Nigeria now has a new way of reminding company owners their tax obligations to government. Going forward, all certificates of company registration issued by the country’s Corporate Affairs Commission, in charge of corporate affairs will boldly bear their tax identification numbers.
“This is to inform our esteemed customers that as part of the ease of doing business initiative, certificates of incorporation of companies registered under part A of CAMA will henceforth carry tax identification numbers issued by the Federal Inland Revenue Service (FIRS),” the corporation said.
“This has dispensed with the need for companies to apply for the issuance of tax identification numbers from FIRS after incorporation.”
Here Is What You Need To Know
- This was part of a statement issued by Corporate Affairs Commission (CAC) meaning that business owners who register their organisations with the Corporate Affairs Commission (CAC) would no longer need to obtain the tax numbers at the Federal Inland Revenue Service (FIRS).
- The statement said that certificates of incorporation issued by the CAC would now carry the numbers.
- However, it should noted that since all small businesses, and not companies, are covered in Part B of the country’s major law governing the operation of businesses, they would not be affected by the new policy.
Read also: New Taxes And Policy Changes Nigerian Businesses Should Expect In 2020
However, It Should Be Noted That Even Though Every Company In Nigeria Is Now Automatically Issued With A Tax ID, Small Businesses Which Registered As Companies Will Not Be Taxed Under The Country’s New Finance Law:
- Under the finance law, small businesses with annual turnover of less than N25m will be exempted from Companies Income Tax. However, to benefit from such incentive, such small businesses must first register for taxation in Nigeria and must continue to file tax returns during the period their profits are below the tax N25mn threshold
- A lower Corporate Income Tax rate of 20% ( as against 30%) will however apply to medium-sized companies with turnover between N25m and N100m, to benefit from such incentive, they must first register for taxation in Nigeria and must continue to file tax returns during the period their profits are between the N25m and N100m threshold.
- For companies or businesses that pay their tax dues early, a 2% deduction bonus on tax payable is given in the case of medium-sized companies between N25m and N100m and 1% deduction on payable tax is given for large companies from N100m and above.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer