Are new business exempted from pit in nigeria
In Nigeria, new businesses are not entirely exempted from paying Pay As You Earn (PAYE) tax, but they may be eligible for a reduced tax rate or a longer payment period. Here's a breakdown:
- New Business Relief: The Nigerian government offers a relief to new businesses, allowing them to pay a reduced rate of 10% on their first N500,000 (approximately $1,300) of profit. This relief is available for the first three years of operation.
- PAYE Exemption: New businesses with an annual turnover of less than N25 million (approximately $65,000) are exempt from paying PAYE tax for the first year of operation. This exemption is provided for in the Companies Income Tax (CIT) Act, 2004.
- Payment Period: New businesses may be allowed a longer payment period for their PAYE tax liabilities. The Federal Inland Revenue Service (FIRS) may grant a payment period of up to 12 months for new businesses, depending on their financial situation and other factors.
To qualify for these benefits, new businesses must:
- Register with the FIRS and obtain a Tax Identification Number (TIN)
- File their tax returns on time
- Maintain accurate and up-to-date records of their financial transactions
- Comply with all other tax obligations
It's essential for new businesses in Nigeria to consult with a tax professional or accountant to ensure they comply with all tax requirements and take advantage of the available reliefs and exemptions.