List of Withholding Tax Exemption in Nigeria

Withholding Tax Exemption in Nigeria

Withholding Tax Exemption in Nigeria – The reduction or elimination of a requirement to make a mandatory payment that would otherwise be imposed by a ruling power upon individuals, properties, income, or transactions is known as tax exemption. Tax-exempt status may offer full tax exemption, reduced rates, or tax on only a portion of the purchased goods. Examples include the exemption of charitable organisations from real estate taxes and income taxes, veterans, and certain cross-border or multi-jurisdictional situations.

 

In essence, withholding tax acts as a down payment on the taxpayer’s eventual income tax bill. In addition to other closely linked services, withholding tax applies to transactions involving management services, consulting, professional obligations, technical services, rent, director’s fees, profits, interest, royalties, and all facets of building construction. Special classes of income are partially excluded from the core of taxable income.

Here’s the List of Withholding Tax Exemption in Nigeria:

  • Contracts and supplies are made by non-resident taxpayers for goods and services that are completed entirely outside of Nigeria.
  • Interest on loans paid by a Nigerian company.
  • Oil-producing enterprises must pay dividends on petroleum activities.
  • Transactions in which the parties have a dual relationship. The dual relationship that arises when a groundnut farmer delivers groundnuts to a manufacturer of groundnut oil is an example that best illustrates this circumstance.
  • Revenue of non-resident companies.
  • Transactions taking place within of Nigeria’s customs territory.
  • Companies that are based in free trade zones.
  • Telephone bills.
  • Internet bills.
  • income earned by an American citizen working as a representative for the International Development Services.
  • The earnings of any legally recognised religious, philanthropic, or educational organisation, provided that these earnings are not related to the organization’s commercial activities.
  • Income accrued to Insurers from insurance premiums.
  • Income earned by distributors from their daily trading activities.
  • a person’s earnings from jobs where their gross earnings are less than the federal minimum wage.
  • income from bonds issued by the federal, state, local, and agencies that work for them.
  • A sum received by a way of death gratuities.
  • Income from dividends, interest, fees, and commissions generated abroad and brought into Nigeria by a Nigerian resident are only permitted if they are paid into a domiciliary account of an established bank in Nigeria and brought in convertible currency.
  • Athletes, authors, musicians, playwrights, and anyone who has earned money from outside Nigeria may bring that money into Nigeria as long as it is paid into a domestic account with an officially recognised bank there in foreign currency.
  • Any compensation for loss of employment.
  • A corporation formed in Nigeria may pay dividends to a person if the individual’s stock interest in the company is entirely paid for in foreign currency.
  • Interest on a loan granted by a bank to a person engaged in agricultural trade.
  • Earnings of consular employees of a foreign State provided that they do not conduct any business outside of their official roles.
  • Members of other forces and those employed permanently by the UK government in Nigeria will get emoluments in relation to their positions with the UK government thanks to monies from the UK.
  • Emoluments paid to members of any civilian extraction and the income of any recognised organisation travelling with visiting forces are excluded from this rule, although Nigerian citizens and anyone who was born in Nigeria are not included.
  • Interest on any funds borrowed outside of Nigeria by a legal entity constituted by Nigerian law is exempt from tax in the hands of any resident person under conditions approved by the minister of finance.
  • According to any currently in effect law, pensions may be provided to any individual.
  • gratuities that are paid to a public official by the government of the Federation or a state in exchange for the services that person provided under a service agreement with that government and are specifically referred to as gratuities in the agreement.
  • The income of a trade union registered under the Trade Union Act, in so far as the income is not derived from a trade carried on by such institution.
  • Gratuities that are due to a private sector employee for work performed as part of a service agreement with their employer are specifically referred to as gratuities in the agreement.
  • Gains from the purchase of shares in a business that is taken over or absorbed by another business, losing its status as a limited company as long as no cash payment is made in relation to the shares purchased.
  • Gains accruing to unitholders of a Unit Trust in respect of the disposal of securities given that the proceeds are re-invested.
  • The Nigerian Cooperative Societies Act requires cooperative societies to register their income as long as it does not come from any trades or businesses other than those that are directed at their members.
  • Armed forces members who suffer injuries or disabilities as a result of enemy action are given pensions.
  • A person receiving dividends must own at least 10% of the company’s equity share capital in order to receive the dividends.
  • 10% of the equity share capital of the company.
  • The income of a friendly or statutory society provided that such income is not derived from a trade carried on by such society.
  • Income accrues to the manufacturer when normal delivery of products is made to distributors for sale.
  • the revenue received by local governments or other government entities.
  • Interest that a person receives on a domestic foreign currency account. 
  • Income received by a foreign national from employment by any government or agency with which the individual has a technical assistance agreement with the Government of the Federation provided that the employment is entirely for the technical agreement.
  • Income of a Chief representative of a Commonwealth country.
  • Money of a Commonwealth conference attendee in Nigeria, providing such income does not come from any business the person is engaged in.
  • Income of a person to whom the Diplomatic Immunities and Privileges Act has granted diplomatic immunity.
  • Income of a foreign convoy operating in Nigeria, providing that it does not stem from any commercial activity.

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