What Is The Percentage Of Withholding Tax In Nigeria

October 05, 2021 Post a Comment

The penalty for failure to deduct or remit tax is 10 of the amount not deductedremitted. A withholding tax of 10 is deducted from the dividend paid by a Nigerian company to a non-resident company.

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Shareholders that are resident in a country that has signed a double tax treaty with Nigeria will however enjoy the reduced rate of 75.

What is the percentage of withholding tax in nigeria. The tax payable is Five per cent 5 on the supply of goods and services. Withholding tax is not a separate tax on its own and does not confer an exemption from the filing of annual tax returns by the company which had suffered WHT. The taxable income of a petroleum company is subject to tax at 85 but this percentage is lowered to 6575 during the first 5 years of operation.

Note that companies are required to submit in electronic form a schedule of all their suppliers for the month showing the tax identification number TIN address of the suppliers the nature of the transaction WHT deducted and invoice number. Commission is subjected to withholding tax in Nigeria. 32 Would there be any withholding tax on royalties paid by a local company to a non-resident.

Nigeria adopts a Pay-As-You-Earn PAYE system to calculate the personal income tax of employees. In most cases however the Withholding Tax rates for individuals is anythin g from 5 percent to 10 percent while for companies it is between 25 percent to 10 percent. Withholding Tax WHT is an advance payment of income tax.

The tax is normally to be deducted at source when a payment is to be made to the beneficiary. The CIT is currently charged at the rate of 30 for companies having more than N100 Million Naira turnover. CIT is one of the major types of taxes collected by FIRS.

It is also charged at the rate of 20 for companies with a turnover between N25 Million and N100 Million. All types of contract activities and arrangements other than outright sale and purchase of goods and property. Where a person rents or hires propertyservices from another withholding tax at the rate of 10 will apply.

Rate of Withholding Tax in Nigeria The rates of withholding tax in Nigeria varies among individuals companies and corporate bodies. A legal view of corporate taxation in Nigeria. Withholding tax rates are usually 10 or 5 depending on the type of transaction and collecting authority for the tax which can be a Federal Inland Revenue or the State Inland Revenue.

As a general rule income on a property rent hire or lease payments or rights royalties situated in Nigeria is liable to tax in Nigeria the place of payment not withstanding. It is not a separate tax and does not. WITHHOLDING TAX COLLECTING AGENTS IN NIGERIA Withholding tax is been collected by all organisations or bodies making payments to.

Dividends paid out of profits that have been subjected to petroleum profits tax will now suffer withholding tax of 10. 20 Tax Coverage The withholding tax WHT provision was introduced into the tax system in. Where oil companies operate under production sharing contracts they will be liable to tax at a rate of 50.

Nigerian law subjects certain activities and services to Withholding. The taxable income band ranges from NGN300000 to above NGN32 million in a year. 5 5 or 10 depending on the the type of transaction and the tax authority responsible for the collection of the tax Federal Inland Revenue Service or State Inland Revenue Service.

Nigerian Companies pay 30 percent of their worldwide profit while foreign companies pay 30 percent of only the profit made in Nigeria. It is governed by the Value Added Tax Act. This include all sources of income of the company.

Nevertheless profits made from business activities outside Nigeria is exempted from CIT. WITHHOLDING TAX RATE TABLE - NIGERIA Companies Individuals Divident Interest Rent 10 10 Royalties 15 15 Commissions Consultancy Professional Technical Management Fees 10 5 Building Construction related activities 5 5 Contract of Supplies Agency arrangements 5 5 Director Fees 10 5. Changes to the PITA Tax Identification Number to Open or Maintain a Bank Account.

It is called PAYE tax. However the rate is 75 for a non-resident company located in a country that has entered into a DTT with Nigeria. It is a 30 tax charged on profits made by companies registered in Nigeria.

This tax rate progresses from 7 percent to 24 percent of taxable income. The law provided for withholding of tax from payments due to companies or individuals whether resident in Nigeria or not that provides goods and services to individuals or companies in Nigeria. In principle it is a payment for the ultimate income tax liability of the taxpayer or company.

This includes rental income on both real and personal property. As a general rule income on a property rent hire or lease payments or rights royalties situated in Nigeria is liable to tax in Nigeria the place of payment notwithstanding. The prevalent tax rate on commission is 10 WHT but if the principal is a non-resident any sales proceed from the arrangement will attract 50 Wht.

Where a person rents or hires propertyservices from another WHT at the rate of 10 will apply. The educational charge is pegged at 2 percent of the assessable profit while a 10 percent withholding tax is deducted from dividend payments to companies and individuals.

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