Investor Presentaiton
The Country and its
institutions
Business Organisation Labour and Social
and Regulation
Security Regulations
The Nigerian Financial Tax System
Services Industry
Foreign Exchange
Transactions
Investment in Nigeria
Accounting and
Auditing Requirements
Importation of Goods Exportation of Goods
COVID-19 Economic
and Fiscal Measures
5.1.7
Payment of Tax
5.1.8
Profits Exempted from Tax
Tax computed on self-assessment basis is payable either in a lump sum
or by instalments. The timeline for remittance of CIT was amended by
Finance Act, 2019. Consequently, companies are required to remit the tax
due by the due date of filing. Where a company intends to pay the tax
liabilities in instalment, the final instalment must be paid by the due date of
filing.
This amendment aligns with the Tax Administration (Self-assessment)
Regulations issued by the FIRS in 2011 which required taxpayers to
commence payment of the tax due in the relevant year of assessment in
a manner that the final instalment payment is made not later than the due
date of filing the related tax returns.
Medium and large companies who remit their tax liabilities 3 months before
the due date of filing are entitled to a bonus incentive of 2% and 1%,
respectively. The bonus is available as a credit which can be used to offset
future taxes.
Where an assessment is raised by the FIRS on a company, the assessed
tax, if not disputed, is payable in a lump sum within 30 days from the
date of service of the assessment. However, where an objection or
appeal is raised by the company in respect of the assessment, collection
of the assessed tax will remain in abeyance until the objection/appeal is
determined. Upon determination of the assessment, the FIRS is required
to serve a notice of the tax payable upon the company, and the company is
obliged to pay the liability (if any) within one month from the date of service
of the notice.
For both self-assessed and FIRS-assessed CIT liabilities, failure to pay the
assessed tax within the statutory period attracts a penalty of 10% of the
tax due and interest at the prevailing MPR of the Central Bank of Nigeria
plus a spread to be determined by the Minister of Finance. In July 2017,
the Honourable Minister of Finance approved a new interest rate spread
of 5 per cent on unpaid taxes Thus, on the basis of the current 11.5% MPR
announced by the CBN in March 2021, taxpayers would be liable to interest
charges for non-payment and late payment of taxes at the rate of 16.5%.
"...companies are required to remit
the tax due by the due date of filing."
The profits of the companies and organisations engaged in the following
specified activities are exempt from taxation under the CITA:
•
statutory or registered friendly societies;
• co-operative societies registered under any enactment or law relating to
co-operative societies;
•
•
•
ecclesiastical, charitable or education establishments of a public
character;
companies formed for the purpose of promoting sporting activities
where such profits are wholly expendable for such purposes;
any company being a trade union registered under the Trade Union Act;
dividend distributed by a Unit Trust;
• companies engaged in petroleum operations, in so far as their profits
are derived from operations liable to tax under the Petroleum Profits Tax
Act, Cap P13, LFN, 2004;
• body corporate established by or under any local government law or
edict in force in any State in Nigeria;
.•
•
·
•
any body corporate being a purchasing authority established by an
enactment and empowered to acquire any commodity for export from
Nigeria for the purchase and sale of that commodity;
profits of a company other than Nigerian company which would have
been chargeable to tax by reason of their being brought into or received
in Nigeria;
dividend, interest, rent or royalty brought into Nigeria through
Government approved channels;
interest on deposit accounts of an NRC;
• profits of a small company (with turnover of not more than #25million);
⚫ profit of a company established with the export processing zone or free
trade zone;
•
dividend received from investments in wholly export-oriented business;
•
profits of any Nigerian company in respect of goods exported from
Nigeria, if such proceeds are used to purchase raw materials, plant
equipment and spare part;
47
Investment in Nigeria Guide - 8th Edition
KPMGView entire presentation