Personal Income Tax

  • What is Tax

    Tax is a compulsory levy imposed on the citizen and resident of a state by the government to generate the funds needed for her responsibilities.

  • What is the basis of assessment of a taxpayer to personal income tax (PIT)?

    A taxpayer is assessed to tax based on his/her aggregate income from all sources.

  • What incomes are chargeable to tax?

    The income chargeable to tax are gains/profit from any trade, business, profession, vocation, salary/wages/fee/allowance/benefit-in-kind and other perquisites enjoyed by a taxpayer.

  • Does payment of tax confer any special benefits(s)?

    The benefit are directly to the general public and not to any particular individual. However, payment of tax is a perquisite to access some public amenities.

  • What happens if someone fails to pay tax?

    It is an offence punishable by law because tax is statutory obligation of an individual the various offences and penalties are as stated in the relevant provision of the personal income tax act (PITA)

  • Does a taxpayer have the right to object to an assessment?

    Yes, the objection which must be in writing, stating the grounds of objection, must be made within 30 days of service of assessment notice.

  • What are the procedures involved in the payment of tax?

    1. Filing of annual returns (income declaration) with the internal revenue service (IRS)

    2. Assessment of taxpayers.

    3. Collection of payment advice from internal revenue service (IRS).

    4. Payment of tax into state government account in any of the designated banks.

    5. Collection of e-Receipt from the office of IRS.

    6. Printing of receipt from dedicated portal

    7. Request for Tax Clearance Certificate TCC

  • Are there penalties for failure to pay any statutory taxes/levies/rate due to the state government?

    Yes, a defaulter’s business premises could be sealed, his/her goods/properties/cartels could be impounded and the impounded items sold to defray the tax liabilities.

Religious Organization

  • Are religious organizations liable to pay taxes?

    NO, the third schedule (section 19 (1) 74) item 2 to personal income tax act CAP P8 LFN 2004 as amended “exempts the income of any ecclesiastical, charitable or educational institution of a public character from taxation provided the income is not derived from a trade or business carried on by such institution”. The importance of this provision is that incomes of the religious bodies from religious activities e.g. tithe, offerings, donations, are not taxable. The following are however taxable:

    1. Income derived from business activities e.g. letting of properties , transportation, production and sales of journals, periodicals, audios&video CDs etc., where these activities are carried out in the name of a separate entity or for profit.

    2. Where religious organisations funds are used to acquire assets i.e. motor vehicles, landed property name different from that of the religious organisation or in the name of an individual who is associated with the religious organisation, funds so expended become income in the hand of the entity/individuals and such are taxable.

  • Are religious organization liable for the payment of tax of their employees?

    YES, they are appointed as government agent to remit the PAYE of the their employees.

  • I am a religious leader, should I pay personal income tax on a monthly salary/allowance/financial donations I receive from the religious organisation I work for or from other source?

    YES, section 24(f) of the constitution of the federal republic of Nigeria 1999 provides that “it shall be the duty of every citizen to declare his income honestly to the appropriate and lawful agencies and pay his tax promptly”.in addition, you are required by section 41(3) of Personal Income tax Act CAP P8 LFN2004 (as amended) to file annual returns of your income for assessment with the Ondo State Internal Revenue Service IRS and pay your tax on or before 31 St of march each year. Your assessable income includes salaries from the religious organisation, income from private business and income from other sources.

Witholding Taxes

  • What is withholding tax?

    Withholding tax is the specified amount deducted at source from payment accruing or made to individuals or corporate entities in respect of income receivable from service(s) rendered or from investment and remittance of same to Relevant Tax Authority in line with the provision of Personal Income Tax (PITA) and companies Income Tax Act(CITA)

  • Is withholding tax another form of Tax?

    YES. It is another form of tax but simply an advance payment of tax, as the tax deducted at source can be set-off against any subsequent tax liability payable on such income by the recipient (tax payer).

  • What are the services/payment on which withholding taxes must be deducted?

    Withholding taxes must be deducted from payment due to corporate bodies and individuals on rents Commission, Management/Professional fees, Consultancy fees, Technical fees, Dividend, Directors fees, Agency Arrangement, Tenancy Agreement, Supplies.

  • Are there any penalties for failure to deduct and/or remit withholding tax?

    Yes. A person or corporate body who fails to deduct or having deduct fails to remit such deduction within 30 days shall be liable to a penalty of an amount of 10% of the tax not deducted or not remitted plus interest at the prevailing monetary rate of central bank of Nigeria.

Land Use Charge

  • What is land use charge?

    Land use charge is a law that provide for the levying and collection of land charges and for the consolidation of all property and land based rates

  • When was it enacted?

    It was duly passed into law on 24th of April is officially known as Land Use Charge Law of 2014

  • What is the difference between land use charge and tenement rate hitherto being collected by the different local government?

    For the purpose of this law each local government area in the state shall delegate to the state internal revenue service its functions with respect to the collection of rates and assessment of privately and commercially owned houses.

  • What constitutes real property under this law?

    Real Property includes:

    1. A parcel of land

    2. An improvement

    3. A parcel of land and improvement bank of Nigeria

  • What is structure under LUC?

    A structure means a building or other thing created or placed in on, over or under land whether or not it is fixed to the land.

  • What type of property attracts land use charges?

    All real property situated in the state are to attract land use charge except properties that are provisional exempted.

  • What type of property is exempted?

    a. A property owned and occupied by a religious body and is used exclusively for public worship of religious education.

    b. public cemeteries and burial grounds

    c. A recognized and registered institution or educational institute certified by the commissioner incharge of finance to be non-profit making

    d. Property used as public library

    e. All official palaces of recognized traditional rulers in the state

    f. All property owned by the state government

    g. Any property specifically exempted by the governor by notice published in the state government official gazette.

  • What is the role of occupier/tenant of chargeable property in the absence of real owner?

    It is the responsibility of the tenant to ensure that the real owner pays accordingly. The land use charge notice can be delivered to the owner, occupier or pasted on the building.

  • Who has the power to grant total or partial relief for a property in the state?

    The commissioner of finance After collecting land use charge assessment when is payment due? After assessment notice has been served, a person is expected to pay within 30 calendar days after the date of delivery of the notice.

  • What constitutes sufficient delivery of assessment notice?

    In the absence of the owner or tenant to take delivery of notice the notice shall be posted on the property.

  • What are the penalties for failure to pay land use charge?

    1. Where a person who has received a notice fails to pay the amount within the period specified in the notice; the charge payable shall be increased by the following percentage.
    a. Between 45 calendar days and 75 calendar days- 25%
    b. Between 75 calendar days and 105calendar days- 50% C. Between 105 calendar days and 135 calendar- 100%

    2. The internal revenue service shall have power to seal up property over which the applicable charge remain unpaid after 30 days of serving notice demand

  • For implementation/administration of this law which government agency is the sole collecting authority of the charge due to Ondo State?

    Ondo State Internal Revenue Service

  • Who benefits from the land use charge revenue collected?

    Revenue generated from the land use charge is shared between the state in the manner prescribed in the law

  • What constitutes offense(s) under the land use charge?

    a. Any person who refuses or neglects to comply with any provision of this law when required to do so by the property identification officer or collection or an assessor

    b. prevents, hinders or obstructs any property identification officer or an assessor in the course of his lawful duty or

    c. removes from or damages or destroyed a property identification plaque on any property or buildings.