LECTURES ON PAY AS YOU EARN (P.A.Y.E.) AND WITHHOLDING TAX PRESENTED BY HAMMAN BALA IZGE DURING THE ONE DAY SENSITATION AWARENESS WORKSHOP ORGANISED BY THE ASSOCIATION OF LICENCED PRIVATE SECURITY PRACTITIONES OF NIGERIA (ALPSPN) ON THE 28TH JULY, 2016
PAYE AS YOU EARN (PAYE) S.81PITA
- – A form of PIT payable by those in employment.
- – It is deducted at source .
- – Should be deducted by employers and remitted to the relevant tax authority.
- – Self-employed are requested to assess themselves
- – The amount so deducted to be remitted ot the relevant tax authority not later than 14th of the preceding month.
- – Penalty for fairlure to deduct and remit tax is 10% of the tax not deducted/remitted plus interest at CBN monetary policy rate–PITA S.70(1)
- – Any employment with five employees or more should make returns.
RIGHT OF TAXPAYER
- To know how to access his income to tax, when to pay and where to file returns and make payments.
- To demand for evidence of payment i.e. receipt or tax clearance certificate (TCC)
- To know what government does with the tax collected.
- To know when penalty and interest will be applied to you on fairlure to payment.
- To seek redress appeal or object to assessment raised or decision taken against you.
OBLIGATION OF TAX PAYER
- To assess correctly, file and make payments as and when due.
- To comply, with the relevant provision of the tax laws
- To disclose all sources of income for tax purpose.
GENERAL REQUIREMENT OF FILING AND PAYMENT OF TAX UNDER PITA
- An indidvidual engaged in full time employment is taxed under pay as you earn system.
- Employers withhold PAYE from the employee’s salary and pay to the relevant tax authority within 14days.
- Every individual employer must make returns unless his income does not exceed N300,000.00
- Other individuals pay tax by self assessment or direct assessment.
- Payment of tax may be made in full or in instalment if applied for and approved.
OBLIGATION OF AN EMPLOYEE
- To correctly fill and file relevant tax documents for each year of assessment as may be required by the relevant tax authority.
- Employee to correctly disclose all the source of his income for tax purpose.
OBLIGATION OF EMPLOYER
- To deduct at source correct amount of tax from salary payable to an employee each month
- To submit annual returns of all employees
- To verify and asceertain the returns form filled in by his employees
- To remit to the relevant tax authority the tax so deducted at least 14days in to the preceding month.
OFFENCES AND PENALTIES
- Sec. 52(1)(a) – fairlure to keep books of accounts N50,000.00 for individual and N500,000.00 for corporate.
- Sec. 70(1) – fairlure to deduct and remit tax – 10% of tax not deducted plus interest at CBN Monetary Policy Rate (MPR).
- Sec. 81(a)(3) – failure to file returns by employers N50,000.00 for individual and N500,000.00 for corporate.
- Fairlure by employer to deduct and remit tax of its employees, warrant sanction of denial of TCC.
- Sec. 94 – Fairlure to comply with any provision where there is no specific penalty, N5,000.00 on the first instance and N100.00 for every day.
WITHHOLDING TAX ON RENT
PITA S.69 – Where a rent becomes dur or payable, the payer of the rent shall, at the date when the rent is paid or credited, whichever first occur, deduct therefrom the tax at a rate prescribed and shall forthwith pay over to the relevant tax authority where the land lord is resident.
- When accounting for WHT so deducted to the relevant tax authority, the person making such deduction shall states in writing the following:
- The gross amount of the rent payable per annum
- The name and address of the recipient and the period covered by the rent.
- The address and accurate description of the property concerned
- The amount of tax being accounted for
- The rate is 10% per annum
WITHHOLDING TAX ON CONTRACT OF SUPPLIES
Contract of supplies is defined as all forms of deliveries or the like through competitive bidding, tender, LP.O and other similar arrangement whether oral or written.
|S/N||TYPES OF PAYMENTS||RATE FOR LTD COMPANIES||RATE FOR NON CORPORATE BODIES (INDIVIDUALS)|
|1||Divided, Interest, Rent and royalties||10%||10%|
|2||Commission and Director’s Fees||10%||10%|
|3||Consultancy, Technical and Management Fee||10%||5%|
|4||Construction, Building and related services||5%||5%|