shall be under the care and management of the board who may do all such things as may be deemed. All of these are expected to work together in order to achieve the economic goal of the nation. Taxation in nigeria plus history of taxation in nigeria. But partnership arrangements affect the computation of the tax liability of partners. Corporate tax rate in nigeria is expected to reach 30. In nigeria, the contribution of tax revenue especially company income tax has not met the expectations of government.
To examine the nature of tax administration in nigeria. Tax administration in nigeria is divided into 3 parts to take care of the 3 tiers of government. In this context, competitiveness is defined as the set of institutions, policies, and. The results of the analysis showed that both company income tax and valueadded tax have significantly positive impact on economic growth. The rate is 30% of total profit for income tax and 2% of assessable profit for education tax. The stu dy f ocused on personal income tax administration in the rural communities, with the study of six selected l ocal government are as in ogun state, nigeria. Here,the tax payable decreases as income increases.
The countrys legal system is based on the english legal tradition. Jun 14, 2017 value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of commencement of business. To identify the impediments to effective and efficient tax administration. Companies income tax cit is chargeable on the profits of a company accruing in, derived from, brought into or received in nigeria. Principally, section 5, subsection 1 of the act states, there shall be allowed a consolidated relief allowance of n200, 000 subject to a minimum of 1 percent of gross income or whichever is higher plus 20 percent of the gross income and the balance shall be taxable in accordance with the income table in the sixth schedule to this act.
Taxes in nigeria can be levied on citizens by tax authorities depending on the type of tax involved. Annual income tax returns by employers and employees. The study made use of 121 online survey questionnaires. Download undergraduate projects topics and materials accounting, economics, education. Impact of tax administration on government revenue in a. Taxation of partners and partnerships in nigeria by ololade olukowi partners, not partnerships, are taxed in nigeria. The tax system in nigeria is made up of the tax policy, the tax laws and the tax administration. However, since 1972 direct taxes such as petroleum profit tax, companies income tax and other revenue became glaringly the leading sources of government revenue in nigeria anyafo, 1996. Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. The government is also seeking for a way to incur minimal cost in the process of enforcing tax on nigerias. P8 lfn 2004 and related matters connected therewith. Problems and procedures abstract the study examines the administration of companies income tax in nigeria.
Based on the findings, the study recommended that government should strengthen the tax administration system to broaden the tax income, and embark on tax education to ensure voluntary tax compliance. Surtax no alternative minimum tax a minimum tax is levied to ensure that, unless exempt, every company pays a certain amount of corporate. The study period spans economic cycles for about 66 percent of the life of. The problems of nigeria personal income tax administration a case study of ministry of education abstract this project work is carried out on problem of personal income tax generation and administration taxation can be simply defined as a compulsory contribution by individuals and organizations to a statutory authority. An act to impose income tax on individuals, communities and families and on ex. Income of a capital nature is not included in taxable income. Visit our tax blog to download a copy of the revised national tax policy. Challenges and prospects, a case study of lagos state board of internal revenue service, largest undergraduate projects repository, research works and materials.
The new act would provide more disposable income to the lower income earners following the amendment of the income tax table and adjustments in the applicable income tax incremental bands, which brings it in line with current income levels. Effect of tax avoidance and tax evasion on personal income. Business or trade only partially carried on or deemed to be carried on in nigeria. The current law that governs the administering of personal income tax pit is the personal income tax act cap. Income for ppt purposes refers to the value of the oil and related substances extracted, except gas, plus any other income of the company. An overview of national tax policy and administration in nigeria. All companies operating in nigeria outside the oil and gas sector of the economy are required to pay income and education tax. The study examines the effect of tax avoidance and tax evasion on personal income tax administration in nigeria. With the cashless policy fully operational in nigeria and the consequent integration of more tax payers in the financial system, there is palpable opportunity for tax authorities to track unidentified income through integrating their systems with financial institutions. Self employed individuals are expected to file annual returns annually and pay the taxes due.
In the longterm, the nigeria corporate tax rate is projected to trend around 30. The most commonly used ones in nigeria are the proportional tax system and the progressive tax system. It therefore explain why only on aspect of it is undertaken in this study which is tax administration in nigeria. This in a way contradicts the national tax policy objective of reducing direct taxation including personal income tax.
The companies income tax act 2007 cita2007 regulates the taxation of companies through the firs. Personal income tax in nigeria is a tax levied on all incomes of an individual employed by a business or organization. This paper attempts to look at the nigeria tax administration and its capacity to reduce tax evasion and generate revenue for development desire of the populace. The table below shows the company income tax contributions among others to the. Personal income tax, custom and excise duties, value added tax which have contributed greatly to the national income of nigeria aguolu, 2004. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year. Personal income tax administration in nigeria economics essay.
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