Taxation is perhaps the oldest recognized profession in the world. It has always been with us, it is still with us, and it will continue to be with us. According to chapter two, verse one of St. Luke's gospel of the Holy Bible which reported the birth of our Lord Jesus Christ with a decree from Augustus Ceasar that all the world should be taxed. "and it came to pass in those days that there went a decree from Ceasar Augustus that all the world should be taxed;" (and this taxing was first made when Cyrenious was governor of Asyria).
This Biblical record is perhaps the origin of taxation. Taxation may be defined as the compulsory contribution imposed by a public authority, irrespective of the amount of services rendered to the taxpayer in return. Taxation can also be defined according to Ola (1987) as the demand made by the Government of a country for compulsory payment of money by the citizens of the country. Tabansi (1997) says tax is a levy imposed by the Government against the income, profit or wealth of the individual, partnership and corporate organization.
The above definitions emphasizes the fact that taxation is a compulsory levy or contribution that is imposed by the Government on the people resident in the country. Since it is a compulsory payment made either directly or indirectly, refusal to comply becomes an offence, which attracts punishment.
Taxation is divided into various types such as Income Tax, Corporation Tax, Capital Gain Tax etc. In Nigeria, tax is levied by the authority of Federal Government Income Tax Management Act of 1961 (ITMA) and subsequent amendment, including the finance (Miscellaneous Taxation Provisions) Decree 1992 and the finance (Miscellaneous Provisions) Decree 1997. The tax year of most government establishment is based on the fiscal year, which is the normal calendar year and ranges from 1st January to 31st December of the same year. This income tax year is also called the year of assessment, for instance the 1999 year of assessment is the 1999 fiscal year.
Table of Contents
CHAPTER ONE GENERAL PRINCIPLES OF TAXATION
CHAPTER TWO TAXATION OF INDIVIDUALS
CHAPTER THREE COMPANTIES INCOME TAX
CHAPTER FOUR BASIS OF ASSESSSMENT OF PROFITS OF COMPANIES
CHAPTER FIVE CAPITAL ALLOWANCES
CHAPTER SIX DOUBLE TAXATION RELIEF
CHAPTER SEVEN CAPITAL GAINST TAX
CHAPTER EIGHT THE TAXTION OF TRUST, SETTLEMENT AND ESTATE
CHAPTER NINE VALUE ADDED TAX (Decree 102 0f 1993)
CHAPTER TEN TAX PLANNING
CHAPTER ELEVEN TAXATION OF SPECIAL COMPANIES
CHAPTER TWELVE PETROLEUM PROFITS TAX (PETROLEUM PROFITS TAX ACT CAP. 354 LFN 1990)
Objectives and Topics
The primary objective of this work is to provide a comprehensive analysis of the Nigerian tax system, including its historical development, legislative framework, and the administrative mechanisms across federal, state, and local government tiers. The study explores the principles of taxation, methods of assessment, and the distinction between tax avoidance and evasion, while offering practical insights into corporate and individual tax computation.
- Fundamental principles and historical evolution of taxation in Nigeria.
- Tax administration structures and the roles of federal, state, and local tax authorities.
- Assessment principles and methods for both individuals and corporate entities.
- Tax incentives and relief measures, including pioneer status and investment tax credits.
- Provisions for double taxation relief, petroleum profits tax, and value-added tax implementation.
Excerpt from the Book
GENERAL PRINCIPLES OF TAXATION
Taxation is perhaps the oldest and recognized profession in the world. It has always been with us, it is still with us and it will continue to be with us. According to chapter two verse one of St. Lukes gospel of the Holy Bible which reported the birth of our Lord Jesus Christ with a decree from Augustus Ceasar that all the world should be taxed.
“and it came to pass in those days that there went a decree from Ceasar Augustus that all the world should be taxed; (and this taxing was first made when Cyrenious was governor of Asyria).
This Biblical record is perhaps the origin of taxation.
Taxation may be defined as the compulsory contribution imposed by a public authority irrespective of the amount of services rendered to the taxpayer in return.
Summary of Chapters
CHAPTER ONE GENERAL PRINCIPLES OF TAXATION: This chapter traces the origin of taxation and covers the fundamental definitions, historical development in Nigeria, and general objectives of the tax system.
CHAPTER TWO TAXATION OF INDIVIDUALS: Focuses on the charging and assessment of individuals, including earned vs. unearned income, PAYE systems, and available reliefs and allowances.
CHAPTER THREE COMPANTIES INCOME TAX: Details the legislative framework and filing obligations for limited liability companies, excluding those involved in petroleum operations.
CHAPTER FOUR BASIS OF ASSESSSMENT OF PROFITS OF COMPANIES: Explains the procedures for assessing company profits, specifically addressing the rules for commencement, cessation, and changing accounting dates.
CHAPTER FIVE CAPITAL ALLOWANCES: Provides an overview of capital allowance types, qualifying expenditures, and the specific rates applicable to various assets.
CHAPTER SIX DOUBLE TAXATION RELIEF: Discusses the mechanisms used to prevent the double taxation of foreign income, covering both Commonwealth reliefs and bilateral agreements.
CHAPTER SEVEN CAPITAL GAINST TAX: Defines and details the taxation of capital gains, including key exemptions, disposal definitions, and roll-over relief provisions.
CHAPTER EIGHT THE TAXTION OF TRUST, SETTLEMENT AND ESTATE: Outlines the administration and taxation of trusts, settlements, and deceased estates.
CHAPTER NINE VALUE ADDED TAX (Decree 102 0f 1993): Explains the characteristics of VAT, calculation methods, and its application to different goods and services.
CHAPTER TEN TAX PLANNING: Guides the reader on strategies for minimizing tax liabilities legitimately while adhering to existing tax laws.
CHAPTER ELEVEN TAXATION OF SPECIAL COMPANIES: Examines specific tax treatments for industries such as air and sea transport, insurance, and banking.
CHAPTER TWELVE PETROLEUM PROFITS TAX (PETROLEUM PROFITS TAX ACT CAP. 354 LFN 1990): Covers the specific tax environment and incentives unique to the petroleum sector.
Keywords
Taxation, Nigeria, Income Tax, Companies Income Tax, Petroleum Profits Tax, Capital Gains Tax, Value Added Tax, Tax Administration, Tax Relief, Capital Allowances, Double Taxation Relief, Tax Avoidance, Tax Evasion, Revenue, Fiscal Policy.
Frequently Asked Questions
What is the core focus of this publication?
This publication serves as a comprehensive guide to Nigerian taxation law and practice, providing detailed information on tax statutes, assessment methods, and administrative procedures for businesses and individuals.
Which entities are primarily affected by the tax laws outlined?
The work covers individual taxpayers, limited liability companies, partnerships, trusts, estates, insurance companies, banks, and enterprises involved in the petroleum industry.
What is the primary objective of the Nigerian tax system according to the text?
The system aims to generate revenue for government administration, reduce income inequality, control inflation, provide subsidies for preferred sectors, and serve as a tool for economic growth and planning.
How are tax disputes addressed in the Nigerian framework?
Taxpayers have the right to file formal objections in writing to the relevant Tax Authority. If they remain dissatisfied, they can appeal to the Body of Appeal Commissioners or state courts.
What characterizes the Nigerian Value Added Tax system?
Nigeria utilizes a single-rate VAT system of 5%, which is a consumption-based tax applied to a wide range of goods and services, excluding those specifically permitted as exempt.
What is the distinction between tax avoidance and tax evasion?
Tax avoidance involves legally exploiting loopholes in tax laws to reduce liability, whereas tax evasion is a criminal act involving false declarations or illegal non-compliance.
How is the capital allowance calculated for new versus old assets for a taxpayer?
The text explains that allowance calculation depends on the nature of the asset (e.g., building vs. plant), the historical cost, the initial allowance rate, and the annual straight-line depreciation rate assigned to the asset type.
What incentives are provided for taxpayers in the petroleum sector?
The industry benefits from specific incentives such as Investment Tax Allowances (ITA), accelerated capital allowances, guaranteed minimum margins, and graduated royalty rates to encourage exploration and production activities.
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- Johnbest Churchill (Autor), 2022, Taxation Principles and Practices in Nigeria, Múnich, GRIN Verlag, https://www.grin.com/document/1302325
