Frequently Asked Questions
What is Personal Income Tax (PIT)?
Who pays personal income tax and how?
What is Direct Assessment?
What is P. A. Y. E ? Section 81 PITA (Amended) 2011
Who is to pay P. A .Y .E?
Relevant Tax Law Guiding P. A .Y.E
Commencement of P.A.Y.E scheme
Where an employee works under the supervision or management of a person who is not his employer, that person (hereinafter referred to as the “manager”) must furnish the particulars of the employee’s emoluments to the Tax Office nearest to the company and the manager must deduct the tax due from the employee’s emoluments and remit same to any of the designated collecting banks.
Within ten days of the end of every month, an employer must pay all deductions made from his employees as well as all other taxes due to the nearest tax office or to any of the aforementioned designated banks.
Category of Income Chargeable to tax Section 3 PITA, 2011
Compensation, bonuses, premiums etc.
Benefits in Kind
Statutory Allowable Deductions (Schedule VI PITA, 2011) Amended
1. National Housing Fund contributions.
A Nigerian worker in both the public and the private sectors of the economy shall contribute 2.5 % of his basic monthly salary to the Fund.
2.National Health Insurance Scheme contributions.
Under NHIS , Federal Government employer and employee shall both bear 5% contribution to the scheme. Federal employer to bear 3.25% & 1.75% representing contribution from the employee’s consolidated salary.
While that of private establishment employer & its employees shall both bear 15%. 10% from the employer and 5% from the employee’s basic salary. However, the employer may decide to bear the whole of the contribution depending on the operating policy of the organization.
3. Life Assurance Premium:
This depend on the policy in operation by the organization.
4. National Pension Scheme:
A Pension contributory scheme is a scheme designed to ensure employees derive the benefit of being paid their pension adequately and as when due upon retirement. The Pension Commission regulates the fund. In the past rate was 15%, split evenly between the parties i.e the employer & the employee.
The current rate is 18% – Nigeria 2014 Pension Reform Act. This is to be borne by both the employer 10% and employee 8% of Basic Salary, Housing allowance & Transport allowance.
This is computed on bases of the employee’s grade level, step and basic salary at the point of exit from active service.
Note that the above exemptions are subject to verification and evidences for informed judgment
How do I calculate my Tax ?
first 300,000.00 @ 7%
Next 300,000.00 @ 11%
Next 500,000.00 @ 15%
Next 500,000.00 @ 19%
Next 1,600,000.00 @ 21%
Above 3,200,000.00 @ 24%
The tax as computed above is compared to a minimum tax of 1% of Gross Income; whichever is higher is the tax payable.
Penalty for Non deduction/non remittance of P.A.Y.E Section(74)
Due date for PAYE remittance – Section 77 PITA 2011
Penalty for late remittance of PAYE
When and How to file Returns
Every employer shall be required to file a return with the relevant tax authority of all emoluments paid to its employees, not later than 31st January of every year in respect of all employees in its employment in the preceding year.
Monthly Returns Section 41
Employers are expected to submit their monthly staff payroll schedule at the point of remittance for that particular month. This is to enable us verify the current status of tax payers and also to straighten the records with us. This is Strictly done on monthly basis on or before 10th of the month following month of deduction.
Annual Tax Returns
Latest on 31st of January following the year of assessment.
This is very important, as it enable tax authorities to verify whether the correct and accurate taxes have been paid and remitted. In addition it makes processing of Tax Clearance Certificate (TCC) easy for the entire staff and it tells on the integrity of the management.
Penalty for failure to file Annual returns – Section 81(3)
Penalty of N500,000 for failure to file on or before 31 January of the following year.
What is Tax Clerance Certificate (TCC)?
Is the TCC obtained in one state valid in other states?
Period of issuance of TCC
What information is on TCC?
Requirement for issuance of TCC to PAYE (Taxpayers in Employment)
1. Typed application letter stating purpose for the TCC.
2. Payslips/salary schedules one in the first and last quarter of the three years of assessment (i.e. two for each year of assessment)
3. Salary Account.
4. Photocopy of staff ID card.
5. One passport.
6. Execution of Assessment Data Form (duly stamped by the officer in charge).
7. Letter of Introduction from your organisation.
Requirement for issuance of TCC for Enterprises
2. Bank statement for the past three (3) years preceding the current year of assessment e.g from
January 2015 – December 2017.
3. Photocopy of valid means of identification
4. One passport photograph
5. Execution of form A
6. Certificate of registration from CAC (if applicable)
Uses of TCC
(a) Application for Government loan for industry or business;
(b) Registration of motor vehicle;
(c) Application for firearms licence;
(d) Application for foreign exchange or exchange control permission to remit funds outside Nigeria;
(e) Application for certificate of occupancy;
(f) Application for award of contracts by Government, its agencies and registered companies;
(g) Application for approval of building plans;
(h) Application for trade licence;
(i) Application for transfer of real property;
(j) Application for import or export licence;
(k) Application for agent licence;
(l) Application for pools or gaming licence;
(m) Application for registration as a contractor;
(n) Application for distributorship;
(o) Confirmation of appointment by Government as chairman or member of a public board, institution, commission, company or to any other similar position made by the Government;
(p) Stamping of guarantor’s form for a Nigerian passport;
(q) Application for registration of a limited liability company or of a business name;
(r) Application for allocation of market stalls;
(s) Appointment or election into public office.
(t) For change of ownership of vehicle by the vendor;
(u) Application for plot of land; and
(v) Any other transaction as may be determined from time to time.
What is Withholding Tax?
Once a withholding tax is deducted at source on behalf of a tax payer, a credit note is available to that tax payer and such a tax payer can use the credit note to offset his/her income tax liability in future periods.
How Does it work?
What is a WHT credit note?
Who Has the Responsibility to Demand Withholding Tax Credit Note?
What Effect Does A Withholding Tax Has on Income Tax?
Which Relevant tax authority collects WHT?
Who are the agents of WHT?
II. Individuals, firms and sole traders.
III. A statutory body, public authority and other institutions or organizations.
IV. Government ministry, departments or agencies and local governments.
How Do You Identify A Genuine WHT Credit Note?
• WHT credit note number on top right corner
• Date of transaction including the nature of the transaction
• Name of the payer (if paid in the name of the person or company that deducted the money using his tin number, then his name will appear on the credit note, but if it is paid in the name of the contractor using the contractor’s tin, then the name of the contractor should appear on the credit note).
• The name of the beneficiary (if paid on behalf of the contractor using the payer’s TIN , the name of the payer will differ from the name of the beneficiary, but if paid in the name of the contractor using the contractor’s TIN, then the name of the payer will be same with name of beneficiary.
Circumstances Under Which WHT Cannot Be Deducted
• WHT cannot be deducted in the ordinary course of business, except it involves contract. For example, if you enter a shop to buy a product, you cannot deduct WHT, but if i ask you to supply the product with a contractual agreement, then WHT must be deducted.
What is Consumption Tax?
Who pays Consumption Tax?
(a) Pay for the use or possession or for the right to use or possession of any hotel, hotel facility or event centre; or
(b) Purchase consumable goods or services in any restaurants within the state.
Consumption and Services Taxable
What is the rate on Consumption Tax?
Who are collecting agents?
(a) Owns operates or manages any Hotel, Hotel facility or event centre, or
(b) Supplies any goods and services chargeable under Section 3 of this law shall be the agent for collection of the tax and on behalf of Kogi State Government
How to Register / Registration
Effective date of payment and collection of 5% Consumption Tax in Kogi State
What is the reporting period?
How to remit taxes collected
For More Information, Call Us On:
0808 342 7276
Or Send Us A Mail
For optimum service delivery to Kogi State, we pride ourselves to provisions of best practice for easy tax processes
©2018 KGIRS. All Right reserved.