Tax liability appears to be a bugging issue for many business owners. Many do not even know what taxes they are to pay, let alone pay them. Many think only target companies have to pay taxes in Nigeria.
This post seeks to determine the tax liability of business name owners in Nigeria. Also, it identifies taxes they need to pay. But before we delve into all of these, let’s understand what a business name is.
What is a Business Name?
A business name is the official name under which a business transacts and operates business activities. It’s vital to register business names. However, under certain conditions, some can get exemptions from registration.
Let’s now find out if registered business names should pay taxes.
Are Taxes Levied On Business Names?
Unlike companies and Partnerships having corporate personality, there are no dedicated tax provisions for business names.
However, they are still mandated to pay some taxes. Here are a few of them below.
Personal Income Tax:
Where you have employees under your business name, you are required to charge and remit PAYE on their behalf. Take note of the minimum wage exemptions applicable in this regard.
Value Added Tax:
This is payable at the rate of 7.5% in Nigeria and is charged on the supply of goods and services in Nigeria. You would also need to obtain a VAT certificate for documentation processes.
Other applicable taxes range from withholding taxes to consumption taxes (if applicable), and others as introduced by law.
Note also that the collecting and remitting authority may differ with location and the individual.
Importantly, while business names do not pay taxes in the real sense as they do not have separate legal personalities, the proprietors are required to pay the taxes required by the relevant laws. It is also noteworthy that tax evasion is an offense for which you can be jailed in Nigeria. You have to seek comprehensive tax advice from your attorneys to ensure you are fully compliant with your tax obligations.
References
- Invoice, “Everything You Need To Know about Small Business Tax in Nigeria” available at https://invoice.ng/blog/all-you-need-to-know-about-small-business-tax-nigeria/ accessed on September 22 2023
- MakemoneyNg, “Do Business Names Pay Taxes in Nigeria?” available at https://www.makemoney.ng/do-business-names-pay-taxes-in-nigeria/amp/ accessed on September 22 2023
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