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A key understanding of the tax structure, which operates in Nigeria is quite important to ensure tax compliance.

What are the taxes applicable to startups in Nigeria?


CIT is the tax paid on the profits of companies in Nigeria. CIT is paid by on profit derived, received, accrued or brought into Nigeria. The Finance Act introduced a tiered approach to CIT...
...The tax rate of 0% applies to companies that have an annual turnover of below N25m, 20% applies to companies that have an annual turnover of more than N25m and less than N100m and 30% applies to companies with an annual turnover of N100m and above.

VAT may be said to be the most popular tax in Nigeria. The VAT rate is 7.5% and is payable by an individual, body of individuals or corporate entity for the sale of good or provision of services...
All registered businesses are therefore expected to register and have a VAT registration certificate, with their VAT registration numbers boldly displayed on all invoices. Companies are mandated by the government to deduct VAT from consumers and remit the same to the authority...
While educational institutions, food & grocery stores, medical and pharmaceutical companies, Medical and pharmaceutical products, basic food items, books and educational materials etc. are exempted from VAT, non-oil exports, goods and services purchased by diplomats, and goods
...purchased for humanitarian donor-funded projects are taxed at 0%.

Capital gains are the profits that one realizes when he or she sells a capital asset for a price that is higher than the purchase price. Capital gains taxes are the taxes charged on capital gains and are only triggered when an asset is sold...
...The capital gains tax rate is 10% of the profit derived from the sale, exchange or other disposition of assets.

Personal Income Tax, often called Pay-As-You-Earn (PAYE) is a Scheme in which deductions are made from the salaries or wages of the employee by the employer and remitted it to the relevant tax authority...
Startups are required to deduct and remit personal income tax on behalf of their employees. Personal income tax is calculated using the progressive tax rates ranging between 7% – 24%, depending on the amount of chargeable income.

WHT is an advance payment of income tax deductible at source on specified transactions. It can be applied as a tax credit against income tax liability in most instances...
Application: When a company or individual supplies goods or services to another company, an invoice will usually be issued as evidence of the transaction. The company is expected to deduct withholding tax from the amount payable and remit to the tax authority and issue a tax...
credit note to the issuing individual or company. The issuing individual or company will apply this as a credit against its tax liabilities. WHT rate is between 5%-10% depending on the type of transaction.

Stamp duty is a tax payable on documents evidencing transactions between persons. Some of such include - bank deposit or transfer, sales agreement, memorandum of understanding, tenancy agreement and other receipts.
Stamp duty is chargeable either at fixed rates or ad valorem (i.e., in proportion to the value of the consideration) depending on the class of document. According to the Stamp Duty Act, tax obligation must be remitted within 40 days after the parties sign the document.
DISCLAIMER: Please note that this post is for general information and should in no way be construed or relied on as legal advice. Do contact us (email or DM) should you require specific legal advice/assistance on the subject matter of this post.
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