NIGERIA LAW AND PRACTICE Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Rebecca Ebokpo, Jibrin Dasun, Peretimi Akinmodun, Onyinyechi Chima and Princess Otah, ǼLEX
Withholding Tax (WHT) WHT of 10% applies to the payment of passive income (interest, dividends, royalties and rents) to a Nigerian company. For royalty payments, the withholding tax rate is 10% for corporate recipients and 5% for non-corporate recipients. In respect of passive income payments to a non- Nigerian company resident in a country with a double tax treaty (DTT) in Nigeria, the rates spec - ified in the tax laws shall apply, except where it exceeds the maximum rate specified in the DTT, in which case the DTT rate shall apply. The payment of technical, managerial, consul - tancy or professional services attracts WHT of 5% for Nigerian companies and 10% for non- resident companies. The WHT is the final tax when paid to a non-resident company. A 15% WHT applies to earnings of non-resident “entertainers and sportspersons”, and this is the final tax payable in Nigeria. WHT of 20% is payable on directors’ fees paid to non-residents, which is the final tax payable in Nigeria. Value Added Tax (VAT) VAT is levied on the supply of all goods and services to a person resident in Nigeria, at the rate of 7.5% and payable to the Federal Inland Revenue Service (FIRS). VAT is collected by the supplier of goods and services, excluding oil and gas companies (including oil service com - panies), ministries, departments and agencies of governments, and select telecommunications companies, which are required to pay VAT on the invoices from their suppliers directly to the FIRS. Non-resident suppliers of goods, services and intangibles (where the supply is made or facili -
tax is deductible for the company’s income tax purposes. • A levy of 0.005% of the net profit of a com - pany is payable annually to the Nigeria Police Trust Fund. • An oil and gas company is required to pay 3% of its annual budget to the Niger Delta Development Commission for tackling eco - logical problems in the Niger Delta, where most of Nigeria’s oil is produced. • A National Agency for Science and Engineer - ing Infrastructure (NASENI) levy of 0.25% of profit before tax is payable by companies engaged in banking, mobile telecommunica - tions, ICT, aviation, maritime, and oil and gas with a turnover of NGN100 million and above. When paid, the levy is deductible for the company’s income tax purposes. • The following companies are required to pay an annual levy into a fund to be maintained by the Financial Reporting Council of Nige - ria, with rates ranging from 0.02% to 0.05% based on turnover; the rates for publicly quoted companies range from 0.10% to 0.002% based on market capitalisation: (a) entities listed on any recognised exchange in Nigeria; (b) regulated entities; (c) public companies; (d) private companies that are holding com - panies of public or regulated entities; (e) companies with government concession/ licences; (f) private companies in which the govern - ment retains an interest; (g) companies engaged and paid by any tier of government for public works with an annual contract sum of more than NGN1 billion; and (h) companies with an annual turnover of NGN30 billion.
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