Posted By: | November 26, 2020 |

Rethinking Nigeria’s Excess Dividend Tax

In recent times, one Nigerian tax provision closely scrutinized by investors and advisers is section 19 Companies Income Tax Act (CITA) which prescribes “excess dividends tax” on Nigerian companies. It states: “where a dividend is paid out as profit on which no tax is payable due to – (a) no total profits; or (b) total profits which are less than the amount of dividend which is paid, whether or not the recipient of the dividend is a Nigerian company,...the company paying the dividend shall be charged to tax at the rate prescribed...(30%) as if the dividend is the total profits of the company for the year of assessment to which the accounts, out of which the dividend is declared relates.”

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