Should Small scale businesses be excessive tax?

[Joseph555]

In my country Nigeria, I do pity small scale business owners, how on Earth will a cap driver be paying excessive taxes to the same government that claims to be encouraging small scale businesses.
Commercial drivers are #200 to #400 Naira ticket everyday to the government and yet there is no good road for them used despite being excessively taxed.
I want to know, those of us that are not from Nigeria is it also happening the same way in your own country?
Please be very sincere.

 

[Mataracy]

Excessive tax kills small scale business in the sence that the profit making by the business is to small compare to the tax paid.
Any excessive tax on the small scale business is will distroy the business when one can no more see money to finance the business again. The gain of a small business scale is to earn profit bit if not then the business will surely run down.

 

[Maks25]

Very good and informative thread. I would like to mention that it been a very long time since I practice tax so I am rusty.

First, you said you are about to become operational, I think you may be charged pre-operational levy for every accessment year your company stays dormant (it should be #50,000). This is assuming that you filed your taxes, where you failed to do this, you will be charged late return penalty. It's gets worse as the FIRS may actually charge you interest on this late return penalty (your tax professional can attempt arguing this part)

As for individuals and partisanship, you pay taxes to your state of residence. The key term here is your state of residence, comes with plenty confusion eg I live at Muye and work in Lagos, or live after Nanya and work in Abuja, so who will I pay my taxes to? Ie I derive income from one state and live in another, it becomes more interesting when your employer remit it for you in a state where you don't work.

Also, I believe military and Abuja residence pay their taxes to the FIRS.

As for tax avoidance, you have to structure your business to take full advantage of the tax law. Eg I know there are some tax incentives if you are into exporting or investing in gas and etc. Also you have to wonder why some organizations collect loans even though they have the money to fund a project (it's because most loans are tax deductible. To determine tax deductibility you have to apply the WREN principles: which says that for any expense to be tax deductible, it has to be "wholly, reasonable, exclusively and necessarily" incurred in the process of doing business (or something of that nature)

Another thing is applying for tax holiday, but you must check the rules to apply for that.

Tax is quite easy if you have the time to study, but as a business owner there is no excuse, you need to know and understand tax.