Income tax is one of the most important components of the economy of any country and when it comes to the Nigeria the laws and related regulations make sure that the life of the tax payers is always eased so that the inflow of cash for the government remains there to support the public welfare work. Unfortunately most of the individuals and most of the companies in the country are unaware of the income tax laws that prevail in the country and hence they never pay what is being paid and how one can enjoy deductions. Though professional tax services for calculating income tax in Nigeria are there to support the individuals and the companies but still the general public should be aware of the laws according to which the income tax in Nigeria is calculated. If the laws seem to be complex then at least a general overview is mandatory to make sure that the concept of income tax in Nigeria becomes crystal clear and the individuals can take steps to make sure that the income tax is deductions are enjoyed. From companies to personal income tax in Nigeria the laws and regulation are very simple and they should be followed to ensure that the tax returns are filed within time so that the economy flourishes and gets the best results for the people at grass root level. Following are some of the forms according to which the income tax in Nigeria is collected by the government:

1. Personal income tax
It can be regarded as the first and foremost form of income tax in Nigeria. It makes sure that all Nigerians and the expats who earn their livelihood in Nigeria pay a part to the government in form of tax. Liability to pay income tax solely depends upon the fact that whether a person is a Nigerian or Non Nigerian and the amount that is earned while the entity is settled in Nigeria. The most common points that are to be noted are as follows:
A person is a Nigerian and earns the livelihood within the country.
The person has a business that is settled in Nigeria
The person is a non Nigerian and earns livelihood in the country.

2. VAT or value added tax
It is the second form of income tax in Nigeria that can be easily calculated. According to this law the purchasers of goods and services had to make sure that 5% of tax is paid on top of the sale price of the good. The Federal Inland Revenue Service or FIRS is the sole authority which makes sure that this form of income tax is collected. The mentioned authority also collects the VAT on behalf of the central, local and state governments. The sharing of the tax proceedings is also done by this authority.



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