Nigerian Tax Laws
Taxes are established by law in Nigeria. By implication, such tax must have been passed into law through enactment of relevant statute (Act, By-law, decree among others). The tax law establishes the administrative body and specify its tax jurisdiction. Tax laws impose tax at a predetermined rate on specified income, profit, gain, and value of transactions of taxable persons. These laws are amended from time to time in view of meeting present economic situation, complexity of financial transaction, welfare, and social needs.
Structure of Nigerian Tax System
Tax structure in Nigeria is tailored towards Nigerian governance hierarchy (Federal, State and Local Government). Nigeria operates a decentralized tax system where each level of government is independently responsible for the administration of taxes within its jurisdiction. Nigeria generate revenue to fund government expenditure through a pool of taxes from each tier of government. A body is established for taxes due to each tier of government.
Federal Inland Revenue Service (FIRS) is the body that is responsible for the administration of taxes that are due to the federal government. The various state boards of internal revenue administer taxes that are due to state governments while the local government revenue committees administer taxes that are due to local governments. However, joint tax board advise, harmonize double taxation, and propose amendment.
Companies Income Tax, Education Tax, Stamp Duties, Custom Duties, Excise Duties, Withholding Tax and Value Added Tax are the major taxes administered by Federal Inland Revenue Service, the State Board of Internal Revenue majorly administer Personal Income Tax and Withholding Tax, while Local Government majorly administer levies.
Basis of Tax Administration
Taxes are established by tax statutes which form the basis of tax administration. These tax statutes usually specify the tax rate, due date, basis of assessment, offences, and penalties of the identified taxes.
Tax administration involves the registration, assessment, returns, collection, compliance monitoring, compliance enforcement, sanction, taxpayer’s education and awareness and any other activity that can improve the efficiency and effectiveness of taxation.
Sanction: Contravention with provision of relevant tax statute may lead to penalty or conviction. Contravention include failure to furnish required information or failure to keep required record, or any other non-compliance with relevant provision of required tax statute.