Companies income tax rate is 30%. There is an additional education tax of 2% on the income of companies. Withholding tax of 5% is chargeable on unearned income. For foreign investors, the 10% withholding tax on dividends is the final tax on dividends. The top personal income tax rate is 25%.
Value added tax (VAT) is chargeable on goods and services at 5%. The Capital Gains Tax rate is 10%, and shares in companies are exempt from capital gains tax. This is a very significant tax relief for investors. Stamp duty is chargeable on various documents at various flat and ad valorem rates, depending on the nature of the instrument, up to a maximum of 2% of the value involved. There are Pay-As-You-Earn income tax regulations, and various social insurance-type contributions are compulsory.
There are also a tax holiday and tax allowance incentives for investors. For example, tax holidays for up to five years may be granted to investors in the manufacturing and gas utilisation sectors. Companies operating in Nigeria's export processing zones are exempted from all taxes including both import and export duties.
Further, import duty relief may be obtained on certain machinery, and there are tax allowances for using local raw materials in manufacturing, being a labour-incentive (and therefore employment-generating) business, expenditure on training, infrastructure, research and development and in economically disadvantaged areas.