Nominate your best employee now before the window closes!
Find out more details on our website
HRM and Payroll Software
Navigating the complexities of Nigeria's labor and tax regulations, especially when calculating PAYE taxes, can be daunting for employers. Failure to accurately...
Nigeria is a vibrant and dynamic nation in West Africa. The country holds a top economic standpoint among West African countries for various reasons. Among the many is its emergence as a remarkable talent pool for international employers in today's globalized workforce.
With its youthful population, diverse skill sets, and rapidly expanding pool of educated professionals, Nigeria offers a wealth of talent that is increasingly catching employers' attention worldwide. But hiring from Nigeria means adhering to the differences in labor and tax regulations, where most companies struggle.
PAYE is a requirement and the responsibility of employers. However, determining the right amount could lead to errors, which the Nigerian government does not take lightly. Companies risk penalties, fines, and even contract termination of their employees.
Therefore, employers hiring from Nigeria must find the most reliable PAYE tax calculators to ensure compliance. The information below details more about the best calculator in Nigeria.
The Nigerian government taxes employed individuals as personal income tax. Like most African countries, Nigeria uses the PAYE system, also known as Pay As You Ear. The system can confuse employers since laws vary from country to country.
In Nigeria, employers must deduct PAYE from people who meet the following criteria:
Employers must remit the deductible amount to the revenue authority on or before the 10th of the following month. Failure to pay taxes could lead to fines and penalties.
Employers can calculate PAYE by first summing up the salary and allowances. In Nigeria, the gross salary includes basic pay, housing, transport, leave, utilities, furniture, meals, and other allowances.
The next step is determining taxable income. Employers can calculate this by subtracting all relevant deductions from the gross income. The total value after subtraction is the taxable income.
With this value, employers can check the tax rates applicable to the employee's salary. The government uses a graduated taxing system, meaning those who earn more pay more taxes. The current PAYE tax rates for employees in Nigeria are as follows:
The employer then needs to calculate the tax rate according to the tax bracket of the employee’s income.
The best PAYE tax calculators offer certain features employers should look for. Good calculators offer:
Workpay, a leading HR platform in Africa, offers an effective PAYE calculator. The software transforms manual calculations into a quick and easy solution. It lessens the burden on HR personnel while ensuring employees in Nigeria receive the correct amounts and that employers comply with PAYE remittance.
The system is easy to use and only requires data entry for fast and accurate calculations. Employers or HR personnel can input the country and employee currency from the Workpay PAYE calculator. Next, they can select the payroll year and month. Employers must also input the salary amount and indicate whether it is net or gross.
The calculator also requests additional information, such as mortgage interest and the deposit on the homeownership savings plan. After double-checking the information, employers can click on the calculate button to receive an accurate breakdown of the employee's payroll.
The report shows deductions, gross and net salary, and PAYE amounts, among others. The detailed payslip is ideal for keeping records and as proof of correct payment.
Nigerian employers use Workpay's PAYE calculator because it offers benefits such as:
The youthful population, diverse skill sets, and ever-expanding pool of educated professionals make Nigeria a lucrative destination for companies looking to tap into a wealth of talent.
However, navigating the complexities of Nigeria's labor and tax regulations, especially when calculating PAYE taxes, can be daunting for employers. Failure to accurately determine and remit PAYE taxes can lead to severe consequences.
One standout solution that meets these criteria is Workpay, a leading HR platform in Africa. The PAYE calculator streamlines a complex process, transforming manual calculations into a quick and accurate solution.
Get started with Workpay's PAYE calculator today, and never worry about tax compliance in Nigeria again!
Subscribe to get the latest articles, information, and advice to help you better run your small business. Delivered weekly, for free.