PAYE Tax for Employers in Nigeria
Calculate employee PAYE, remit it on time and keep clean payroll tax records with ComplyDesk.
Who Must Operate PAYE in Nigeria?
Pay-As-You-Earn (PAYE) is the system through which employers deduct personal income tax from employees’ salaries and remit it to the relevant tax authority. If you employ staff in Nigeria, you are responsible for calculating, deducting and remitting PAYE every month.
PAYE is generally remitted to the State Internal Revenue Service of the state where the employee is resident. Federal agencies and certain categories of employees are handled by the federal tax authority.
Income tax rates are progressive and, together with reliefs and exemptions, have been updated under recent tax reforms. Always calculate from the current rates rather than an old payroll template.
- Who deducts
- The employer
- Return frequency
- Monthly
- Typical remittance deadline
- 10th of the following month
- Remitted to
- State Internal Revenue Service (SIRS)
How to Handle PAYE as an Employer
- 1
Register as an employer
Make sure the business has a TIN and is registered with the tax authority for the state where your employees live.
- 2
Calculate each employee’s taxable pay
Start from gross pay, subtract allowable reliefs and deductions such as pension contributions, then apply the progressive rates.
- 3
Deduct PAYE and remit
Deduct the tax from each payslip and remit the total to the tax authority by the monthly deadline.
- 4
File the annual return
Submit the annual PAYE returns with employee schedules, and keep payslips and proof of payment on file.
Documents You Need for PAYE Compliance
- Payslips or the payroll register for the period
- Employee list with TINs and residence details
- Proof of pension contributions
- Bank statements showing salary payments
- Previous PAYE receipts and returns
Penalties for PAYE Defaults
- Late remittance can attract penalties and interest on the unpaid PAYE.
- Failure to deduct PAYE leaves the employer liable for the tax that should have been withheld.
- Missing records can lead to payroll audits and delay your Tax Clearance Certificate.
How ComplyDesk Helps with PAYE
Accurate Calculations
Upload payslips and get PAYE worked out against current rates and reliefs, reviewed by an accountant.
Organised Payroll Records
Keep payslips, pension proof and receipts together so audits and clearance applications are straightforward.
Deadline Reminders
Monthly reminders so remittances are never late.
Frequently Asked Questions
What is PAYE in Nigeria?
PAYE (Pay-As-You-Earn) is the method by which employers deduct personal income tax from employees’ pay each month and remit it to the tax authority on the employee’s behalf.
Who do employers remit PAYE to?
PAYE is generally remitted to the State Internal Revenue Service of the state where the employee is resident. Certain categories, such as federal agencies, are handled federally.
When is PAYE due?
PAYE is typically remitted by the 10th of the month following the month of deduction. Confirm the deadline with your state tax authority.
Are pension contributions deductible for PAYE?
Employee pension contributions are generally an allowable deduction when computing taxable income, so keep proof of contributions with your payroll records.
Does a small business need to run PAYE?
Yes. Any employer in Nigeria that pays salaries must deduct and remit PAYE, however small the team.
Do I get help from a tax professional when I use ComplyDesk?
Yes. ComplyDesk pairs you with a dedicated chartered accountant who reviews your submission, answers questions and helps resolve compliance issues before anything is filed.
Related Nigeria Tax Guides
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