PAYE Schedule (Nigeria)

A PAYE Schedule in Nigeria captures the structured information needed to complete the process it supports.

Under Section 81 of PITA, every employer is required to deduct tax from the emoluments of each employee and to remit the deducted amounts to the relevant tax authority — which is the state internal revenue service of the state where the employee is resident for tax purposes — not later than the 10th day of the month following the month of deduction. The Lagos State Internal Revenue Service (LIRS) collects PAYE for Lagos-resident employees, the Federal Capital Territory Internal Revenue Service (FCT-IRS) collects PAYE for FCT-resident employees, and the Rivers State Internal Revenue Service collects for Rivers State-resident employees.

The PAYE tax rates in Nigeria are graduated under Section 40 of PITA: first NGN 300,000 at 7%; next NGN 300,000 at 11%; next NGN 500,000 at 15%; next NGN 500,000 at 19%; next NGN 1,600,000 at 21%; and above NGN 3,200,000 at 24%. Each employee is entitled to a Consolidated Relief Allowance (CRA) of NGN 200,000 per annum plus 20% of gross income, whichever is higher, under Section 33 of PITA. Pension contributions under the Pension Reform Act 2014 and National Housing Fund (NHF) contributions under the National Housing Fund Act (Cap N45, LFN 2004) are also deductible before calculating taxable income.

A PAYE Schedule differs from a payslip (which is the individual document given to each employee) and from the annual PAYE Returns (Form A) which employers must file with the relevant state IRS by 31 January each year under Section 81(2) of PITA. The PAYE Schedule is the employer's internal record of all employees' monthly tax deductions and provides the basis for the monthly remittance.

The legal framework governing the PAYE Schedule (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a PAYE Schedule (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Labour Act (Cap. L1, LFN 2004) sets the foundational requirements.

A PAYE Schedule in Nigeria is required every month by any employer who pays salaries or wages to employees resident in Nigeria.

A PAYE Schedule is required when an employer makes monthly salary payments to full-time, part-time, or contract employees and must document the PAYE deducted from each employee's emoluments before remitting to the relevant state internal revenue service by the 10th of the following month under Section 81 of PITA.

A PAYE Schedule is needed when a company registered with the Corporate Affairs Commission (CAC) under CAMA 2020 is audited by the Lagos State Internal Revenue Service (LIRS), the Federal Inland Revenue Service (FIRS), or any other state IRS, and must produce payroll records demonstrating compliance with PAYE deduction and remittance obligations.

A PAYE Schedule is required when preparing the employer's annual PAYE Returns (Form A) which must be filed with the relevant state IRS by 31 January each year under Section 81(2) of PITA, listing all employees, their annual emoluments, and the total PAYE deducted and remitted during the year.

A PAYE Schedule is needed when an employee requests confirmation of their total tax paid for the year for the purpose of filing their individual income tax self-assessment return under Section 41 of PITA or for obtaining a Tax Clearance Certificate (TCC) from the relevant state IRS.

Parties in Nigeria should prepare a PAYE Schedule (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid PAYE Schedule for Nigeria must contain the following essential elements to meet the requirements of the Personal Income Tax Act (PITA) Cap P8, LFN 2004.

Employer Details: The employer's legal name, CAC RC number under CAMA 2020, Tax Identification Number (TIN) issued by the FIRS, the relevant state IRS employer reference number, and the payroll period (month and year).

Employee Information: Each employee's full name, staff ID, Tax Identification Number (TIN), and the state of their tax residence (which determines which state IRS receives the PAYE remittance).

Gross Emoluments: Each employee's gross monthly salary including basic salary, housing allowance, transport allowance, and all other taxable benefits in kind. Non-taxable allowances, such as reimbursements, must be excluded.

Allowable Deductions: The Consolidated Relief Allowance (CRA) of NGN 200,000 per annum plus 20% of gross income under Section 33 of PITA; pension contributions at 8% of monthly emoluments under the Pension Reform Act 2014; National Housing Fund (NHF) contributions at 2.5% of basic salary under the NHF Act; and any approved life assurance premiums.

Taxable Income: Gross emoluments minus all allowable deductions, representing the base on which the graduated PAYE tax rates under Section 40 of PITA are applied.

PAYE Deduction: The monthly PAYE tax calculated by applying the graduated rates to the annualised taxable income and dividing by 12. The minimum income tax rule under Section 37 of PITA — which imposes a minimum tax of 1% of gross income on persons whose computed tax is less than 1% of gross income — should be applied where relevant.

Remittance Details: The total PAYE deducted for all employees, the name of the receiving state IRS, the remittance date, and the bank transfer reference or payment receipt number.

Additional compliance elements for a PAYE Schedule (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.