Actually, the Nigerian Federal Inland Revenue Service explains it all on their website
Welcome to FIRS Individuals
The current law guiding the taxation of personal incomes is the Personal Income Tax Act (Cap P8 LFN 2004). Under the law, Federal and States’ tax boards are empowered to identify persons living in or earning income from Nigeria who are required to pay tax, and to assess incomes and tax their incomes using specified guidelines and rules.
This law also guides the tax official in identifying the residence of potential taxpayers, as well as the sources and origins of their incomes for the purpose of taxing the income.
Two forms of PIT
Two forms of taxes are administered under Act, namely (a) Pay-As-You-Earn (PAYE) i.e. taxes from employment, and (b) taxes from self employed persons.
A. Pay-As-You-Earn
PAYE TAX DEDUCTION GUIDE
This PAYE Tax Deduction Guide has been prepared to guide Taxpayers in filing their Annual Tax returns and to prepare their Income Tax computations.
2. All taxable persons are required to file their tax returns within 90 days from the beginning of every year and include the amount of tax payable.
3. The Personal Income Tax Act No 104 of 1993 in Section 3(1) lists Incomes that are chargeable to Tax as:-
Ψ Gain or Profit from any trade, business, profession or vocation for whatever period of time such trade, business, profession or vocation may have been carried on or exercised;
Ψ Any salary, wage, fee, allowance or other gain or profit from employment including gratuities, compensations, bonuses, premiums, benefits or other perquisites allowed, given or granted by any person to an employee.
Based on the above provisions of the Law, all Incomes earned by an Individual are liable to be assessed to Tax subject however to the exemptions granted under section 3(1) b (i to xiii) as amended. The details of these exemptions are as stated hereunder:-
4. Exempted Allowances
i. Rent Allowance - Maximum of N150,000 per annum.
ii. Transport Allowance - Maximum of N20,000 per annum.
iii. Utility Allowance - Maximum of N10,000 per annum.
iv. Meal Allowance - Maximum of N5,000 per annum.
v. Entertainment Allowance- Maximum of N6,000 per annum.
vi. Leave Allowance - 10% of Basic Salary per annum.
vii. Disability Allowance - 10% of Earned Income or N3,000
whichever is lower.
5. The Tax Reliefs
i. Personal Allowance - 20% of Earned Income + N5,000.
ii. Children Allowance - N2,500 per child for maximum of
4 Children.
iii. Dependant Relative Allce- N2,000 per Dependant.
iv. Life Assurance - 100% of sum paid (Evidence to
be submitted before this relief can be
granted).
v. Interest on Loan in respect of Owner Occupier premises – 100%
Subject to approval of the Board (FIRS).
vi. Pension contribution - 100% of sums paid.
6. Minimum Tax Provision
The minimum tax rate payable is 0.5% for any emoluments below N30,000 per annum earned by an individual in one fiscal year.
7. Chargeable Income then becomes taxable at the following rates:
1st N30,000 @ 5%
Next N30,000 @ 10%
Next N50,000 @ 15%
Next N50,000 @ 20%
Above N160,000 @ 25%
8. The Federal Inland Revenue Service seeks the co-operation of all Taxpayers as filing of their annual tax return is a mandatory requirement under the Personal Income Tax Act Cap. P8 LFN 2004.
(b) Federal Inland Revenue Service also collects Personal Income Taxes of
• Persons employed in the Nigerian Army, the Nigerian Navy, the
Nigerian Air Force and the Nigerian Police other than in a civilian
capacity;
• Officers of the Nigerian Foreign Service;
• Non-residents who derive income or profit from Nigeria.
So it's quite plain that all individuals having an income from working in Nigeria are subject to tax.
Tango 123,
What you get isn't tax free. In Bristow, for example, all your income is declared to the FIRS and the company then pays your tax so you still receive the amount you are told you'll get. A copy of that tax paid is available to you. CHC operate a similar scheme. Your remaining income is then a matter between you and your own country where it may well be that the fact that your Nigerian tax is paid for you is classed as 'a benefit in kind'. Many of the expatriates working in Nigeria are subject to some form of income tax in their home countries.
normally you are not supposed to pay tax to Nigeria when you are in the country less than 183 days in a year, flying on a weat lease on OY- registration and paying tax in your home country.
I think if you look through the regulations in the link I posted above, there's nothing in the exemptions sections about flying on a wet lease on OY- registration. If your company is leaving it up to meet your legal tax obligations in Nigeria, then maybe you're working for the wrong company or you need to point out to them that other companies pay tax on behalf of their workers.
Here's another explanation which may make it clearer for you
The tax system explained in beer:
When pondering the question of taxes and the structure of our tax
system in general please refer to this explanation using the language
of Beer !!
Suppose that every day, ten men go out for beer and the bill for all
ten comes to $100.
If they paid their bill the way we pay our taxes, it would go
something like this;
The first four men (the poorest) would pay nothing.
The fifth would pay $1
The sixth would pay $3
The seventh would pay $7
The eighth would pay $12
The ninth would pay $18
The tenth man (the richest) would pay $59
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with
the arrangement, until one day, the owner threw them a curve ball.
"Since you are all such good customers," he said, "I'm going to
reduce the cost of your daily beer by $20". Drinks for the ten men
would now cost just $80.
The group still wanted to pay their bill the way we pay our taxes.
So the first four men were unaffected.
They would still drink for free. But what about the other six men
- the paying customers?
How could they divide the $20 windfall so that everyone would get
his fair share?
They realised that $20 divided by six is $3.33.
But if theysubtracted that from everybody's share, then the fifth
man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each
man's bill by a higher percentage the poorer he was, to follow
theprinciple of the tax system they had been using, and he proceeded
to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing
(100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four
continued to drink for free. But, once outside the bar, the men began
to compare their savings.
"I only got a dollar out of the $20 saving," declared the sixth man.
He pointed to the tenth man, "but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a
dollar too. It's unfair that he got ten times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get $10
back, when I got only $2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "we didn't
get anything at all. This new tax system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the
nine sat down and had their beers without him. But when it came time
to pay the bill, they discovered something important. They didn't have
enough money between all of them for even half of the bill!
And that, boys and girls, journalists and government ministers, is
how our tax system works.
The people who already pay the highest taxes will naturally get
the most benefit from a tax reduction.
Tax them too much, attack them for being wealthy, and they just
may not show up anymore.
In fact, they might start drinking overseas, where the atmosphere
is somewhat friendlier.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
