If you’re anything like me, you’d want to minimize your tax burden. A Pay-As-You-Earn system would be helpful for you then. At the time of each payment, employees must pay taxes on the money they receive from their employers.
Pay-As-You-Earn is a way to collect tax from people who are working and earn salaries, including residents and non-residents.
Gains or Profits include earnings, hourly wages, salaries, leave pay, sick pay, payment in lieu of leave, fees, commissions, bonuses, gratuities, or sustenance, as well as any other compensation received in exchange for labour or other services.
In this article, we discuss what Pay-as-you-earn tax is, who is qualified to register for Pay-as-you-earn-tax, how much to pay, the deadline for payment and Where to file Pay-As-You-Earn (PAYE) taxes with the Lagos State Internal Revenue Scheme (LIRS) in Ikeja, Lagos.
What is Pay-As-You-Earn
Pay As You Earn (PAYE) is the method used by Federal Inland Revenue Service (FIRS) or assigned State Inland revenue service to collect income tax from workers, which helps pay for healthcare and educational expenses, as well as national insurance, which supports the State Pension and several other benefits.
The majority of employers will use their payroll software to manage their PAYE deductions. Calculators for PAYE tax and National Insurance can be used by people who conduct their payroll manually, or they can learn how to calculate their Pay-As-You-Earn tax below.
Who is qualified to register for Pay-As-You-Earn tax?
Every employer or organization in Nigeria is responsible for filing Pay-As-You-Earn tax for their employees and deducting it from their salaries.
Any person that pays emoluments to an employee or employees must register for the PAYE duty. Once registered, the individual must Subtract taxes from the employee(s)’ salaries.
The business seeking registration should have current evidence of incorporation or registration.
How much is the Pay-As-You-Earn tax for citizens of Nigeria?
The amount of income tax that a person must pay increases with their income. PAYE is calculated as follows:
Individual Tax Rates and Bands
|Annual Taxable Income (NGN)
|Tax payable per annum (NGN)
|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 432,000.
What is the deadline for paying Pay-As-You-Earn tax in Nigeria
The deadline for employers in Nigeria to submit Pay-As-You-Earn (PAYE) tax returns for 2021 is January 31, 2022.
Each employee’s compensation (salary or wages) and the amount of tax paid the year prior have to be included in the PAYE returns.
In the state where the employees resided, the applicable State Board of Internal Revenue Services (SBIRS), as well as the Federal Capital Territory Internal Revenue Service for Abuja residents, must receive the PAYE returns by 2021.
Penalties may apply if an employer fails to submit the returns by the deadline specified by law.
Where to file Pay-As-You-Earn (PAYE) taxes with the Lagos State Internal Revenue Scheme (LIRS) in Ikeja, Lagos
Lagos State’s internal revenue service distributed their office locations across Lagos State to enable ease of access. This article is centred on one of the regions of the office locations in Lagos, Ikeja.
There are quite a number of Lagos state inland revenue service office locations in Ikeja. some of them are:
- 669 Agege Motor Rd, Shogunle 101233, Lagos
- 27 Adeniyi Jones, Oba Akran 101233, Ikeja
- Good Shepard Building, 11 Cipm Ave, opposite State Secretariat, Alausa 101233, Ikeja
Filing taxes has been made easy by the Lagos state inland revenue service through their tax website. Therefore, you can now file taxes from the comfort of your home or office. You can also visit any of these LIRS offices if you have certain tax-related complaints or concerns.