TAX & GOVERNMENT FINANCE

The difference between filing taxable income with Federal Inland Revenue Service (FIRS) and State Internal Revenue Service (State IRS) depends mainly on who you are and the type of income.

Here’s the clear breakdown 👇

1. FIRS (Federal Tax) 🇳🇬

You file with FIRS if you are:

Individuals

Employees of Federal Government

Armed forces, police, immigration, etc.

Staff of Foreign embassies

Nigerians working abroad but resident in Nigeria

Residents of FCT Abuja

Companies

All Companies registered in Nigeria (Limited Liability Companies)

Taxes handled by FIRS

Companies Income Tax (CIT)

Value Added Tax (VAT)

Withholding Tax (Companies)

Education Tax

Petroleum Profit Tax

Capital Gains Tax (Companies)

2. State IRS (State Tax)

You file with State Internal Revenue Service if you are:

Individuals

Salary earners (Private company staff)

Business owners (sole proprietor)

Professionals (consultants, freelancers)

Self-employed persons

Example:

If you live/work in Lagos → file with Lagos State IRS

If you live/work in Rivers → file with Rivers State IRS

Taxes handled by State IRS

Personal Income Tax (PIT)

PAYE (Salary earners)

Direct Assessment (Business owners)

Capital Gains Tax (Individuals)

Simple Rule to Remember 🧠

If You Are

File With

Company (Ltd)

FIRS

Salary earner (Private Company)

State IRS

Business Owner (Individual)

State IRS

Federal Government Staff

FIRS

Abuja Resident

FIRS

Your Case (Based on your previous questions)

Since you mentioned:

Salary (PAYE deducted)

Running a business

You may need to:

File Personal Income Tax with your State IRS

Declare both salary + business income

Important Tip ⚠️

Even if PAYE is deducted from salary:

You still may need to file annual tax return with State IRS

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When filing tax, Year of Assessment (YOA) refers to the year you are reporting income for — not necessarily the year you are filing.

Simple Rule

Year of Assessment = Previous year’s income

Example

If you are filing in 2026:

You are reporting income earned in 2025

So your Year of Assessment = 2025

More Examples

When You File

Income Year

Year of Assessment

2026

2025 income

2025

2025

2024 income

2024

2024

2023 income

2023

Nigeria Tax Rule (Important)

In Nigeria:

Tax returns are usually filed between January 1 — March 31

And it’s for the previous year’s income

So right now (2026):

You should normally use 2025 as your Year of Assessment

Special Cases

However, it can differ slightly if:

You’re filing for backlog years

You’re filing first time

You’re filing for company vs individual

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If you’re earning salary (PAYE already deducted) and also running a business in Rivers State, you still need to file Personal Income Tax (PIT) — but you won’t pay tax twice. Instead, you declare all your income together, and any tax already deducted from salary is credited to you.

Here is the clear explanation:

🧾 Your Situation

You have two sources of income:

Salary (PAYE deducted by employer)

Business income (your own business)

Under Nigeria’s Personal Income Tax Act, all sources of income must be declared together annually. Your employer deducts tax using PAYE, but you still file annual returns showing:

Salary income

Business income

Other income (if any)

✅ What You Should Do (Step-by-Step — Rivers State)

Step 1: Get Rivers State Tax ID (RIVTIN)

You must have RIVTIN to file tax in Rivers State.

You can register through Rivers State tax portal (RIVTaMIS).

Step 2: Prepare Your Income Details

You’ll need:

Salary (Annual total)

PAYE deducted (from payslip)

Business profit (not revenue)

Business expenses

Step 3: Combine Your Income

Example:

Salary per year = ₦3,000,000

PAYE deducted = ₦250,000

Business profit = ₦1,000,000

Total income = ₦4,000,000

Tax is calculated on ₦4,000,000, then ₦250,000 already deducted is subtracted.

You only pay balance (if any).

📅 When to File

Annual PIT filing deadline: March 31 every year

You must file even if PAYE already deducted

⚠️ Very Important (Many People Don’t Know This)

If you only rely on PAYE and don’t declare business income, you may:

Get penalty later

Be denied Tax Clearance Certificate (TCC)

Have issues with contracts / loans / investments

🧠 Simple Rule

Salary only → Employer handles PAYE

Business only → You file yourself

Salary + Business → You must file annual PIT

Where to File (Rivers State)

You can file:

Online (RIVTaMIS portal)

Or visit Rivers State Internal Revenue Service office

I Can Guide You Personally

Tell me:

Are you running registered business name or informal business?

Are you working private company or government?

I’ll show you exactly what to do in your own case.

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I don’t personally face challenges, but based on what most people in Nigeria struggle with, the biggest tax challenges are usually:

1. Confusion About Where to File

People often don’t know:

Should I file with State or Federal?

Which state should I file in (where I live vs where I’m from)?

This is very common — especially for people like you who move for work.

2. Not Knowing If They Even Need to File

Many people ask:

I’m self-employed — do I file?

I’m not working — do I still file?

I’m a student — do I need tax?

3. Getting a Valid TIN

Issues include:

Multiple TINs

Online TIN not working

State vs FIRS TIN confusion

4. Fear of Penalties

People worry about:

Late filing penalties

Back taxes

Interest charges

5. No Clear Income Records

This affects:

Keke drivers

Traders

Freelancers

Small business owners

They don’t know:

How much to declare

How to estimate income

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Here’s a clear, beginner‑friendly explanation of how personal income tax works for different kinds of people in Nigeria — including Abuja (Federal Capital Territory) and Lagos — and how to file it

1) How Personal Income Tax Works in Nigeria

Personal Income Tax (PIT) is imposed on the income of individuals who earn money from work, business, rentals, investments, etc

This tax is mostly administered by the State Internal Revenue Service (SIRS) where you live — e.g., Lagos State Internal Revenue Service (LIRS) for Lagos, and FCT Internal Revenue Service for Abuja.

The Federal Inland Revenue Service (FIRS) only handles some specific categories (e.g., military personnel, police, foreign service officers, and certain Abuja residents

There are two main ways PIT is collected:

• PAYE (Pay‑As‑You‑Earn) — for employees through salary deductions; the employer deducts it monthly. �

• Direct Assessment / Self‑Assessment — for self‑employed persons or individuals with non‑employment income; you declare your income and pay yourself.

LIRS – Lagos Internal Revenue Service

2) Housewife or Individual with No Work and No Income

Do you have to file tax?

If you earn no income at all, you do not owe income tax. Tax is on income received.

However, modern tax laws (like the 2026 changes) encourage even people with no income to file a “nil” return — especially if you own a Tax Identification Number (TIN) — so that authorities have records and don’t mistakenly assume gifts or allowances are taxable income.

How to file if you want to be compliant anyway

Get a TIN (if you don’t already have one) with your State IRS (LIRS if Lagos).

Go to the State’s tax portal (e.g., eTax for LIRS).

Choose “Personal Income Tax Return” and submit a nil or zero‑income declaration.

Submit by the deadlines (often March 31 each year).

3) Students (18+ and Not Working / Under Parents’ Care)

When do you file?

If you have no taxable income, you don’t owe tax.

However, like the housewife situation above, you can file a nil return to have an official tax record — especially important if you later start earning (salary, freelance work, online income, etc.).

How to file if you earn some income

If you start earning (even part‑time or online income), you must:

Register for a TIN.

File a personal income tax return (Direct Assessment) to declare income earned and pay any tax due.

Do this annually by the state’s filing deadline.

4) People Living in Abuja — Filing Personal & Company Income Tax

Personal Income Tax (Abuja Residents)

Abuja residents (FCT) are generally taxed by the FCT Internal Revenue Service.

If you earn income (salary, business income, rent, investment income):

Register with FCT IRS and get a TIN.

Choose the filing type:

PAYE (your employer deducts and remits for you).

Direct Assessment (for non‑employment income).

Submit your annual personal tax return digitally or at an IRS office.

Pay any tax due.

Company Income Tax (for Businesses in Abuja or Anywhere in Nigeria)

Company income tax is separate from personal income tax and is administered by the Federal Inland Revenue Service (FIRS), not state revenue services.

Companies (limited liability companies) must:

Register for a Corporate TIN with FIRS.

File Company Income Tax Returns annually (usually within 6 months of the end of their financial year).

Pay tax on profits after allowable deductions.

5) Practical Steps to File Tax in Lagos or Abuja

Personal Income Tax (General Steps)

Get a Tax Identification Number (TIN) with the appropriate IRS.

Log into your State’s tax portal (e.g., LIRS eTax for Lagos).

Complete the annual income tax return form — even if zero income.

Upload required documents (if any).

Submit and pay any tax due by the deadline (often March 31)

Key Notes

If you earn below the taxable threshold or have no income, you won’t pay tax but can still file a nil return for compliance

Employers deduct and remit tax for employees under PAYE, but employees must still file annual returns in many states.

Summary

Situation

Must File?

How

Housewife with no income

Tax not owed; can file nil

Register TIN + file nil return

Student under parents (no income)

Tax not owed; can file nil

Same as housewife

Student with income

Yes

Register + file Direct Assessment

Abuja resident (salary)

Yes

PAYE + annual return

Abuja resident (business)

Yes

Register + file Direct Assessment

Company income tax

Yes

File with FIRS

If you want, I can provide links and step‑by‑step guidance for the exact online portals and forms for Lagos (LIRS) and Abuja (FCT IRS). That will make the actual filing process very clear.

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