TAX

SUMMARIES
WITHOLDING TAX AND VALUE
ADDED TAX
 • Withholding tax is a method to collect tax in advance
Definition Of • Tax deducted at source from income especially from
dividends, paid to non-residents of a country, which may
Withholding be reclaimed if a double taxation agreement exists
between the country in which the income is paid and the
Tax country of residence of the recipient
WHT withheld for payment to
Penalty for late filing of
companies is collected by
The date for filing returns is 25,000 for the first
federal inland revenue
withholding tax is 21st day of month it occurs and 5,000 for
service(FIRS) while state
every succeeding month. each subsequent month the
revenue service (e.g., LIRS)
failure occurs.
for individuals.

Failure to deduct or remit is

Withholding tax credit note is 10% of the amount not
allowed to be ducted from deducted /remitted and
company income tax interest at the prevailing
market rate.
 Companies Individuals
Transactions
(%) (%)

Royalties 10 5
Contract of Supplies 5 5
Contract of Construction 5 5
Dividend 10 10
Technical Service 10 5
Withholding tax rates based on
the types of payment Professional Service 10 5
Consultancy 10 5
Management Service 10 5
Commission 10 5
Rent 10 10
Interest 10 10
Hire, Charter, List 10 10
Directors Fees 10 10
Transactions that are exempted from WHT,

i. Direct purchase across the counter,

ii. Direct purchase of raw materials from supplier as distinct from contract of supplies
iii. Sale in the ordinary course of business.
iv. All imported goods.
v. Inter- bank interest.
vi. Income exempted from income tax
vii. Claims in insurance business
viii. Interest on Bonds
ix. Dividends redistributed by Holding Companies.

I. Name and address of the Agent/Depositor.

ii. TIN of the Agent/Depositor
iii. The name and address of the
Taxpayer/Beneficiary
iv. TIN of the Taxpayer/Beneficiary
Content of remittance schedule of
v. The nature of transaction
withholding tax
vi. The gross value of the business on which
WHT is being deducted
vii. The applicable rate of WHT
viii. The amount of WHT deducted.
ix. Period covered
 VAT is a consumption tax paid when goods are purchased,
and services rendered.

All goods and services (produced within or imported into the

country) are taxable except those specifically exempted by
the VAT Act
Definition VAT is borne by the final consumer
of Value
Added Tax VAT is charged at a rate of 7.5%.

All taxable persons are required to file VAT monthly returns

not later than 21st day following the month of transaction
Vatable and Non-Vatable Goods and Services?
Vatable goods and services
Vatable Goods are all goods
manufactured/assembled in or imported into
Nigeria, except those specifically exempted under
the law. Examples of Vatable goods include
jewelries, shoes, bags, television etc.
VATable Services are all services rendered by any
person in Nigeria except those specifically
exempted under the law. Examples of VATable
services are, services rendered by Lawyers,
Engineers, Accountants, Contractors and
Consultants etc.
Exempted goods and services under
Value Added Tax (VAT) Act?
• All medical and pharmaceutical products.
• Basic food items.
• Books and Educational materials.
• Baby products.
• Fertilizer (locally produced), agricultural and veterinary medicine, farming machinery and
farming transportation equipment.
• Plant and Machinery imported for use in the Export Processing Zone or Free Trade Zone;
provided that 100% production of such company is for export.
• All commercial Aircraft and Aircraft spare parts imported for use in Nigeria.
• Amorphous Pet Chips (HS Code 3907.6000.00)
• Medical services.
• Services rendered by Community Banks.
• People’s Banks and Mortgage Institutions.
• Downstream Gas Utilization – Plant, machinery and equipment purchased for the utilization of
gas in downstream petroleum operations are VAT exempt. The Order essentially borrows the
definition of “Downstream Gas Utilization” from the Companies Income Tax Act and defines it
as “the marketing and distribution of natural gas for commercial purposes and includes power
plant, liquefied natural gas, gas to liquid plant, fertilizer plant, gas transmission and distribution
pipelines”.
• Plays and performance conducted by the educational institutions as part of learning.
• All exported services.
• Renewable energy- Wind and solar powered generators and other equipment are VAT exempt.
• Petroleum products – The Schedule to the Order exempts petroleum products from VAT,
including aviation and motor spirit, kerosene, natural gas, other liquefied petroleum gases and
gaseous hydrocarbons.
 Nigerian companies that are
carrying on Vatable transactions
Under the Nigerian with non-resident companies
within the country; 
VAT regime, three
groups of taxpayers Government ministries, statutory
bodies and other agencies of
are obligated to government; and
deduct VAT at source
and remit directly to Companies operating in the oil
tax authority. and gas sector.
 Zero-rated VAT means the goods and services
are Vatable, the applicable rate is zero
percent (0%).

Zero- rated
VAT The following transactions are zero-rated.
These are:-
i. Non-oil exports
ii. Goods and Services purchased by
Diplomats
iii. Goods and Services purchased by
humanitarian donor-funded projects
Penalties and fines
What are the penalties for Non registration of VAT?

A penalty of N10,000 for the first month in which the failure occurs and N5,000 for each
subsequent month. If this persists, the business premises will be sealed up after a considered
reasonable period.

What are the penalties for Non remittance of VAT?

•A penalty of a sum equal to 5% per annum plus interest at a commercial rate payable within
30 days of notification by the Tax Authority.​

What are the penalties for Non deduction of VAT?

Non deduction or failure to collect tax by a taxable person attracts a penalty of 150% of the
uncollected tax plus 5% interest above the CBN's rediscount rate