₦airaland Forum

Ayo, please advise if VAT Rate in Nigeria stands at 5% as per this Nigeria VAT calculator - http://www.calculator.co.ke/ng/nigeria-value-added-tax-vat-calculator

Also check out this online version of Nigeria income tax calculator: http://calculator.com.ng/firs-salary-income-tax-paye-calculator It computes easily paye, net paye, pension contributions in Nigeria!

Hi funkystanl,

I discovered there’s a simple Nigeria income tax calculator http://africa.calculator.co.ke/nigeria-firs-payroll-income-tax-paye-calculator which can easy your burden of making the computations here

funkystanl:
Ok...i'm using ednut1 as my hypothetical case. Mr Ednut works for TheRealAdonye n Co. In his offer letter he's to earn:
Basic Salary (B): 700,000
Housing Allowance (H): 200,000
Transport Allowance (T): 100,000

Calculate his monthly take home pay!

Annual Gross = B + H + T
Annual Gross = (700 + 200 + 100)k = 1million

NHF contribution = 2.5% * Basic = 17,500
Pension contribution = 8% (B+H+T) = 80,000
Personal allowance = 20% * Gross = 200,000
CRA = Higher of 200k or 1% of gross = 200,000

Taxable Income = Gross - (NHF+Pension+PA+CRA)
Taxable Income = 1,000,000 -(17,500+80000+200,000+200,000) = 502,500. This is the amount to be taxed not your gross.
19.2% of this amount is 96,480. But this ain't the true tax. Let's see how close it is to the true tax.

Since we use PAYE
First 300k (out of the taxable income of 502500) will be taxed at 7% i.e 7%*300,000 = 21,000
Next 300k will be taxed at 11% (please not that what is left fromm the taxable income is just 202,500. So we are taxing what is left and not 300k) i.e 11%*202500 = 22,275

What is left? Nothing so there is no 500k to be taxed at 15% hence Mr Edut tax bad stops at 11%

The PAYE tax is 21000+22275 =43,275

Can you compare with the 96,480 when we just applied (19.2% on the taxable income? This showed that Mr Ednut Effective Tax rate (ETR) is about 8.6%.


Back on track. Mr Ednut total deductions is:

NHF + Pension + Tax = 140,775.

Net income = Gross - Total deductions = 859,225

Monthly take home = Net income divide by 12 = 71,602.08.

Try out this cool Nigerian income tax calculator: http://calculator.com.ng/firs-salary-income-tax-paye-calculator Should help clear things up when it comes to PAYE, NHF and pensions deductions..