18 January 2018
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Company Income Tax

Company Income Tax

 Is a Tax imposed by the Government on the income and profits of companies operating in the country. The law governing the administration of Companies Income Tax is the Companies Income Tax Act. The law which was first enacted in 1961 has undergone so many amendments, the latest being that of April, 2007.



The administration of the Companies Income Tax is vested on the Federal Inland Revenue Service which used to be known as the Federal Board of Inland Revenue (FBIR) until the enactment of the Federal Inland Revenue Establishment Act in April, 2007 which scrapped the FBIR and replaced it with Federal Inland Revenue Service.

Tax Rate: The current Tax rate in any year of assessment for a company in Nigeria is 30%. The tax is payable on the profits accruing in, derived from, brought into or received in Nigeria. These profits are in relation to the following activities:
    Any trade or business carried out
    Rent or any premium arising from a right granted any person for the use or occupation of any property.
    Dividends, interest, discounts, royalties, charges or annuities.
    Any source of annual profits not falling under any of the fore-goings.
    Fees, dues, and allowances for services rendered.
   Any amount of profits or gains arising from acquiring or disposing short-term money instruments like the federal   government securities, Treasury Bills and Savings Certificates, Debenture Certificates and Treasury Bonds.Any amount deemed to be income or profit with respect to any benefit arising from a pension or provident fund under the Personal Income Tax Act.

Payment of Minimum Tax:

Where in any year of assessment the ascertainment of total assessable profit from all sources of a company results in a loss, or where a company’s ascertained total profits result in no tax payable or tax payable which is less than the minimum tax, there shall be levied and paid by the company a minimum tax as prescribed by subsection (2) of section 33 of CITA.

The minimum tax to be levied and paid are as follows:

1.If the turnover of the company is N500,000 or below and the company has been in business for at least four calendar years, the minimum tax shall be:m ·0.5% of gross profit; or 0.5% of net assets; or ·0.25% of paid-up capital; or ·0.25% of turnover of the company for the year.

2.   If the turnover is higher than N500,000, be whatever is payable as per any of the above, plus such additional tax on the amount by which the turnover is in excess of N500,000 at a rate which shall be 50% of the rate used above of 0.25%.

Date of Filing Returns and penalty for late filing:

The date of filing returns for companies shall be:

In the case of a company that has been in business for more than 18 months, not more than 6 months after the end of the accounting year.
    In the case of a newly incorporated company within 18 months from the date of its incorporation or not later than 6 months after the end of its accounting period, whichever is earlier. In addition, the form of returns shall be signed by a Director who must be the Chairman or the Managing Director of the company and the Secretary respectively.

Any company which fails to comply with the provisions listed above shall be liable to pay as penalty for late filing as stated below: ·N25,000 in the first month in which the failure occurs; and N5,000 for each subsequent month in which the failure continues.

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