What Is the Difference Between Federal and State Tax in Nigeria (FIRS vs State Internal Revenue Service)?

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