RESEARCH BACK UP

1.0 INTRODUCTION Company income tax has been distinguished from personal income tax by enacting a separate legislation to cater for it. The legislation is known as Company Income Tax Act 1979 (CITA) as amended. The act defines a company, under section 84, as a corporation established by or under any law (such as the Companies and Allied Matters Act (CAMA) 1990) in force in Nigeria-for instance, or elsewhere. A Nigerian company is distinguished from a foreign company; the former is liable to company income tax on all its profits wherever they arise, whether or not they have been brought into or received in Nigeria. The profits of the latter, on the other hand, shall be deemed to be derived from Nigeria to the extent to which such profits are not attributable to any part of the operations of the company carried on outside Nigeria. In other words, the profits of a foreign company are taxed to the extent that they are derived from sources within Nigeria. Therefore, this unit shall expo...

1.0 INTRODUCTION Construction Companies that are registered in Nigeria and even those that operate in the country pay tax under the Nigeria tax system. The legislation that regulates them is the Companies Income Tax Act, 1993. Section 13 (2) of LFN, 2004 states that profits of a company from any trade or business shall be deemed to be derived from Nigeria. Construction companies often engaged in contract work, which involves the execution of building and civil engineering projects, mechanical and electrical engineering installations and other fabrications normally evidenced by an agreement between two or more parties. These companies engage in both short and long-term construction contracts that should be completed within twelve months or expected to take more than twelve months to be completed. Thus in this unit, you will be exposed to the ascertainment of profits arising from both short and long-term construction works that are subjected to tax. 2.0 OBJECTIVES At the end of t...

1.0 INTRODUCTION Company income tax act requires that income received in or brought into Nigeria should be subjected to tax and any Nigerian who earns his income from abroad will be taxed in the country where the income originates and at the same time such income would also be taxed in Nigeria where the recipient resides. The implication of this is that the same income received is being taxed twice. To lessen the burden imposed by double taxation on recipients, various countries have therefore, made provisions for double taxation relief. Part VI of CITA contains the provisions relating to double taxation relief. Section 32 in this part deals with circumstances where there are no specific double taxation agreements while section 33 and 34 cover cases where there are agreements. The double taxation relief is also applicable to individuals and is governed by section 23, 24, & 25 of ITMA 1961. The incomes of both individuals and companies are assessable to tax on the basis of their res...

1.0 INTRODUCTION Section 12(1) of CITA 1990 states that the profit or loss of a foreign company which carries on the business of transport by sea or by air, and any ship or aircraft owned or chartered by it and calls at any seaport or airport in Nigeria- its income or loss is deemed to be derived from Nigeria- shall be the full profit or loss arising from the carriage of passengers, mails, livestock or goods, shipped or loaded into an aircraft in Nigeria. This provision does not apply to passengers, mails, livestock or goods which are brought to Nigeria, solely for transhipment or for transfer from one aircraft to another or in the direction between an Aircraft and a ship. Hence, the assessment of companies such as these to taxation differs a little in terms of the principles and methods from other assessments. The unit shall expose you to the detailed issues involved. 2.0 OBJECTIVES At the end of this unit, you should be able to:  state the issues involved in taxation for shipping...

Methods of Assessing Personal Income-Pay-As-You-Earn(PAYE) System P.A.Y.E. as an abbreviation relates to how an employee is assessed to taxation. The assessment is on actual year basis, but operates on monthly basis throughout the year. It can simply be defined as a scheme whereby tax on employees’ income is deducted at source by the employer and remitted to the relevant tax authority within 14 days after the end of the month. 3.4.1 Residence A place of residence means somewhere available to an individual for his/her domestic use in Nigeria, on a relevant day (1st January), which excludes a hotel, rest house or other places at which he is temporarily lodging unless there is no other place available for his use on that day. The definition is contained in schedule 1 of PITA, 1993. Further, it may be necessary to determine a principal place of residence- where an individual resides in more than one place. Principal place of residence (not being both within the same territory) means: fo...

1.0 INTRODUCTION Insurance companies are owned either wholly by foreigners or Nigerians, or partly owned by both foreigners and Nigerians. These companies can either be for life or non–life insurance businesses. Section 14 (1 – 5) of CITA 1990 provides for the taxation of such companies, which gives them certain unique principles and methods that are adopted for the ascertainment of their taxable profits and subsequently, their tax liabilities. This unit, therefore, exposes you to those unique intricacies and the computations of taxable profits for both life and non–life insurance companies. 2.0 OBJECTIVES At the end of this unit, you should be able to: distinguish between life and non–life insurance companies  explain how the profits of life and non–life insurance companies are ascertained  discuss the term “permanent establishment”  explain the general procedures for ascertaining tax liabilities in respect of all insurance companies, irrespe...

1.0 INTRODUCTION Bank’s taxation falls within the provisions of the Companies Income Tax Act of 1993 (CITA). Therefore, it shares the same corporation tax rate prevailing in every fiscal year with other companies. However, banks pay extra tax on any excess profit that emanates from their assessments. Therefore in this unit, you will be exposed to the computational aspects of bank taxation. 2.0 OBJECTIVES At the end of this unit, you should be able to: explain the term “excess profit”  identify the provisions of CITA that relate to the banking sector  compute taxable and excess profits for tax purposes   ascertain tax liability of banks.  3.0 MAIN CONTENT 3.1 Banks’ Excess Profit CITA, 1979 provides that banks shall pay tax for each year of assessment in respect of any taxable profit computed. In addition to this tax which applies to all companies under CITA, there shall, as from the year of assessment commencing on 1st April, 1978,...

1.0 INTRODUCTION Settlements, trust and estate administrations have given rise to issues of accounting and taxation. Usually, the administrators of deceased properties are expected to give detailed account of his stewardship to all the beneficiaries and tax authorities to their satisfaction. Hence, tax authorities use these accounts to assess the income of the deceased person arising from either the disposal or valuation of the property or assets. In carrying out the tax assessment, individual beneficiaries pay tax according to their benefits (in terms of the property/assets) and not collectively from the entire property. This unit demonstrates to you the preparation of accounts of this nature and the apportionment of computed income arising there-from. 2.0 OBJECTIVES At the end of this unit, you should be able to:  state the differences between trusts, settlements and estates explain the preparation of accounts of this nature and identification of beneficiaries...

1.0 INTRODUCTION The administration of taxes in Nigeria rests on various tax authorities depending on the type of tax under consideration. Broadly speaking, we have three tax authorities, as shown below. The Federal Board of Inland Revenue (FBIR)   The State Internal Revenue Board (SIRB)  The Local Government Revenue Committee  The principles of fiscal federalism give the three tiers of government the right to collect taxes within their areas of jurisdiction. The enabling law in respect of each type of tax contains a provision as to the body charged with the administration of such a tax. Each body with its composition had been discussed in details. 2.0 OBJECTIVES At the end of this unit, you should be able to: discuss the different organs charged with the responsibility of tax administration in Nigeria   enumerate the various tax laws in Nigeria   explain the functions and composition of the Joint Tax Board  outline the procedures for regi...

1.0 INTRODUCTION In every country, taxes are levied on profits arising from a regular business operation or from a one – off action which may not necessary involved a business activity. In Nigeria, taxes are levied on income from employment business operations and the disposal of capital goods. Legislations such as PITA, CITA and PPTA regulate taxation of income, while CGTA regulates taxation of capital. This unit explains to you, extensively, capital gains tax and draws a clear difference between it and other forms of taxes. 2.0 OBJECTIVES At the end of this unit, you should be able to:  state the differences between the taxation of income and taxation of capital   illustrate the composition of the taxation of income and taxation of capital   discuss the similarities between the two forms of taxation  define capital gains tax, clearly  explain roll over relief, vividly.  3.0 MAIN CONTENT 3.1 Taxation of Income Income accr...

1.0 INTRODUCTION A partnership is a business organisation where two or more persons pool their resources together with a view to making profit. The business is usually conducted in accordance with certain terms and conditions as agreed to by all the partners. However, where no fixed terms are agreed upon for the period of partnership, then the association is a partnership at will. According to Soyode & Kajola (2006:229), partnership is a relationship subsisting between two or more persons agreeing to carry on business in common with a view to making profit under some arrangement, for the sharing of the resultant profit or loss for tax purposes. Partnership income is computed in the same way as that of sole trader and company income so as to ascertain the taxable profit for a given year of assessment. In computing the adjusted profit of a partnership, allowable income and deductions according to section 20 of PITA, and disallowable income and deductio...

1.0 INTRODUCTION The taxation of employees and sole traders is covered by ITMA and PITA. It falls under the personal income tax system of Nigeria. The collection of personal income tax is vested in the State Board of Internal Revenue (SBIR) of the principal place of residence of self – employed individual and principal place of business of employed individuals. Each SBIR is assisted by its operational arm- the State Internal Revenue Service (IRS), in carrying out its primary duties which include assessment and collection of taxes from individuals resident or working in a state. This unit, therefore, exposes you to the Pay-As-You-Earn (PAYE) system, earned and unearned incomes of a sole proprietorship business with all associated deductions and non-deductible expenses. Reliefs and allowances will also be considered. 2.0 OBJECTIVES At the end of this unit, you should able to:  itemise personal incomes chargeable to tax in Nigeria  explain the meaning of earned an...