Pay-As-you-Earn tax is one of the taxes that must be withheld by employers each month and paid to the Internal Revenue Scheme on the taxpayer’s behalf. The IRS PAYE tables, which include various tax rates for employees who are paid weekly, fortnightly, or monthly, are consulted in order to do this.
Based on the employee’s wages, the PAYE is computed and includes base pay, bonuses, fringe benefits, and other allowances.
This article’s focus is on what a PAYE tax is and where you can file your PAYE taxes with the Lagos State Internal Revenue Scheme (LIRS) in Yaba, Lagos.
What is Pay-As-You-Earn?
Each of us would be required to make a lump sum tax payment at the end of each tax year that ranged between 18% and 45% of our total monthly earnings if it weren’t for the PAYE system, which compels workers to pay taxes as they earn their money.
Employers are required to withhold money from their employees’ paychecks when they are received and pay it to Internal Revenue Service scheme on the employee’s behalf under the Pay As You Earn (PAYE) system.
You pay this kind of tax on your wages, and the money goes directly to the National Insurance Fund. In actuality, the benefits of this contribution to employees are numerous.
When determining your PAYE and paying IRS, your employer will take into consideration any deductions or credits made for you by your employer when providing benefits like medical insurance, pension funds, income protection, and/or retirement annuity funds on your behalf.
After six months of the company’s activities, the employer must start withholding tax from the salaries and earnings of its employees. The withheld taxes are sent through any designated collection bank to the Lagos State Internal Revenue Service (LIRS), which is in charge of enforcing tax laws in Lagos State.
When the collecting bank has been paid, the employer will take proof of payment to its tax office. The closest tax office to your main operating location should be your tax office. The locations of the several LIRS tax offices in Lagos are shown below.
Employers are responsible for making sure Pay-As-You-Earn is sent to the LIRS by the 10th of the month that follows the month in which deductions were made. For example, January PAYE must be submitted by February 10th at the latest. Keep in mind that interns and contract workers are subject to a Pay-As-You-Earn deduction as well.
Pay-As-You-Earn tax rate
The taxable income tax brackets and corresponding rates of tax are summarized in the table below on a yearly basis.
|Annual income (NGN*)||Personal income tax (PIT) rate (%)|
Keep in mind that there are no longer any tax or pay-as-you-earn deduction requirements for employees whose monthly earnings do not exceed the national minimum wage, which is currently NGN 30,000. (PAYE).
How does Pay-As-You-Earn operate?
You are well aware that the 2021 tax year extends from April 6, 2021, to April 5, 2022. To get at the taxable amount, you must determine the taxable earnings of your employees and subtract the required allowances.
After that, you may assign an employee to the appropriate tax-paying group. The Pay-As-You-Earn amount will be the only item left to pay after that.
If you’re seeking to understand the PAYE notion as an employer, you really must fully understand the NIC concepts.
NIC stands for an employee’s national insurance contributions. It is a form of tax that you pay on your income, and it is paid to the Internal revenue service of your country.
Lagos State Internal Revenue Scheme (LIRS) in Yaba, Lagos
There are various centres for filing PAYE taxes in Nigeria. For Lagos residents, there are quite a number of places you can file your tax. For the purpose of this article, we will be sharing where you can file your PAYE tax in Lagos state’s internal revenue scheme in Yaba.
The location for filing Pay-As-You-Earn taxes in Yaba is
There are penalties for tax evasion, therefore it is important that all employers file their employee’s taxes as at when due and be consistent with it.