Multiple Taxation Madness

Preface

In Nigeria, it is possible to be taxed three times on the same business activity.

The Nigeria Revenue Service (NRS), formerly FIRS — now the Nigeria Revenue Service (NRS) — collects Company Income Tax. Your state's Internal Revenue Service collects Personal Income Tax and various levies. Your local government collects tenement rates, market fees, and licensing charges. And then there are the levies that are not even legal — the "development levy" collected by area boys with government-looking receipt books, the signage fee that appears in no legislation, the "security contribution" that nobody can explain.

A small business owner in Lagos can face 30-40 different taxes, levies, and fees from federal, state, and local authorities. Many of these overlap. Some are illegal. Almost none are coordinated. And very few business owners know which ones they are legally required to pay, which ones they can challenge, and which ones are pure extortion.

This is the multiple taxation problem — and it is uniquely, painfully Nigerian.

Who This Book Is For

• Small and medium business owners paying taxes and levies they are not sure are legal
• Entrepreneurs setting up a business and wanting to know their actual tax obligations
• Business owners who have been assessed by multiple authorities for the same income
• Market traders paying daily levies without knowing what they are paying for
• Anyone who has ever wondered whether the receipt they just received is from a real government authority

What You Will Walk Away With

By the last page, you will know exactly which taxes the federal government can legally collect from you, which the state can collect, and which the local government can collect. You will know which levies are illegal and how to identify them. You will have a system for challenging duplicate assessments. You will understand how to structure your business to minimize legitimate tax overlap. And you will have a tax defense toolkit — including template letters and escalation processes.

Every Nigerian business deserves to pay tax — once. Not twice. Not three times. Just once.

The Tax Upon Tax Problem

Alhaji Musa runs a building materials shop in Kano — cement, iron rods, roofing sheets, plumbing fittings. He has been in this business for 22 years. His shop is on Bompai Road, his warehouse is in Sharada Industrial Estate, and he employs 8 people.

In 2025, Alhaji Musa sat down with his accountant to count every tax, levy, fee, and "contribution" his business had paid in the previous year. They went through bank statements, receipts, and the stack of demand notices he keeps in a cardboard box behind his desk.

The total: 23 separate payments to 11 different government bodies and quasi-government agencies. Here is a partial list:

• Company Income Tax — NRS — ₦1,850,000
• VAT — NRS — ₦2,400,000
• PAYE (staff) — Kano SIRS — ₦960,000
• Business premises levy — Kano SIRS — ₦350,000
• Development levy — Local Government — ₦150,000
• Signage/advertisement levy — Local Government — ₦80,000
• Waste management levy — REMASAB (Kano) — ₦120,000
• Trade/business registration — Local Government — ₦45,000
• Loading/offloading fee — Motor park touts (collected "on behalf of" LG) — ₦240,000
• "Security contribution" — Area boys / "community development" — ₦180,000
• Market association dues — Bompai Road Traders Association — ₦96,000
• Fire service levy — Kano State Fire Service — ₦60,000
• Total identified — ₦6,531,000

His business revenue was ₦78 million. His legitimate federal and state tax obligation — CIT, VAT, and PAYE — came to approximately ₦5.2 million. He paid ₦6.5 million. The extra ₦1.3 million went to levies, fees, and payments that ranged from legally questionable to outright extortion.

"Na so government dey do. If you no pay, they lock your shop."

That sentence — the resigned acceptance that you must pay whatever is demanded because the alternative is worse — is what costs Nigerian businesses billions every year. This chapter shows you exactly how much, and where the money actually goes.

What You Will Learn

• Quantify the total tax and levy burden on your specific business
• Identify which payments are legally required and which are not
• Understand why multiple taxation exists and who benefits from the chaos
• Calculate the real cost of over-taxation on your margins
• Begin building the documentation system that protects you

Why This Matters

Nigeria's multiple taxation problem is not a secret. It has been studied by the World Bank, documented by the Manufacturers Association of Nigeria (MAN), lamented by every business association in the country, and acknowledged by successive federal governments. The National Tax Policy of 2017 explicitly prohibited the collection of taxes and levies not backed by law.

Yet nothing has changed. In fact, the problem has worsened. As state and local government revenue from federal allocations has shrunk, sub-national governments have become more aggressive in creating new levies and fees — many without any legal basis.

The Nigerian Economic Summit Group (NESG) estimated in 2024 that multiple taxation costs Nigerian businesses ₦3-5 trillion annually — not in legitimate tax payments, but in duplicate, illegal, and unofficial levies. For the average SME, these illegitimate charges represent 10-25% of the legitimate tax burden.

That money does not build roads or hospitals. It disappears into a system that has no accountability, no receipts, and no legal backing. And it comes directly from your margin — the same margin already under pressure from devaluation, inflation, and power costs.

How Multiple Taxation Works

The Three-Tier System

Nigeria's tax system has three tiers, each with constitutionally defined taxing powers:

Federal (NRS, now NRS from 2026):

• Company Income Tax (CIT): 30% on profits above ₦25 million; 20% for medium companies
• Value Added Tax (VAT): 7.5%
• Education Tax: 2.5% of assessable profits
• Capital Gains Tax
• Petroleum Profit Tax
• Stamp duties on certain instruments

State (State Internal Revenue Service — SIRS):

• Personal Income Tax / PAYE
• Business premises levy
• Development levy
• Right of occupancy fees
• Market and trading fees
• Naming of street registration fees

Local Government:

• Tenement rate (property-related)
• Shops and kiosks fees
• Marriage, birth, death registration fees
• Signage and advertisement fees
• Domestic animal license
• Bicycle, truck, canoe fees

The Taxes and Levies (Approved List for Collection) Act specifies exactly which taxes each tier can collect. There are 9 federal, 11 state, and 21 local government-approved taxes and levies — a total of 41 approved charges across all three tiers.

The problem? In practice, Nigerian businesses face 50-100+ different demands because:

1. State governments create levies not on the approved list. "Infrastructure development levy," "environmental protection fee," "ICT development levy" — names that sound official but have no legal backing.
2. Local governments improvise. "Loading and offloading fee," "road maintenance contribution," "youth empowerment levy."
3. Quasi-government agencies collect their own charges. Waste management, fire service, environmental agencies — each with their own levy.
4. Unofficial collectors demand payment. Area boys, motor park touts, "community leaders" who claim to represent the local government.
5. The same tax is collected by multiple tiers. Both state and local government may demand "business premises" payments, each claiming authority.

The Real Cost — Case Studies

Case 1: Restaurant Owner in Lagos

Mama Chioma runs a restaurant in Surulere, Lagos. 12 staff, monthly revenue of ₦6 million.

• CIT (SME rate) — NRS — Yes — ₦480,000
• VAT — NRS — Yes — ₦540,000
• PAYE (staff) — Lagos IRS — Yes — ₦288,000
• Business premises — Lagos IRS — Yes — ₦200,000
• Environmental sanitation levy — LASEPA — Questionable — ₦120,000
• Waste management — LAWMA — Yes (service fee) — ₦180,000
• Food handler's certificate — Lagos Ministry of Health — Yes — ₦96,000 (₦8K x 12 staff)
• Signage fee — Local Government — Yes — ₦50,000
• "Health inspection" fee — Unknown officers — No — ₦60,000 (₦5K x 12 visits)
• "Fire safety certificate" — Unknown officers — Questionable — ₦80,000
• Market association dues — CDA — Quasi-legal — ₦48,000
• "Security" — Area boys — No — ₦120,000
• Total — ₦2,262,000
• Legitimate total — ₦1,834,000
• Excess — ₦428,000