Tax Collection has been classified below under the 3 main tax collection bodies:

TAXES COLLECTED BY STATE GOVERNMENT

Personal Income Tax in respect of individuals resident in the State
(a)Pay-As-You-Earn(PAYE) (b)Direct Taxation(Self-Assessment)
Withholding Tax (Individuals Only)
Capital Gains Tax (Individuals Only)
Stamp Duties on instrument executed by individuals
Pools Betting, Lotteries Gaming and Casino Taxes
Road Taxes
Business premises registration fee in respect of urban and rural areas which includes registration fees and per annum for the renewals as fixed by each state
Development Levy (individuals only) not more than 100 per annum on all taxable individuals
Naming of street registration fees in the State Capital
Right of Occupancy fees on lands owned by the State Government in urban areas of the State
Market Taxes and Levies where State finance is involved
Land use Charge, where applicable
Entertainment Tax, where applicable
Environmental (Ecological) fee or levy
Mining, milling and quarrying fee, where applicable
Hotel, Restaurant or Event Centre Consumption Tax, where applicable
Animal Trade Tax, where applicable
Produce Sales Tax, where applicable
Slaughter or Abattoir fees, where applicable
Infrastructure Maintenance Charge or levy, where applicable
Fire Service Charge
Property Tax, where applicable
Economic Development Levy, where applicable
Social Services Contribution Levy, where applicable
Signage and Mobile Advertisement, jointly collected by the State and Local Government

TAXES AND LEVIES TO BE COLLECTED BY LOCAL GOVERNMENT

Shops and Kiosks rates
Tenement rates
On and Off Liquor License fees
Slaughter slab fees
Marriage, birth and death registration fees
Naming of street registration fees, excluding any street in the State Capital
Right of Occupancy fees on lands in the rural areas, excluding those collectible by the Federal and State Governments.
Markets taxes and levies excluding any market where State finance is involved
Motor park levies
Domestic animal license fees
Bicycle, truck canoe wheelbarrow and cart fees, other than a mechanically propelled truck
Cattle tax payable by cattle farmers only
Merriment and road closure
Radio and television license fees (other than radio and television transmitter)
Vehicle radio license
Wrong parking charges
Public convenience, sewage and refuse disposal fees.
Customary burial grounds permit fees
Religious places establishment permit fees.
Signboard and Advertisement permit fees.
Wharf Landing Charge, where applicable

TAXES COLLECTED BY FEDERAL GOVERNMENT
Companies Income Tax
Withholding Tax on companies and residents of the Federal Capital Territory and non-resident individuals
Petroleum Profit Tax
Value Added Tax
Education Tax
Capital Gains Tax on the residents of the Federal Capital Territory, bodies corporate and non-resident individuals
Stamp Duties on bodies corporate and residents of the Federal Capital Territory
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 (d)Staff of the Ministry of Foreign Affairs and non-resident individuals
National Information Technology Development Levy

TAX TYPES

Personal Income Tax
Tax is imposed on individuals who are either in employment or are running their own small businesses, under a business name or partnership.

Though collection of Personal Income Tax is a federal responsibility, this tax is generally collected by state governments from those that are resident in their various states, regardless of whether they are federal, state, local government, or private sector workers. The Federal Inland Revenue Service, also collects this tax but only from residents of the Federal Capital Territory as well as what may be described as highly mobile federal worker; staff of the Ministry of Foreign Affairs, other Nigerians and foreigners outside the country but earning income in Nigeria (non-residents), expatriate workers resident in Nigeria, Police Officers, and Military Officers. Civilians working in Police and Military formations, however, pay to their respective States of residence.

The current law guiding the taxation of personal incomes is the Personal Income Tax Act (Cap P8 LFN 2004). Under the law, Federal and States’ tax boards are empowered to identify persons living in or earning income from Nigeria who are required to pay tax, and to assess incomes and tax their incomes using specified guidelines and rules. This law also guides the tax official in identifying the residence of potential taxpayers, as well as the sources and origins of their incomes for the purpose of taxing the income.

There are two types of Personal Income Tax:
01.
Pay-As-You-Earn (PAYE) i.e. taxes from employment
PAYE is an acronym for “Pay as You Earn”. It is a method of collecting personal income tax from employees’ salaries and wages through deduction at source by an employer as provided by the relevant sections of the Personal Income Tax Act (PITA). (S.81 of Personal Income Tax Act Cap P8 LFN 2011).

02.
Taxes from self employed persons (Direct Assessment)
Direct Assessment is an assessment raised directly on self-employed persons (eg. Professionals, Contractors, Traders, Landlords etc).
The self employed person will without notice or demand, file a return of income earned in the preceding year using Tax Form A.

Capital Gains Tax (Individuals only)
It is a tax on the profit made from the sale or exchange of capital assets like land shares, machinery.

Stamp duties
It is a tax imposed on legal instruments/documents executed by individuals, this tax is usually placed on the transfer of homes, buildings, copyrights, land, patents and securities.

Business Premises levy
It is a tax on property used for the production of income including rental houses, office buildings, factories etc. Business premises amounts to N10,000 for registration and then N5,000 for renewal in subsequent years for urban areas and N2,000 / N1,000 respectively in rural areas.

Capital Gains Tax (Individuals only)
It is a tax on the profit made from the sale or exchange of capital assets like land shares, machinery.

Hotel occupancy and Restaurant Consumption Tax:
It is a tax imposed on goods and services consumed in hotels, bars, restaurants and event centres within Lagos State. This tax is payable by the consumers who purchase these goods and services. The hotels, bars, restaurants and event centres serve as collecting agents for LIRS.

Withholding Taxes:
It is the specified amount deducted at source from payment accruing or made to individuals or corporate entities in respect of income receivable for service(s) rendered or from investment and remittance of same to the Relevant Tax Authority in line with the provisions of Personal Income Tax (PITA) and Companies Income Tax Acts (CITA).

System of Tax

1. Proportional Tax: This is the system of taxation where the marginal rate of tax remains constant as income increases or decreases. It takes the same percentage of taxpayers’ income any level of income. Examples include Petroleum Profit Tax (85%), Capital Gains Tax (10%), etc

2. Progressive Tax: This is the system of taxation where the marginal rate of tax increases as income increases. It takes a larger percentage of taxpayers’ income as income increases. Example includes Personal Income Tax.

3. Regressive Tax: This the system of taxation where the marginal rate of tax decreases as income increases. It takes a smaller percentage of taxpayers’ income as income increases. Example includes Consumption/Expenditure Taxes like Value Added Tax (VAT), Poll Tax which is levied at a fixed rate per person regardless of income, and Toll Duty.

Tax Administration
Taxation in Nigeria is the three major tiers of government. Each tier of government is saddled with the responsibility of collecting different taxes.

The Federal Government collects taxes through the Federal Board of Inland Revenue; the agency administers Revenue laws that deal with taxes paid by the residents of the Federal Capital Territory and taxes that are paid by corporate bodies (Limited Liability Companies). They are responsible for accounting to the Federal Government for all taxes collected.


The State Governments collect taxes through the State Board of Internal Revenue; the agency primarily administers the Personal Income Tax Act, and however, some states of the federation have instituted additional revenue statutes, which they administer. They are responsible for accounting to the State Government for all revenue collected.


The Local Government collects taxes through the Local Government Revenue Committee; they are responsible for the assessment and collection of all taxes, fines and rates under its jurisdiction and account for all revenue collected to the chairman of the Local Government.

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