What do I need to know about tax and employment law?
The Embassy strongly recommends that you contract a lawyer or business consultant to provide detailed advice on your tax and employment law obligations.
Your CAC registered company must be registered with the Federal Inland Revenue Service (FIRS) to obtain a Tax Identification Number (TIN) - a must for VAT and other tax payments. FIRS Registration must be carried out in the city or area where the company is officially registered. There is no existing Double Taxation Agreement between Ireland and Nigeria and the Nigerian 30% Corporate Income Tax must be paid on all earnings in Nigeria.
Other taxes include: Education Tax (2%); IT tax (1%) Capital Gains Tax (10%); Withholding Tax (5-10%); Value-Added Tax (5%); Personal Income Tax (max 24%); and Industrial Training Fund Tax (1%). federal, and state and local government taxes can lead to a multiple taxation burden and, for companies of a certain size, having a good tax adviser is essential. Some taxes are dependent on the number of staff or the turnover of the company.
For companies with 15 (previously 5) or more staff, the employer's contribution towards the employee's pension contribution is now calculated at 10% of monthly salary. Cities such as Lagos have revamped their tax collection systems and are implementing public works to justify tax collection. Lagos tax rates are among the highest in the country. All information on taxes can be found on the FIRS website.
Nigeria is highly unionised and trade unions wield considerable power. Strikes occur regularly, though they are unlikely to affect private entities. Fringe benefits paid to workers can include a housing allowance, medical insurance, transport allowance, annual holidays with pay, leave bonus, pension and end of employment gratuity contributions and meal subsidies. Employers are not permitted to make deductions from employees' remuneration other than those prescribed by law, such as taxes under the Pay As You Earn (PAYE) system, and collective bargaining agreements, as well as contributions to trade unions and contributions to provident and pension funds. Always ensure you have input from a lawyer and/or a HR specialist in order to comply with the latest labour, health & safety and environmental laws and regulations.