In Nigeria, all persons in employment, individuals in business, non residents who derive income from Nigeria as well as companies that operate in Nigeria are liable to pay tax.

Some taxes are payable to the Federal Government (and administered by Federal Inland Revenue Service), some are payable to the State Governments and some to Local Governments.

The various taxes collected by the FIRS are under listed and explained below;

• Petroleum Profits Tax (PPT): This is an act that imposes tax on profits of upstream petroleum operations. Upstream petroleum operations refers to exploration of petroleum products, mining and drilling. Downstream petroleum operations on the other hand refer to simple sale and distribution of processed oil products by local corporations. Therefore, corporations engaged in upstream exploration are subject to Petroleum Profits Tax (PPT), while downstream corporations are subject to Companies Income Tax (CIT). The current rate of petroleum profits tax is 50% for operations in the deep offshore and inland basin and 85% for operations in the onshore and shallow waters.

• Companies Income Tax (CIT): Although the rate of Corporate Income Tax (CIT) paid by a business varies from one country to another, it is imperative for a company owner to know what applies in his/her own country. Under the Companies Income Tax Act of Nigeria, a resident or non-resident company incorporated in Nigeria must pay Companies Income tax. This is done by an annual self-assessment and submission of tax returns according to specifications of the Federal Inland Revenue Service (FIRS).  For non-resident companies however, tax payment is done through remittance. For CIT, tax payable for each year of assessment on profits of a company accruing in, derived from or brought into Nigeria stands at 30%. Companies paying dividends to shareholders are also obliged to first pay tax on profits at the companies’ tax rate. Below are companies subject to the Companies Income Tax:

1. Companies resident in Nigeria, with the exception of companies engaged in petroleum operations.
2. Foreign companies that earn their income from Nigeria.
3. Organizations engaged in profit making activities other than promotion of their primary objects
4. Liquidator, receiver or agent of liquidator or receiver of any taxable company or organization

• Value Added Tax (VAT): This is a tax placed on a product whenever value is added at a stage of production and at the final sale. VAT is a way of charging tax on the increase in value of goods and services at each stage they are produced, rather than just selling on their final selling price to customers.
• Education Tax (EDT): Here, a tax of 2% of assessable profits is imposed on all companies incorporated in Nigeria. It is done with a view to ensuring that all companies contribute to the development of the education sector.
• Capital Gains Tax (CGT): This pertains to all gains accruing to a taxpayer from the sale or lease or other transfer of proprietary rights in a chargeable interest which are subject to a CGT of 10%. In simple terms, CGT is a tax on profits obtained from a disposal or exchange of certain kinds of assets.

• Personal Income Tax (PIT): This is a tax that governments impose on financial income generated by all entities within their jurisdiction. Thus, by law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. A person liable to PIT is expected to compute his tax liability , file tax return and pay tax, if any, accordingly on a calendar year basis.

• Withholding Tax (WHT): Withholding tax is an advance payment of income tax. It is the payment of income tax liability of a taxpayer or company. Because it is not a distinct tax type and has no legislation of its own, WHT is only a mechanism for collection of other taxes that may have been lost through evasion and/or avoidance.