NIGERIA Law and Practice Contributed by: Theophilus Emuwa, Jibrin Dasun, Perpetua Onyeukwu and Tubosiya Ibama, ǼLEX
1.4 Applicable Corporate and Individual Tax Rates Companies pay corporate income tax (CIT) at the rate of 30%. The Nigeria Tax Act (NTA) empowers the President to reduce the CIT rate to 25% on the advice of the National Economic Council. However, “small” companies (ie, those with a turnover of less than NGN100 million with total fixed assets not exceeding NGN250 million) are subject to CIT at 0%. In addition to CIT, companies that have converted from the Petroleum Act (PA) regime to the Petrole - um Industry Act (PIA) regime pay a hydrocarbon tax (HT) of 15% for operations in onshore and shallow waters pursuant to a Petroleum Prospecting Licence (PPL) and 30% in respect of operations in onshore and shallow waters pursuant to a Petroleum Mining Lease (PML). Companies that opt not to convert to the PIA regime will continue to pay petroleum profits tax (PPT) at rates that vary between 50% and 85%, depending on the nature of the company’s operations. Also, a company that has not commenced the sale of crude oil under a programme of continuous production will enjoy a reduced PPT rate of 65.75% until all pre-production capitalised costs have been fully amortised. Individuals are allowed a rent relief of 20% of annual rent paid, subject to a maximum of NGN500,000, whichever is lower. The balance of the income after the relief will be taxed in accordance with the gradu - ated tax rates set out below: • NGN800,000 at 0%;
electronic data storage, online adverts, participative network platforms, online payments, supply of user data, search engines, digital content services, online gaming, cloud computing and online teaching ser - vices, and profit can be attributable to such activity. The NRC would be subject to tax on the income attrib - utable to its PE and SEP. The third instance is where the NRC receives payment from a Nigerian resident or a Nigerian PE of an NRC: • for services provided from outside Nigeria, except where the payment is made by a foreign PE of a Nigerian resident and the expense is borne by that foreign PE; or • in respect of insurance premiums or risks insured within Nigeria. Tax Residence for Transparent Entities The income of transparent entities (general partner - ship, sole proprietorship and limited partnership) is taxed in the hands of their owners, where the owners are deemed to be tax-resident in Nigeria. An individual is deemed to be tax-resident in Nigeria if the person: • is domiciled in Nigeria; • has a permanent place available for their domestic use in Nigeria; • has a place of habitual abode in Nigeria; • has substantial economic and immediate family ties in Nigeria; • sojourns in Nigeria for a period or periods amount - ing to an aggregate of not less than 183 days in a 12-month period inclusive of annual leave or temporary period of absence; or • serves as a diplomat or diplomatic agent of Nigeria in another country. The income, gains or profits of a Nigerian resident are treated as accruing in Nigeria and are taxable regard - less of where they arise or whether they are brought into or received in Nigeria.
• next NGN2.2 million at 15%; • next NGN9 million at 18%; • next NGN13 million at 21%; • next NGN25 million at 23%; and • above NGN50 million at 25%. 2. Corporate Tax Regime 2.1 Taxable Profits
Taxable profits are arrived at by aggregating all income and gains and then deducting exempt income, allow -
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