Federal taxes include Companies Income Tax, Value Added Tax, Tertiary
Education Trust Fund, etc.

Companies Income Tax
This is a tax chargeable on all companies (other than companies engaged in
petroleum operations) registered in Nigeria. It is an annual tax on the profits
of registered companies, which profits must accrue in, derived from, brought
into, or received in Nigeria.
The rate of a company’s income tax is fixed at 30% of taxable income. This
tax is remitted to the Federal Inland Revenue Service, and it is payable on a
preceding year basis.

Value Added Tax (VAT)
VAT is a consumption tax payable by the consumer at 7.5%. It is a tax
imposed on the supply of goods and services. All registered businesses are
expected to register with the Federal Inland Revenue Service (FIRS) as a
VAT agent. Businesses are mandated by the law to charge VAT on all
VATable sales and services, collect VAT from consumers, then remit to the
relevant tax authority.

Therefore, the business is an agent of the government for the purposes of
collecting VAT. A failure to charge VAT is an offence that attracts sanctions
within the law. VAT filing is monthly, and always due on the 21st day of the
month following the month of transaction.

Goods exempted from VAT
There are however some goods that are exempted from VAT; some examples
are medical and pharmaceutical products, basic food items, baby products,
Fertilizer, locally produced agricultural and veterinary medicine, farming
machinery and farming transportation equipment, all exports, etc.

Services exempted from VAT
The following services are exempted from VAT:
Medical services, services rendered by Micro-finance Bank, People’s Bank and
Mortgage Institutions, Plays and performances conducted by educational
institutions as part of learning, all exported services, tuition relating to
nursery, primary, secondary and tertiary education, airline transportation
tickets issued and sold by commercial airlines registered in Nigeria, hire,
rental or lease of tractors ploughs and other agricultural equipment for
agricultural purposes.

The following services are charged to VAT at zero rate
Non-oil exports, goods and service purchased by diplomats, goods purchased
for use in humanitarian donor funded projects(projects undertaken by Nongovernment Organizations and religious and social clubs or societies recognized by law whose activity is not for profit and in the public interest.

Tertiary Education Trust Fund
This fund is charged with the responsibility for imposing, managing and
disbursing the tax to public tertiary institutions in Nigeria. All registered
companies in Nigeria are required to pay a percentage of their assessable
profit into an Education Tax Fund. The tax is charged at 2.5% of the
assessable profit.