Vat and Tax returns Filing

Understanding VAT & Tax in Nigeria

1.PIT (Personal Income Tax)

This is tax on individuals (what you earn as salary or personal business income).

Example: If you earn 100,000 salary per month, a small part of it (depending on your income level) goes to the government as PIT.

It's usually deducted by your employer (PAYE ? Pay As You Earn) or filed directly if you're self-employed.

In short: PIT = tax on your personal income.

2. Business VAT (for sole proprietors / small businesses)

When you sell goods or services as a business name/individual, you must add 7.5% VAT to your price.

Example: If you charge 10,000 for tailoring, you add 750 VAT = 10,750 total.

That 750 is not your money; it must be sent to FIRS.

 In short: Business VAT = tax on what your customers buy from your business.

3. Company VAT (for registered companies Ltd / PLC)

The same 7.5% VAT rule applies, but here it's charged by a company instead of a sole business.

Example: If your company sells furniture worth 1,000,000, you add 75,000 VAT collect 1,075,000  remit 75,000 to FIRS.

Companies also file Company Income Tax (CIT) separately, which is tax on company profits (not sales).

In short: Company VAT = tax on what the company sells

CIT = tax on the company's yearly profit

 Layman's Summary:

PIT = tax on your salary or personal income.

Business VAT = extra 7.5% customers pay when buying from your small business.

Company VAT = extra 7.5%

Customers pay when buying from a registered company.