Tax Glossary

The profit figure used to calculate CIT, after deducting allowable expenses, capital allowances, and other deductions from gross revenue.

Tax on the profit from selling an asset (property, shares, etc.). Under NTA 2026, CGT rate is 30% for companies and 10% for individuals on chargeable gains.

Tax on the profits of registered companies. Rate is 0% for turnover under NGN 50M, 20% for NGN 50-100M, and 30% above NGN 100M under NTA 2026.

A tax relief of NGN 200,000 plus 20% of gross income, deducted before applying PAYE tax bands. This reduces your taxable income.

A mandatory digital invoicing system being introduced under NTA 2026. Businesses must issue and transmit invoices electronically for VAT compliance.

The former name of the federal tax authority, now replaced by the Nigeria Revenue Service (NRS) as of January 2026.

The tax authority responsible for collecting state taxes in Lagos. One of the most advanced state revenue services in Nigeria with online filing capabilities.

A mandatory 2.5% deduction from your basic salary, managed by the Federal Mortgage Bank. Used to fund affordable housing loans.

A social health insurance program. Employee contribution is 1% of basic salary, matched by 1% from the employer. Being restructured under the NHIA.

The federal body responsible for assessing, collecting, and accounting for federal taxes. Replaced the Federal Inland Revenue Service (FIRS) in January 2026.

The primary legislation governing taxation in Nigeria, updated in 2025 (effective January 2026). Introduced new PAYE bands, CIT thresholds, and compliance requirements.

The system where employers deduct income tax from employees salaries monthly and remit it to the tax authority on their behalf. Rates are progressive from 0% to 25% based on annual taxable income.

The regulatory body that oversees pension administration in Nigeria. Ensures PFAs and employers comply with the Pension Reform Act.

Employees contribute 8% and employers contribute 10% of basic salary, housing, and transport into a Retirement Savings Account (RSA) managed by a Pension Fund Administrator (PFA).

A licensed company that manages your Retirement Savings Account (RSA) and invests your pension contributions. Examples include Stanbic IBTC, ARM, and Leadway.

A tax holiday granted to businesses in certain approved industries. Can provide up to 5 years of income tax exemption. Applied for through NIPC.

The individual pension account where your pension contributions are held and invested. Managed by a Pension Fund Administrator (PFA) of your choice.

The system where taxpayers calculate their own tax liability and file returns, rather than the tax authority calculating it for them. Standard practice in Nigeria.

Income ranges with specific tax rates. Nigeria uses progressive bands where higher income portions are taxed at higher rates (0% to 25% for individuals).

The 12-month period for which tax is assessed. In Nigeria, it is typically the calendar year (January to December), though companies can use their financial year.

A document proving you have filed and paid all taxes due. Required for government contracts, loans, visa applications, and business registrations.

A unique 10-digit number assigned to every taxpayer in Nigeria. Required for all tax filings and linked to your BVN. Register through the NRS portal or your state revenue service.

A 7.5% consumption tax charged on goods and services at each stage of the supply chain. Businesses with turnover above NGN 25M must register and file monthly.

Tax deducted at source on payments for services, rent, contracts, and dividends. Rates are 5% for companies and 5-10% for individuals depending on the type of payment.

A receipt issued when WHT is deducted from your payment. Can be used as a credit against your final tax liability. Important to collect from every payer who deducts WHT.