0 UNDERSTANDING NIGERIAN PERSONAL INCOME TAX

Many Nigerian especially those in the real sectors have been paying their taxes regularly but most cannot state how their employers arrive at those strange figures. The essence of this post is to help you understand the recent amendment in the personal income tax law of Nigeria as at 14 June 2011.

Key changes

·       Introduction of a consolidated tax free allowance of N200,000 or 1% of gross income, whichever is higher, plus 20% of the gross income.

NB: Gross emolument (or income) is defined to include benefits in kind, gratuities, superannuation and any other incomes derived solely by reason of employment.

·       Principal place of residence redefined to include places where branch offices and operational site of companies are situated.

.    Benefit-In-Kind (B.I.K) may be defined as those benefits or perquisites that accrue to a person by reason of the office and/or position he/she occupies. Benefits in kind include such benefits as official car, official accommodation, cooks, gardeners, security etc

The absence of a unique identifier in the Nigerian banking industry has been a major challenge inhibiting the effectiveness of the Know Your Customer (KYC) principle, with negative consequences on the growth of credit cards and other credit-related products.

To complement the existing means of identification of customers, which include: the driver’s license; the International Passport; the National Identity Card; and the Permanent Voter’s Card; the CBN, in collaboration with the Bankers’ Committee on February 14, 2014, launched a centralized biometric identification system for the banking industry, tagged Bank verification Number (BVN).

The Bank Verification Number (BVN) project is an initiative aimed at protecting bank customers and further strengthening the Nigerian banking system. The Bank introduced BVN to all banks’ customers to address the absence of unique identifier across the Nigerian Banking Industry. The BVN is a number that enables a bank customer to have a single identity in the banking system. The full implementation was expected to enhance the effectiveness of KYC requirement, the safety and reliability of the payments system