If you want answers to common questions on Nigerian PAYE tax, you are in the right place. Personal income tax is a type of direct tax that impacts the net salary of an employee. We’ve addressed twelve (12) frequently asked questions on Nigerian PAYE tax for beginners. At this point, you must have read BRC’s Guide on taxation of employees in Nigeria.
1. My company has only one (1) employee, should the company remit PAYE tax for 1 staff?
Yes, except where the employee is exempt under the law.
2. Is a worker with a monthly income of NGN30,000 or below liable to PAYE tax?
4. What is the tax rate for an employee in the Federal Capital Territory?
The tax rate has not changed. It is the same as the figures in the pre-Finance Act 2020.
5. What is the rate for foreign persons working in Nigeria?
The tax rate for nationals and expatriates are the same.
7. Should an employee pay tax on other allowances apart from basic salary?
Yes. An employee should pay tax on all employment income. Taxable income includes all employment income, gains, and allowances payable to an employee.
8. Can I deduct children and dependent relative allowance in calculating PAYE tax?
9. Can I claim employee and employer contributions as a personal income tax relief?
An employee cannot use an employer’s contribution to reduce tax. Only the pension contribution of an employee is allowed. A full review of the different payroll contributions is here.
10. How do I remit PAYE tax?
PAYE tax remittance is through the designated banks in Nigeria. Note: A person must register for tax before payment.
11. What can serve as proof that an employer paid the tax of an employee?
A person may use a tax clearance certificate (TCC) of the employee or an extract of the Form H1 return.
12. If an employer deducts my PAYE tax, how do I collect my TCC card? Is it from the employer, or do I apply to get one?
An employer will apply for a tax card on behalf of all employees.