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Business Ethics and Taxes: What Should You Know? – Essential Woman Magazine
Business Ethics

Business Ethics and Taxes: What Should You Know?

Ethics is the new bottom line and there is a rise in companies embracing it across board. To erase all doubts, being ethical in business, means applying principles of honesty and fairness to relationships with stakeholders. A company’s strong corporate culture and ethics might be informed by various reasons such as an avoidance of fines to it being a re-flection of the firm’s fibre. The latter is a more sustainable approach as it is woven into the culture of the firm and yields better results such as decreased vulnerability, improved brand image and reputation, customer loyalty and a positive work environment.

With an intensifying competitive environment and less money chasing services and goods, a strong corporate culture and ethics is a vital strategic key to survival and profitability. This is a winning streak that could set a company apart. Research has it that a CEO’s ethical reputation enhances a company’s ability to attract investment capital, recruit the best employees, and earn a company the benefit of the doubt in times of crisis

A 1997 DePaul University study also found that companies with a defined corporate commitment to ethical principles do better financially (based on annual sales/ revenues) than companies that don’t. Complying with regulations such as taxes is an ethical trait and we should delve into some important taxation points as outlined below:

Companies Income Tax (CIT) is levied on profits accruing in, derived from and received in Nigeria. CIT rate is 30%. Small company tax rate is 20%. This is applicable to agricultural, manufacturing companies and companies engaged wholly in export, within the first five years of operation, and where the turnover does not exceed N1 million.

Due date for filing is within 6 months of the company’s accounting year end. A new company must file its returns within 18 months from the date of incorporation or 6 months after its first accounting period, whichever is earlier. Penalty for non-compliance is N25,000 for the first month in which the failure occurs, and N5,000 for each subsequent month in which the failure continues.

Tertiary Education Tax is payable by all Nigerian companies and is levied on assessable profit, that is, tax adjusted profit before capital allowances. Tertiary Education Tax rate is 2%.

Due date – In practice, the tax is self-assessed and paid 6 months after the accounting year end date. Penalty for noncompliance is 5% of the tax, in addition to the principal tax, for failure to pay after 2 months of service of assessment notice.

IT Tax is payable by specified companies with turnover of N100 million and above. The tax when paid is tax deduct-ible for company income tax purposes.

Rate is 1% of Profit before Tax

Penalty is 2% of the tax payable.

VAT is chargeable on the supply of taxable goods and services except items specifically stated as exempt or zero-rated. VAT rate is 5%

Both resident and foreign companies engaged in VAT-able activities in Nigeria are required to include VAT on their invoices to customers.

The deadline for filing VAT returns, and paying the VAT due to the FIRS, is the 21st day of the month following the month of the transaction.

When corporations avoid or evade tax, legally or illegally, they free ride on the backs of the rest of us. Adopt sound ethics and pay your taxes on time.

 

Oluwatosin Olaseinde

Oluwatosin Olaseinde is a finance professional with over 7 years of experience spanning across audit, financial accounting, corporate finance and research. She has a deep affinity for numbers; She enjoys crunching them and bringing them to life.

About the author

Oluwatosin Olaseinde

Oluwatosin Olaseinde

Oluwatosin Olaseinde is a finance professional with over 7 years of experience spanning across audit, financial accounting, corporate finance and research. She has a deep affinity for numbers; She enjoys crunching them and bringing them to life.

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