I’m confused about how taxes work in Nigeria, especially the difference between federal tax and state tax.
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I’m confused about how taxes work in Nigeria, especially the difference between federal tax and state tax.
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 FRead more
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
See lessIn Nigeria, taxes are shared between the Federal Government and State Governments, and each one handles different types of taxes. Federal taxes are collected by the Federal Inland Revenue Service (FIRS now NRS) and mainly apply to companies and nationwide taxes like Company Income Tax, VAT, and PetrRead more
In Nigeria, taxes are shared between the Federal Government and State Governments, and each one handles different types of taxes.
Federal taxes are collected by the Federal Inland Revenue Service (FIRS now NRS) and mainly apply to companies and nationwide taxes like Company Income Tax, VAT, and Petroleum Profit Tax.
State taxes are collected by each state’s Internal Revenue Service (for example, Lagos State IRS) and mostly apply to individuals especially Personal Income Tax under PAYE.
FIRS handles company and national taxes, while State Internal Revenue Services handle personal income taxes for residents.
See less