Taxation in the Nigerian economy is an important system that assists in the generation and redistribution of income to offer public services and enhance the economy. Due to its importance, the government has enacted laws that govern and regulate taxation in various sectors of the economy in Nigeria. The main laws governing taxation in Nigeria are as follows: –
Company Income Tax Act (CITA)
The Company Income Tax Act (CITA) is the main law governing corporate taxation in Nigeria. CIT is a tax imposed on a company’s gains from all its origins and it is also put on foreign companies operating a business in Nigeria. Section 1 of the Act offers for the establishment and composition of the board of directors, the operational arm of which will be given the name of Federal Inland Revenue Service, while section 3 lays down that the powers and duties of the board in relation to corporations comprises the tax collection and accounting of all the sums collected.
Capital Gains Tax Act
Capital Gains Tax Act – The legislation governing the capital gains tax is the Capital Gains Tax Act 1990. The capital gain tax is 10% of the company gains realized upon the disposal of chargeable assets or exchange of specific interests as provided by Section 2 of the Act. The most usual capital gains tax that is paid by the companies includes, but is not limited to, the sale of stocks, precious metals, bonds, real estate, disposal of assets and real estate investments in accordance with Section 6 of the Act. Capital gains tax accumulates per year.
Petroleum Profit Tax Act (PPTA)
Petroleum Profit Tax Act 2004 (as amended) rules the taxes that are levied on the income of companies in the operations of petroleum sector of an economy. The Act rules the financial functions of oil companies covering those in production of crude oil, marketing of petroleum and the servicing of companies in the survey, drilling, and data collection.