30 May 2017
May 30, 2017

Taxable Income

Taxable Income

Taxable income is the portion of total income used to calculate an individual’s or a company’s income tax payable. This is derived after necessary adjustment for allowable and disallow income and expenses for the relevant year of assessment.

Profits subject to Nigeria Tax are profit accruing in, derived from, brought into or received from a trade, business or investment.

Only expenses reasonably incurred in deriving the revenue of the company would be allowed by tax authority as a deduction from revenue/gross profit. An expenses could be disallowed if the amount is unrealistic and there is no supporting documents relating to it.

Examples of disallowed expenses are depreciation, loss on sale of fixed assets, personal expenses from the business etc.

Federal Inland Revenue Service (FIRS) with branches across the country is responsible for collecting tax on behalf of the Federal Government while Internal Revenue Service(IRS) of each state is responsible for collecting tax on behalf of state governments.

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