Introduction
Entrepreneurs seeking to do business in
Nigeria will have to comply with all
requirements needed to properly establish
their enterprise in Nigeria.
Nigeria is basically a free enterprise country,
subject only to such regulations as are
necessary for national interest.
Launching the business
Determine Your Business Structure: Consider
the following factors;
a. The level of control you want to have over the
business.
b. The level of formality you need within the
organisation.
c. The need to protect oneself against liability for
business actions.
Launching the business
d. The ability to attract investors.
e. Tax considerations for both you and your
investors. The Companies and Allied Matters
Act (CAMA) provides under different parts,
for the following types of business
organisations:
Launching the business cont..
Part A
Limited Liability Company
Unlimited Liability Company
Company Limited by Guarantee
Part B
Business Name registration for:
Partnership/Firms
Sole proprietorship
Launching the business
Part C
Incorporated Trustees
Foreign Company
Representative Office
Relevant Government Agencies
Corporate Affairs Commission
Federal Inland Revenue Service
The Corporate Affairs Commission
The Corporate Affairs Commission is
established and empowered under the
Companies and Allied Matters Act to
provide for the incorporation of companies
and other incidental matters, registration of
business names and the incorporation f
trustees of certain communities, bodies and
associations.
Federal Inland Revenue Service
The object of the Federal Inland Revenue
Service (FIRS) shall be to control and
manage the different taxes and laws given
by the National Assembly or other
regulations made by the Government of
the Federation and to account for all taxes
collected.
Taxation in your business plan
What taxes am I liable to pay?
Taxes follow businesses as surely as night follows day. So every business must expect to pay
taxes at the end of each year. But one of the
frequent complaints of business owners and managers in Nigeria is that they frequently do
not know what taxes they are liable for and to
whom it should be paid.
While ignorance of the law (taxation is a
matter of law) is no excuse, our experience
in Nigeria will seem to justify the
complaints. Frequently, different agents of
the various tiers of Government show up or
accost businesses demanding one kind of
tax, levy, charge or the other.
Taxation
Currently, under the Nigerian law, taxation is
enforced by the three tiers of government
i.e Federal , State and Local government.
In preparing your business plan all these
taxes have to be considered where
applicable.
Taxes to be collected by
the Federal Government
1. Companies income tax – This tax is payable
annually on the profits of the business. The tax is 30%
of the profit of the company.
2. Withholding tax (on companies, residents of the
Federal Capital Territory, Abuja and non-resident
individuals) – is the advance payment of income tax
by deduction at source of that income.
3. Petroleum profits tax.
Taxes to be collected by
the Federal Government
4. Value added tax (VAT) – paid by a business on purchases is called input tax. On company sales, it is called output tax. It is 5% of all taxable goods and services. It is a consumption tax. 5. Education tax – An education tax of 2% of profits must be paid by all companies registered in Nigeria. 6. Capital gains tax (on residents of the Federal Capital Territory Abuja, bodies corporate and non-resident individuals) – This is calculated yearly and covers all profits to a taxpayer from the sale or lease or other transfer fights which are subject to a capital gains tax of 10%.
Taxes to be collected by
the Federal Government
7. Stamp duties on bodies corporate and residents of
the Federal Capital Territory, Abuja.
8. Personal income tax in respect of:
(a) members of the armed forces of the Federation;
(b) members of the Nigerian Police Force; (c) Residents of the Federal Capital Territory, Abuja; and
(d) Staff of the Ministry of Foreign Affairs and non-resident
individuals
Taxes and levies to be collected
by the State Government
1. Personal income tax in respect of a. Pay-As-You-Earn (PAYE); and b. Direct taxation (self-assessment) 2. Withholding tax (individuals only) 3. Pools betting and lotteries, gaming and
casino taxes. 4. Road taxes.
Taxes and levies to be collected
by the State Government
5. Business premises registration fee in respect of
a. Urban areas as defined by each State,
maximum of:
(i)N10, 000 for registration; and
(ii) N5, 000 per annum for renewal
of registrations; and
6. Capital gains tax (individuals only)
Taxes and levies to be collected
by the State Government
7. Stamp duties on instruments executed by
a. individuals
b. Rural areas:
(i) N2, 000 for registration; and
(ii) N1, 000 per annum for renewal
of registration
8. Development levy (individuals only) not more than
N100 per annum on all taxable individuals.
Taxes and levies to be collected
by the State Government
9. Naming of street registration fees in the State
Capital.
10. Right of Occupancy fees on lands owned by the
State Government in urban areas of the State.
11. Market taxes and levies where State finance is
involved.
Registration of business
In preparing your business plan ensure
the following procedures are well spelt
out to ensure your business is always
on the right side of the law:
Registration of business
1. Register your Company – The FIRS requires
applicants to complete tax registration forms and
get a tax identification number (TIN). This is
submitted to the FIRS office nearest its place of
business or registered office.
2. Complete the VAT registration form (VAT form
001) and return it to the nearest tax office.
Registration of business
Register for personal income tax at the
State Tax Office. Once the application is
filed, with a copy of the certificate of
incorporation attached, a reference file is
opened for the company.
WHO WINS?
