What is withholding tax WHT under the Nigerian law?
What is withholding tax WHT under the Nigerian law?
WITHHOLDING TAX LAW Withholding Tax in Nigeria is a form of advance payment of income tax. The WHT is normally deducted at source when payment is to be made to a beneficiary. The law governing or regulating the payment WHT is the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA).
How does Nigeria withholding tax work?
A withholding tax is basically an advance and indirect source of taxation deducted at source from the invoices of the tax payer. Withholding tax rates are usually 10% or 5% depending on the type of transaction and collecting authority for the tax (which can be a Federal Inland Revenue or the State Inland Revenue).
What is Nigeria tax legislation?
Every taxpayer in Nigeria is liable to pay tax on the aggregate amount of his or her income, whether derived from within or outside Nigeria. The salaries, wages, fees, allowances, and other gains or benefits given or granted to an employee are chargeable to tax.
Who is responsible for withholding tax?
Tax withholding, also known as tax retention, Pay-as-You-Go, Pay-as-You-Earn, or a Prélèvement à la source, is income tax paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient.
What is PAYE in Nigeria?
pay as you earn
Below is the basis of pay as you earn (PAYE) calculation for an individual whose gross income is NGN 4 million. For the purpose of this calculation, it is assumed that pension is calculated at 8% of gross income and no NHF deduction.
Who pays withholding tax on rent in Nigeria?
The residential property is jointly owned by husband and wife. Non-residents’ gross rental income is subject to a withholding at a rate of 10%. The tenant deducts the amount and remits it to the tax authorities. Non-residents’ gross rental income is subject to a withholding tax at a rate of 10%.
What are the 3 principles of taxation?
In The Wealth of Nations (1776), Adam Smith argued that taxation should follow the four principles of fairness, certainty, convenience and efficiency. Fairness, in that taxation should be compatible with taxpayers’ conditions, including their ability to pay in line with personal and family needs.
What income is not subject to withholding?
Taxable income not subject to withholding – Interest income, dividends, capital gains, self employment income, IRA (including certain Roth IRA) distributions. Adjustments to income – IRA deduction, student loan interest deduction, alimony expense.