COMPANY INCOME TAX (CIT) IN NIGERIA: THINGS YOU NEED TO KNOW

A registered business in Nigeria that earns a legitimate income is captured under the Company Income Tax Act (CITA), Cap C21, LFN 2004 (as amended) to pay the tax due from all its revenue sources. 

However, the provision of the Company Income Tax Act (CITA), Cap C21, LFN 2004 (as amended) exempts income or profits earned from some particular sources from CIT.

The following income is subject to CIT in Nigeria:

  • Profits accruing in, derived from, brought into, or received in Nigeria in respect of any trade or business.
  • Dividends (extended to include compensating payment arising from Regulated Securities Lending Transaction), interest (extended to include compensating payment arising from Regulated Securities Lending Transaction), royalties, discounts, charges, or annuities.
  • Rent or any premium arising from the right granted to any person for the use or occupation of any property, where applicable.
  • Any source of annual profits or gain not falling within the preceding categories.
  • Fees, dues, and allowances (wherever paid) for services rendered.
  • Any amount of profits or gains arising from the acquisition or disposal of short-term money instruments like treasury bills, treasury or savings certificates, debenture certificates, and treasury bonds.

The Finance Act 2021 also includes the profits earned by an educational institute to be chargeable under CIT at the applicable rates which were earlier exempted.

The following entities’ income or profit is exempt for CIT purposes:

  • Statutory or registered friendly societies.
  • Co-operative societies registered under any ecclesiastical, or charitable establishments of a public character.
  • Profit of a company established within an EPZ or FTZ.
  • Export profits, as long as proceeds are brought into Nigeria through government-approved channels and invested in raw materials, spare parts, and plant and machinery.
  • Small company’s profit. (Companies with Turnover of 25m and Below)
  • Profits of a company carrying on primary agricultural production for four years, and can be extended for another two years upon satisfactory performance.

What Taxaide Offers

  • Preparing Income Tax Computations and Returns documents, including:

· Tertiary Education Tax.

· Capital and Investment Allowances.

· Deferred Tax computation and analysis.

  • Assembling Transfer Pricing (TP); Documentations; Preparing of TP Returns documents and filing of TP Returns.
  • Filing of CIT Returns and or remittance of applicable taxes.
  • Facilitating the process of obtaining a CIT Clearance Certificate and other relevant certifications.

For further enquires on this bulletin or any other tax-related issues, you can contact 0700TAXAIDE

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