Lagos State Revenue Administration Law

PAYE is an acronym for “Pay as You Earn”. It is a method of collecting personal income tax from employees’ salaries and wages through deduction at source by an employer as provided by the relevant sections of the Personal Income Tax Act (PITA). (S.81 of Personal Income Tax Act Cap P8 LFN 2011).

Personal Income Tax is a tax that is imposed on individuals who are either in employment or are running their own small businesses under a business name or partnership. Though the collection of PIT is a federal responsibility this tax is generally collected by state governments from those that are resident in their various states, regardless of whether they are federal, state, local government, or private-sector workers.

The Federal Inland Revenue Service, however, also collects this tax but only from residents of the Federal Capital Territory as well as what may be described as highly mobile federal workers – staff of the Ministry of Foreign Affairs and other Nigerians and foreigners outside the country but earning income in Nigeria (non-residents), expatriate workers resident in Nigeria, Police Officers, and Military Officers. Civilians working in Police and Military formations, however, pay to their respective States of residence.

The current law guiding the taxation of personal incomes is the Personal Income Tax Act (Cap P8 LFN 2004). Under the law, Federal and States’ tax boards are empowered to identify persons living in or earning income from Nigeria who is required to pay tax and to assess incomes and tax their incomes using specified guidelines and rules. This law also guides the tax official in identifying the residence of potential taxpayers, as well as the sources and origins of their incomes for the purpose of taxing the income.

Forms of PIT
Two forms of taxes are administered under Act, name;

  • Pay-As-You-Earn (PAYE) i.e. taxes from employment.
  • Taxes from self-employed persons.


Lagos State Revenue Administration Law

Lagos State Revenue Administration Law Text

Personal Income Tax Act

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