Tax in Nigeria: Know Your Tax Aspect
In Nigeria, taxes are collected from both individuals and corporations. Individuals pay income tax to the government. At the same time, they also pay a flat rate tax on goods and services.
Corporations in Nigeria have to pay income tax as well as what is called turnover tax which is based on the company’s total annual sales and purchase value of goods or services.
Taxes can be boring and complicated, but there are many ways to make it easier. Tax optimization is a way for you to lower your tax liability by using deductions, credits, and other legal tax breaks.
Taxes have always been a significant expenditure for the wealthy and large corporations. And with the new tax law in place, those who don’t know how to optimize their taxes are the ones who will suffer the most.
- What are Taxes?
Taxes are the mandatory payments made by individuals and corporations to governments.
Taxes serve to redistribute income and wealth in the most equitable manner possible, while also providing essential government-supplied services. Taxes are collected by the state in order to fund public expenditures on a range of services, including infrastructure, education, healthcare, social security and welfare.
In this increasingly globalized world we live in today, it is important that everyone helps pay for these public services because of the benefits they provide us all.
- Why Taxes Matter?
Taxes are a way to redistribute resources in society. They can be used to create public goods, like schools and roads. They can also help provide a safety net for those who need it most.
Without taxes, the rich would get everything they could want while those with more modest incomes would have to pay for it all themselves. Taxes are also important because they help keep the economy working properly by balancing out buyers and sellers.
- What are the Important Tax Laws in Nigeria?
Nigerian taxes are levied on the individual and not on the company. This is also true for dividends, interest income, and capital gains.
Nigerian tax laws are confusing to foreigners and Nigerians alike. The most important tax laws in Nigeria involve the following:
– Taxation of Local Residents
The taxation of local residents is based on the type of residency status that an individual has. People who are considered as residents are taxed on their worldwide income.
– Taxation of Foreigners
Foreigners are sometimes subject to higher taxation than locals.
– Income Tax
Income Tax is a form of tax paid on income. It is based on the principle that a person’s income should be taxed in proportion to their income.
– Capital Gains Tax
The capital gains tax is a tax on profits made from the sale of certain types of property. The profit is calculated by deducting the purchase price from the sale price.
– Dividend Income Tax
Dividend Income Tax is the tax that an investor pays on dividends. It’s usually a flat rate of 15%.
- Nigerian Businesses & Importance of Tax Planning and Planning for Foreign Trade
Nigerian businesses have so much potential, with the right efforts and a little help from tax planning and foreign trade, we can make Nigeria one of the most successful economies in Africa.
The Nigerian government should make it easier for companies to register for tax, as well as making it easier for foreigners to invest in our economy. This will create more jobs and give more people the opportunity to start their own business.