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Income Tax

Companies (other than those engaged in petroleum operations) are subject to companies’ income tax (CIT) on their taxable profits. Nigerian companies are assessed to tax on their worldwide income, whilst non-resident companies (NRCs) are subject to tax only on profits accrued in or derived from Nigeria, to the extent that the profits are not attributable to operations outside Nigeria. For NRCs whose activities constitute a Significant Economic Presence (SEP) in Nigeria, CIT is charged on only the portion of the profit attributable to such activities in Nigeria. Every NRC carrying on trade or business in the country or whose activity constitutes SEP is required to prepare audited financial statements and file CIT returns within 6 months from the end of their financial year. However, withholding tax (WHT) is the final tax for such a NRC that derives profit from the provision of technical, management, consultancy, or professional services to persons resident in Nigeria, provided it does not have a fixed base, or engages in any other trade or business, in the country as defined by the CIT Act.

Further, Nigerian companies and NRCs are liable to minimum tax where:

  • the total assessable profit for any year of assessment (YOA) results in a loss; or
  • the ascertained total profits results in no tax payable; or
  • tax payable is less than the minimum tax,

unless they meet any of the criteria for exemption. Finance Act, 2019 amended the base and rate of minimum tax to 0.5% of a company’s turnover less franked investment income.

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