Understanding Business Taxes in Nigeria: A BeeBot Guide for New Businesses
July 2, 2024
Understanding Business Taxes in Nigeria: A BeeBot Guide for New Businesses
Congratulations on incorporating your business in Nigeria! Now that you’re officially up and running, navigating the world of business taxes can seem daunting. But fear not, this guide will equip you with the essential knowledge to ensure you’re compliant and financially prepared.
Essential Taxes for Nigerian Businesses
1. Company Income Tax (CIT): This tax is levied on your business’s profits. The rate depends on your annual turnover:
No tax: Businesses with a turnover below 25 million Naira.
20%: Businesses with a turnover between 25 million Naira and 100 million Naira.
30%: Businesses exceeding 100 million Naira in turnover.
2. Value Added Tax (VAT): A consumption tax currently set at 7.5%, added to the supply of most goods and services. Registered businesses collect VAT on sales and remit it to the Federal Inland Revenue Service (FIRS). Now you understand why there is a VAT charge at the end of your shopping receipt.
3. Capital Gains Tax (CGT): This is a 10% tax on profits from selling assets like property, stocks, or bonds.
Additional Taxes to Consider
Withholding Tax (WHT)
A Withholding Tax applies to certain business payments, such as dividends, rent, and management fees. The withholding tax rate varies depending on the nature of the payment.
Important Dates and Deadlines
Company Income Tax: Filing is due within six months of the end of your accounting year or 18 months of incorporation for new businesses, whichever is earlier.
Value Added Tax: VAT returns and payments are typically due monthly.
Tips for Managing Business Taxes
Maintain Accurate Financial Records: An accurate financial record is crucial for calculating your tax liability and ensuring smooth filing.
Register for VAT (if applicable): If your turnover exceeds the VAT registration threshold, you must register and become a collection agent for the government.
Seek Professional Advice: A tax consultant can guide you through complex regulations and ensure you’re optimising your tax position. We recommend BeeBot’s professionals to help you with tax-related matters. We assure you of safety and compliance.
Utilise Technology: Our platform has tools to help you with tax calculations, filing, and record-keeping, as well as firsthand consultation and advice from our business formation professionals.
Understanding your tax obligations and staying organised can ensure your business remains compliant and avoids penalties. Remember, BeeBot is here to support you beyond incorporation—whether abroad or in the country. Feel free to reach out if you have any further questions about navigating the business landscape in Nigeria.