TAX & GOVERNMENT FINANCE

If you haven’t paid any tax before, you can still file a Personal Income Tax (PIT) return — and what you file depends on your situation.

Here’s the correct breakdown:

1. If You Had No Income Last Year

You file a Nil Return (also called Zero Income Return).

This simply means:

You had no job

No business income

No freelance income

No investment income

So you declare ₦0 income.

This is accepted by tax authorities like:

Lagos State Internal Revenue Service

Federal Inland Revenue Service

Filing a Nil Return protects you from future penalties.

2. If You Just Got Employed This Year (But Not Last Year)

Example:

Got job in 2026

Filing for 2025

Then:

You file Nil Return for 2025

Because you had no income in 2025

This is completely normal.

3. If You Had Income But No Tax Was Paid

Example:

Freelance work

Business

Side hustle

Rental income

Then you must declare that income even if:

No tax was deducted

No TIN yet

You file:

Income earned

Then tax authority calculates tax

This is required under the Personal Income Tax Act.

4. Who Must File Annual PIT in Nigeria?

You should file if you:

Are employed (public or private)

Run a business

Freelance / side hustle

Just got employed recently (file Nil Return for previous year)

Simple Rule

No income → File Nil Return

Income → File Income Return

Just employed → File Nil Return for previous year

Example (Your Case Scenario)

Someone:

Just employed by Lagos State Government

No salary yet

No previous tax

He should:

File Nil Return for last year

Wait for PAYE once salary starts

No penalty. No stress.

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Great questions — these are very important before investing in mutual funds in Nigeria.

Let’s break this down clearly.

1. If You Withdraw Before Quarterly Reinvestment — Are You Taxed on Your Capital?

No. You are NOT taxed on your initial deposit.

In Nigeria:

Only the interest (profit) is taxed

Your capital is never taxed

Example:

You invest ₦100,000

You earn ₦5,000 interest

You withdraw before reinvestment

Tax applies only to:

₦5,000 (interest)

NOT ₦100,000 (capital)

So:

Your ₦100,000 remains intact

Only interest gets taxed

This rule is set under Nigerian tax laws enforced by

Federal Inland Revenue Service

2. The 10% Tax — Is It Per Year, Quarterly, or Monthly?

The 10% tax is NOT charged per annum.

Instead: 👉 The 10% tax is applied whenever interest is paid to you

This depends on how the fund distributes interest:

Fund Type

When Tax Applies

Daily Accrued Funds

When you withdraw

Monthly Distribution

Monthly

Quarterly Reinvestment

Quarterly

On Withdrawal Funds

When you withdraw

So:

If interest is credited quarterly → tax applied quarterly

If you withdraw before quarter → tax applied at withdrawal

Example (Simple)

You invest: ₦100,000

Interest earned: ₦8,000

Tax (10%) = ₦800

You receive: ₦8,000 − ₦800 = ₦7,200

Total:

Capital = ₦100,000

Interest after tax = ₦7,200

Total withdrawal = ₦107,200

Important (Most People Don’t Know This)

Some Nigerian money market funds already deduct tax automatically.

Examples:

Stanbic IBTC Asset Management

ARM Investment Managers

Meristem Wealth Management

So: You usually don’t need to file anything yourself.

Bonus: Good News (Tax Advantage)

Some mutual funds in Nigeria:

May enjoy reduced tax treatment

Some institutional funds even have tax exemptions

But for most retail investors: 👉 Assume 10% withholding tax on interest

Simple Summary

❌ No tax on capital

✔️ 10% tax on interest only

✔️ Tax applied when interest is credited or withdrawn

✔️ Usually deducted automatically

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I’ll explain this very simply — step-by-step — like teaching a primary school pupil. 😊

1. What is Personal Income Tax?

Personal Income Tax is money you pay to the government from the income you earn.

In Nigeria, this is guided by the Personal Income Tax Act and handled by:

State tax offices (if you live in Nigeria)

Federal Inland Revenue Service (for some special cases)

For example:

If you live in Rivers State → You pay to Rivers State Internal Revenue Service

2. How to File Personal Income Tax Yourself (Step-by-Step)

Let’s do it like ABC:

Step 1 — Register for Tax Number (TIN)

You need a Tax Identification Number (TIN) first.

You can get it:

Online

Or visit your State Tax Office

Go to:

Joint Tax Board Nigeria website

👉 https://tin.jtb.gov.ng⁠�

Fill:

Your name

Phone number

Address

Occupation

Submit → You get your TIN

That’s Step 1 done ✅

Step 2 — Know Your Income

Write down:

Salary (if employed)

Business profit (if you sell goods)

Freelance income

Investment income (sometimes)

Example: Mama Ngozi earns:

₦50,000 from tomatoes

₦20,000 from provisions

Total = ₦70,000 per month

Step 3 — Calculate Your Tax (Don’t worry — it’s simple)

Nigeria uses graduated tax (small income = small tax)

Basic rule: If your income is small → your tax is very small

For many low income earners: You may pay between ₦0 — ₦5,000 yearly sometimes.

Step 4 — Fill Tax Form

Go to:

Your State Tax Office

OR

Online (Some states allow online filing)

You’ll fill:

Name

Income

Address

Occupation

This is called Self-Assessment.

Step 5 — Submit & Pay

After filling:

Submit the form

Pay to government account

Keep receipt

Done 🎉

You have filed your tax.

3. If You Don’t Work in Nigeria But Have Nigerian Bank Account

This is VERY important.

You only pay Nigerian tax if:

You:

Work in Nigeria

Run business in Nigeria

Earn money from Nigeria

If:

You live abroad

Work abroad

Only keep money in Nigerian bank

👉 You may NOT be required to pay Nigerian personal income tax

Because tax depends on income source, not just bank account.

Example:

You work in UK → Pay UK tax

You keep money in Nigeria → No Nigerian income tax

But if:

You run business in Nigeria

Rent house in Nigeria

Earn from Nigeria

Then you must pay Nigerian tax.

4. What About Parents Supported by Children?

Very good question 👏

If parents:

Don’t work

Don’t earn income

Only depend on children

👉 They may not pay tax

Because: No income = No tax

Example: Mama Ngozi retired Her children send ₦50,000 monthly

That is support, not income.

So:

No tax required

No filing required (in most cases)

5. Important Truth Many People Don’t Know

Not everyone MUST pay tax.

You pay tax only if:

You earn income

If:

No job

No business

No investment

Then: 👉 No tax

6. Special Tip (Since You Work in Security)

Since you mentioned before you’re a security personnel, your tax depends on:

If:

Your company already deducts PAYE → You’re already paying tax

You work privately → You may need to file yourself

You can check your payslip: If you see PAYE → You’re already paying tax.

7. Simple Summary

Get TIN

Know your income

Fill tax form

Submit

Pay

Keep receipt

Done.

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