How to calculate Pay-As-You-Earn (PAYE) taxes for employees in Kaduna in 2024

People employed or who operate a small business under a partnership or business name are subject to tax. In Nigeria, a person’s tax liability can be evaluated through Pay-As-You-Earn or direct assessment.

The Personal Income Tax Act governs the taxation of personal income in Nigeria (Cap P8 LFN 2004). According to the law, federal and state tax boards have the authority to determine which individuals are required to pay taxes because they reside in Nigeria or receive income from there, to estimate those individuals’ incomes, and to impose taxes on those incomes in accordance with a set of regulations.

What is Pay-As-You-Earn(PAYE)?

Pay As You Earn is referred to as PAYE. It is a technique for collecting personal income tax from employees’ salaries and earnings through source deduction by an employer in accordance with the pertinent Personal Income Tax Act parts (PITA) (Section 81 of the 2011 Personal Income Tax Act, Cap. P8 LFN). The tenth day of the month after the month of deductions is when PAYE must be sent.

Kaduna Internal Revenue Service

Kaduna Inland’s revenue service focuses on rendering value-added services by being firm and fair, entrenching a sustainable system that will encourage massive voluntary tax compliance and improved internally generated revenue.

Prior to 1985, the Kaduna State Board of Internal Revenue was a branch of the Ministry of Finance and Economic Planning. It was then led by a Commissioner of Revenue who reported directly to the Hon. Commissioner of Finance and Economic Planning.

Since then, the Board has been restructured to meet new challenges. In 1985, the Kaduna State Government issued Edict No. 5 of 1985, which established the Kaduna State Board of Internal Revenue with the exclusive responsibility of administering taxes in compliance with different tax statutes.

The Board is solely responsible for collecting and accounting for all internally produced money including Pay-As-You-Earn (PAYE) owed to the Kaduna State Government, both within and outside the state.

This technique shows how to apply for a Company Tax Clearance Certificate in Kaduna in various ways.

In-Person Application:

  • To apply for a Company Tax Clearance Certificate in person, the applicant must go to the Federal Inland Revenue Service office, where he or she files returns.
  • The following page contains the addresses and contact information for the Kaduna Inland revenue service offices: Link to an office locator.
  • Visit the office and obtain an application form for a Company Tax Clearance Certificate from the appropriate department.
  • Check that you have all of the papers specified in the “Required Documents” section.
  • Now, fill out the application form with the necessary information in the appropriate areas. Once done, affix your signature to it.
  • Once the application form has been completed, attach all essential papers to it and present it in person to the competent authority at the office.
  • Following submission, you must make the required payment (if any).
  • The application and supporting papers will be submitted for evaluation and verification after successful payment of Pay-As-You-Earn (PAYE).
  • After the verification and validation processes are completed, the application will be authorized, and authorities will take the necessary measures to issue the Certificate.
  • When the Certificate is ready for collection, the applicant will be notified by any means available.

How to calculate Pay-As-You-Earn (PAYE) taxes for employees in Kaduna

The personal Income Tax rate in Nigeria Is not fixed but varies according to a person’s annual income. However, the minimum personal income tax rate is 1% (if the individual’s annual income is less than ₦300,000). There is a standard way to compute and calculate taxes in Nigeria. Below is the standard rate for calculating Pay-As-You-Earn (PAYE) taxes for employees in Kaduna

Annual Taxable Income (NGN)RatesTax payable per annum (NGN)
Next 500,00019%95,000
Next 1,600,00021%336,000
Next 500,00015%75,000
Above 3,200,00024%Multiply only the excess amount over NGN 3.2 million by 24%. For example, an annual taxable income of NGN 5 million is (5-3.2) million *24%= NGN 432,00

It is illegal to not file taxes. Employers guilty of improper tax deductions or improper accounting for deductions are required to pay the full amount of taxes owed.

The employer must also pay 10% yearly interest for each year that the taxes were not submitted properly or at all. Employers are further subject to fines and interest for late or missed payments. To prevent unwarranted financial loss to the organization, it is crucial for employers to correctly deduct Pay-As-You-Earn (PAYE) from employees’ earnings and salaries and to immediately remit such deductions before the deadline.

The calculation and remittance of Pay-As-You-Earn will be impacted by changes to the PIT statute. Therefore, it is recommended that employers and management staff get current updates regarding the PIT law and assess the new law’s change.

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