Legal Nuggets on Regulatory Compliance: Tax Regime for Business Name Owners in Nigeria

Tolu Oni

If at the time of registering your business with the Corporate Affairs Commission, the name of your business outfit as it appeared of your certificate of registration does not end with Limited, PLC, Unlimited or Ltd Gte, then this article is for you.

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Every Business Name owner earning an income in Nigeria either from employment or from carrying on a business is subject to tax under the Personal Income Tax Act. This simply means that every business name owner is required to remit taxes from payments made to his/her employees (this includes salaries, wages, allowances, bonuses and any other type of benefit paid to the employee) on one part. On the other part, a business owner is required to pay taxes on all profits derived from his/her business or trade.

It is not good enough to know what the law is, it is best to comply at every given time. Below are important tax tips every business name owner should adopt:

  • Understand the basic principles of book keeping. If you don’t, find a professional to guide you through the process. This will make the determination of what is taxable easy.
  • Register with the State Board Internal Revenue in your place(s) of business and obtain a Tax Identification Number (‘TIN’) which will be used for the payment of taxes such as Personal Income Tax, Withholding Tax and VAT. The Personal Income Tax and Withholding Tax (if withheld from an individual i.e. not a company or business name) will be paid to the State Board Internal Revenue. The VAT and Withholding Tax (if withheld from a corporate organization or business name) will be remitted to the Federal Inland Revenue Service.
  • Every business owner is required to file an annual self-assessment tax returns within 90 days from the commencement of every year and include the amount of tax payable. For each year of assessment, you are required to file a return of income in the prescribed form with the relevant Tax authority where your business is deemed to be resident. If you operate your business in more than one state, you are required to file returns with the State Board Internal Revenue in each of those states limiting the details of your filing for each states to only businesses carried out there.
  • The law requires that every business deducts PAYE from all salaries, wages, allowances, bonuses and any other type of benefit paid to their employee(s) and remit such deductions within 10 days from the end of every month. Business owners should note that PAYE deductions should be remitted to the State Board Internal Revenue of the state where each employee is resident as opposed to where the business is located.
  • All applicable taxes have a tax rate structure, it is important for every business owner to get information on this. Even where you have your tax consultants handle this part of your compliance, it is important for you to have the basic understanding of what your tax liabilities are under the law and how this directly impacts your business.
  • Tax Holidays for Businesses with Pioneer Status: Every new business owner should keep him/herself abreast of several tax holiday schemes that the government offers. On 27th August 2017, the federal government added 27 categories to the Pioneer Status List. Businesses under these categories are to enjoy 3 years tax holiday from commencement of business with a possible extension for two years. These categories include meat and poultry production, animal feed, motion, picture, video & television programme production, E-commerce, real estate etc.
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Please note that the above is only a general guide. You should engage professional services to have a robust understanding of the tax regime applicable to your business. Send your comments and/or questions to

Tolu Oni is Head Legal at Health Plus Limited.




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