Avoid Costly Penalties: Your Complete Guide to Nigeria’s Tax Compliance Guide
Prepared by Sunmola David, BSc, MSc, FCA, FCTI Managing Partner, SUNMOLA David & Co (Chartered Accountants and Chartered Tax Practitioners) Contact: +2348038460036 | Website: www.sunmoladavid.com WhatsApp: +2348038460036
Nigerian tax laws require all companies and business names to file yearly tax returns and submit statutory documents. If you fail to comply, the Federal Inland Revenue Service (FIRS) may issue a Best of Judgment (BOJ) assessment against your business. This could result in unnecessary financial penalties. To avoid these problems, business owners must file all required returns on time.
A. Federal Inland Revenue Service (FIRS) Tax Returns
Both companies and business names must file the following returns with FIRS:
- Company Income Tax (CIT) – For Companies Only
Companies must submit annual tax returns together with their audited financial statements. The deadline for filing is within six months after the end of the company’s financial year. - Value Added Tax (VAT) – For Companies and Business Names
Businesses must file monthly VAT returns using Form 002. This form should include details of input and output VAT. The due date for submission is the 21st of the following month. - Withholding Tax (WHT) – For Companies and Business Names
Businesses must file monthly returns for taxes deducted from payments made to contractors, service providers, and other recipients. The deadline for filing is the 21st of the following month. - Education Tax (ET) – For Companies Only
Companies must pay 3% of their assessable profit as Education Tax. This tax is filed annually along with the Company Income Tax (CIT) return. - National Information Technology Development Levy (NITDL)
This levy applies to companies in designated sectors such as banking, telecommunications, and insurance. The amount is calculated as a percentage of profit before tax. - Capital Gains Tax (CGT)
Businesses must declare and pay Capital Gains Tax on profits made from selling chargeable assets such as land, buildings, or investments.
Important Note for Business Name Owners:
Business names are not required to pay Company Income Tax (CIT). Instead, the owners must file Direct Self-Assessment Tax under the Personal Income Tax Act (PITA) with the State Inland Revenue Service (SIRS) where they operate.
B. Corporate Affairs Commission (CAC) Annual Returns
- Annual Returns Filing
Both business names and companies must file annual returns using Form CAC 10. The deadline for submission is 42 days after the Annual General Meeting (AGM). - Reporting Changes in Company Details
If there are any changes in company details—such as directors, shareholders, or registered address—these updates must be reported to CAC immediately.
C. State Inland Revenue Service (SIRS) Returns
Businesses operating in any Nigerian state must comply with the following requirements:
- Pay-As-You-Earn (PAYE) Returns
Employers must file monthly returns for taxes deducted from employees’ salaries. The deadline for submission is the 10th of the following month. - Development Levy
This is an annual levy that applies to all employees and businesses. - Business Premises Levy
Businesses must renew their premises levy every year for all registered locations. - Direct Assessment (For Sole Proprietors and Business Name Owners)
Owners of unincorporated businesses must file personal income tax returns under the Direct Self-Assessment system.
D. Nigeria Social Insurance Trust Fund (NSITF) Returns
- Monthly Pension Contributions
Employers must remit both employee and employer pension contributions to a Pension Fund Administrator (PFA) every month. The deadline for payment is the 7th of the following month. - Pension Compliance Certificate
Companies bidding for government contracts must obtain this certificate to prove compliance with pension laws.
E. Nigeria Social Insurance Trust Fund (NSITF) Returns
Monthly Employee Contributions
Employers must make monthly contributions for employee social insurance coverage. The deadline for remittance is the 31st of the following month.
F. Industrial Training Fund (ITF) Returns
Annual Training Contribution
Companies with five or more employees must pay 1% of their annual payroll costs to the ITF. The payment is due once a year, based on the company’s financial year.
G. National Housing Fund (NHF) Returns
Monthly Employee and Employer Contributions
Employees earning ₦3,000 and above must contribute 2.5% of their salary to the NHF. Employers must remit these contributions along with their own portion. The deadline is the 10th of the following month.
H. Financial Reporting and Audited Accounts
- Audited Financial Statements
Companies must prepare audited financial statements and submit them with their CIT returns and annual CAC filings. - Publication of Accounts (For Public Companies Only)
Public companies must publish their audited financial statements in at least two national newspapers.
For further assistance or professional tax advisory services, please contact SUNMOLA David & Co (Chartered Accountants and Chartered Tax Practitioners).
Contact: +2348038460036 | Website: www.sunmoladavid.com
WhatsApp: https://wa.me/2348038460036
