Personal Income Tax (PIT): Compliances and Filing in Nigeria

Описание: Personal Income Tax (PIT) in Nigeria: Compliances and Filing in Nigeria

Key Reforms Across Tax Types

1. Personal Income Tax (PIT)
a. Pay-As-You-Earn (P.A.Y.E)
b. Direct Assessment

Exemption for individuals earning ₦800,000/year or less.

Progressive rates of up to 25% for higher earners; broader brackets reflect inflation.

Rent relief: a ₦200,000 deduction on rental expenses helps lower taxable income.

Compensation exemption: up to ₦50 million is exempted for loss of employment or injury.

Personal Income Tax (PIT) in Nigeria as of September 2025, including both the current system and upcoming changes under the new tax law:
TAX PAYER NAME: XYZ

TOTAL INCOME 2,000,000.00

LESS: RELIEFS
PERSONAL ALLOWANCE (Earned Income*20%+200,000) 600,000.00 (600,000.00)


TAXABLE INCOME 1,400,000.00

GRADUATED TAX RATES
1ST 300,000 300,000.00 7% 21,000.00
NEXT 300,000 300,000.00 11% 33,000.00
NEXT 500,000 500,000.00 15% 75,000.00
NEXT 500,000 300,000.00 19% 57,000.00
NEXT 1,600,000 0 21% -
Above 3,200,000 0 24% -

ANNUAL TAX PAYABLE 186,000.00


Under Nigeria Tax Act (Effective 1, January, 2026)

TAX PAYER NAME: XYZ

TOTAL INCOME 2,000,000.00

LESS: RELIEFS
Rent Allowance (lower of 500,000 or 20% of annual rent)
Lower of:
a. 500,000
b. 400,000 (400,000.00)

TAXABLE INCOME 1,600,000.00

GRADUATED TAX RATES
1ST 800,000 800,000.00 0% -
NEXT 2,200,000 800,000.00 15% 120,000.00
NEXT 9,000,000 - 18% -
NEXT 13,000,000 - 21% -
NEXT 25,000,000 - 23% -
Above 50,000,000 - 25% -

ANNUAL TAX PAYABLE 120,000.00

New Tax Structure (Effective January 1, 2026) As part of major reforms under the Nigeria Tax Act 2025, President Tinubu signed a new law on June 26, 2025, which introduces significant updates to PIT starting January 1, 2026.

Who Collects PIT?
State Internal Revenue Services (SIRAs) handle PIT for residents of the state—this includes virtually all employees and small business owners.

The Federal Inland Revenue Service (FIRS) collects PIT only from: Residents of the Federal Capital Territory Federal government workers (e.g., military, police, foreign service) Non-residents earning income in Nigeria

Filing And Deadlines
Tax Year: January 1 – December 31
Returns: Must be filed within 90 days after year-end.
PAYE: Employers remit deducted taxes by the 10th day of the following month
Company must file PAYE annual returns on or before January 31

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