A taxable person is required to register for taxes in Nigeria. Individuals, employees, partnerships, and communities pay personal income tax in Nigeria. Personal income tax is payable to the relevant tax authority. Tax residents in Lagos State usually pay tax to the Lagos State Internal Revenue Service (LIRS). The taxes and other levies payable to LIRS include PAYE tax, withholding tax, business premises levy, development levy. This guide will focus on how to register for tax with the Lagos State Internal Revenue Service.
Phase 1: Register for tax with Lagos State Internal Revenue Service - LIRS
- Search for the nearest LIRS office using the addresses on https://lirs.gov.ng/contact#locate_us
- An official application for PAYE tax registration including the response to LIRS questionnaire
Provide a copy of the following documents
- For companies – Memorandum and Articles of Association, Certificate of Incorporation, and Form CAC 1.1 (Status report). Formerly, Form CAC 7 (Particulars of the Company’s Directors) and CAC 2 (Statement of share capital and return of allotment of shares).
- For enterprises – Business Name Registration Certificate and Form 1.1. Formerly, Form CAC 7.
- Utility bill
- Rent agreement
- Tax clearance of the directors
- Staff payroll
- Evidence of payment for business premises levy
- Evidence of payment for development levy
- After registration, LIRS will issue a taxpayer ID and the details for remitting tax.
Registration on LIRS E-tax portal: LIRS uses e-filing. New users without the LIRS TaxPayer ID can register on the LIRS E-Tax portal via www.etax.lirs.net and click Signup. Enter the details of the individual, that is, the Bank Verification Number (BVN) and date of birth to generate a new TaxPayer ID.
Phase 2: Monthly tax returns
- PAYE tax is due on the 10th day of the month after payment of salary. For instance, tax on the employee’s salary paid in July will be due on 10 August.
- Withholding tax (WHT) is an advance payment of income tax. The WHT rate is between 5% and 10% depending on the type of transaction and recipient.
Phase 3: Annual tax returns
- Form H1: At the end of the fiscal year, the company will file an annual employer tax return (Form H1) showing the gross salary and PAYE tax of each employee.
- Individual Form A: The employer will file Form A return for all employees by 31 March.
- Annual tax clearance certificate: A company will apply for a tax clearance certificate (TCC) on behalf of employees. While there is no deadline, most taxpayers usually process TCC after filing the Form H1 or Form A.
Useful resources
- There are other statutory deductions that an employer will deduct from employment income. However, this is subject to certain conditions. Two popular types are contributions to a pension fund and industrial training fund, although it is not mandatory for businesses with two (2) employees. To read more on the statutory deductions, check here.
- Guide on PAYE tax in Nigeria that shows an overview of the PAYE tax system.