Nigeria

Overview

Last reviewed - 28 January 2020

Nigeria, a country located in West Africa along the Gulf of Guinea on the Atlantic Ocean, is a federal constitutional republic comprised of 36 states and its Federal Capital Territory, Abuja. English is the official language of Nigeria, and its currency is the Nigerian naira (NGN).

Nigeria became the largest economy in Africa after rebasing in 2014. The gross domestic product (GDP) is estimated at 397 billion United States dollars (USD) for 2018 based on the information available from the Nigerian Bureau of Statistics.

As a developing country, Nigeria has been recognised by prominent members of the global investment community and economists as an up-and-coming market with tremendous growth potential over the next decades. A member of the Organisation of Petroleum Exporting Countries (OPEC) since 1971, Nigeria ranks as the largest oil producer in Africa and the 11th largest in the world. In addition to oil and gas, Nigeria has vast underexploited mineral resources, including coal, bauxite, gold, and iron ore. The country's natural resources have attracted the attention of the super major oil and gas companies as well as businesses in allied industries, including oil field equipment and services, transportation and logistics, and petrochemicals and plastics.

As the seventh most populous country in the world, Nigeria is also rapidly expanding its infrastructure and witnessing foreign and domestic investment from major players in the engineering and construction industry as well as the telecommunications sector. The financial services segment also continues to expand in Nigeria as international banks and investors look to capitalise on the expansion of the West African market.

Nigeria’s tax compliance rate is significantly low compared to other countries, especially given the weak revenue administration capacity to deal with evasion and lack of data mainly around the informal sector. The present administration is currently pursuing tax reforms that are geared towards achieving a business friendly environment and simplified tax administration. The Federal Government of Nigeria established the Presidential Enabling Business Environment Council (PEBEC), which was constituted by the President in August 2016, to address issues associated with the ease of doing business in Nigeria. As part of its commitment to achieving its objective of creating a conducive business environment in Nigeria, some of its initiatives with regards to paying taxes include:

  • Automatic registration for taxes upon incorporation.
  • Implementation of an Integrated Tax Administration System (ITAS) that will enable taxpayers to file tax returns and pay their taxes online. This is being implemented in phases. However, the implementation is facing certain challenges. State tax authorities and other tax authorities are slowly adopting the use of online platforms to aid compliance and reduce compliance costs for taxpayers. 
  • Reforms in the Federal Inland Revenue Service (FIRS) to ensure that issues raised by taxpayers are dealt with on a timely basis.
  • Obligation of the FIRS to issue tax clearance certificates (TCCs) to qualifying taxpayers not later than two weeks from the date of application.

Based on the release of Nigeria’s GDP for 2018, the country’s tax-to-GDP ratio remains low at 4.2%. The proposed reforms include a risk-based approach to enforcement of tax compliance. The Federal Government of Nigeria approved a new National Tax Policy in February 2017, which currently recommends a reduction in corporate income tax rates for small businesses, progressive personal income tax rates, and an increase in the value-added tax (VAT) rate for luxury items, amongst others. The National Tax Policy covers the tax incentive regime, tax morality, and transfer pricing (a new Transfer Pricing Regulation 2018 was released by the FIRS), encouraging voluntary compliance and reducing the cost of tax collection.

In 2018, the Joint Tax Board issued a collaborative framework for cooperation between the FIRS and the state tax authorities. This indicated that there is now clear movement in improving collaboration after many years of simply discussing the concept.

On 8 October 2019, the President presented the Finance Bill 2019 alongside the 2020 National Budget to the National Assembly. On 13 January 2020, the President of the Federal Republic of Nigeria, Muhammadu Buhari signed the Nigerian Tax and Fiscal Law (Amendment) Bill 2019 otherwise known as the Finance Bill into law. 

PwC has been operating in Nigeria since 1953 through its predecessor firms of Coopers & Lybrand and Price Waterhouse. We are one of the leading professional services firms in Nigeria, with offices in Lagos, Abuja, and Port-Harcourt, over 1,000 staff, and 31 resident partners.

We are committed to serving as a force for integrity, good sense, and wise solutions to the problems facing our clients. We are guided by one promise: to do what is right, be it with our people, clients, community, or environment. Our clients range from the biggest, most complex global establishments to smaller, newer businesses both privately owned and those in the public domain. Our Tax services meet the needs and requirements of each client, irrespective of size or location.

Quick rates and dates

Corporate income tax (CIT) rates
Headline CIT rate (%)

30% for Large Companies

20% for Medium companies

0% for Small companies

Corporate income tax (CIT) due dates
CIT return due date

Within six months of the financial year-end. For new companies it is the earlier of six months from its first accounting period or 18 months from incorporation.

CIT final payment due date

On or before the due date for filing.

CIT estimated payment due dates

On or before the due date for filing.

Personal income tax (PIT) rates
Headline PIT rate (%)

24

Personal income tax (PIT) due dates
PIT return due date

Employer PAYE returns are due by 31 January whilst individual returns are due by 31 March.

PIT final payment due date

Expected to be paid when individual returns are filed.

PIT estimated payment due dates

PAYE must be remitted on or before the 10th day of the month following the month in which salaries were paid.

Value-added tax (VAT) rates
Standard VAT rate (%)

5% to be increased to 7.5% effective 1 February 2020

Withholding tax (WHT) rates
WHT rates (%) (Div/Int/Roy)

Resident: 10 / 10 / 10;

Non-resident: 10 / 10 / 10

For non-residents, the WHT rate will be reduced to 7.5% through the use of a DTT.

Capital gains tax (CGT) rates
Corporate capital gains tax rate (%)

10

Individual capital gains tax rate (%)

10

Net wealth/worth tax rates
Headline net wealth/worth tax rate (%)

NA

Inheritance and gift tax rates
Inheritance tax rate (%)

NA

Gift tax rate (%)

NA

NA stands for Not Applicable (i.e. the territory does not have the indicated tax or requirement)

NP stands for Not Provided (i.e. the information is not currently provided in this chart)

All information in this chart is up to date as of the 'Last reviewed' date on the corresponding territory Overview page. This chart has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this chart, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.