PAYE (Pay As You Earn) — Regulatory Reference¶
Last reviewed: 2026-04-01
Overview¶
PAYE is the system by which employers withhold income tax from employees' salaries and remit it to the State Internal Revenue Service (SIRS). It is the employee's personal income tax — the employer is merely the collection agent.
Key Facts¶
| Item | Detail |
|---|---|
| Authority | SIRS (state-level, NOT NRS) |
| Filing | Monthly |
| Due date | 10th of the month following the payroll period |
| Portal | State-specific (e.g., LIRS eTax for Lagos) |
| Penalty | Fines + interest; director personal liability possible |
PAYE Tax Bands (NTA 2025)¶
| Annual Income Band | Rate |
|---|---|
| First ₦300,000 | 0% |
| Next ₦300,000 (₦300K–₦600K) | 7% |
| Next ₦500,000 (₦600K–₦1.1M) | 11% |
| Next ₦500,000 (₦1.1M–₦1.6M) | 15% |
| Next ₦1,600,000 (₦1.6M–₦3.2M) | 19% |
| Above ₦3,200,000 | 24% |
Reliefs and Deductions¶
Before applying the tax bands, these are deducted from gross income:
| Relief | Amount |
|---|---|
| Consolidated Relief Allowance (CRA) | ₦200,000 + 20% of gross income (whichever is higher) |
| Pension contribution | Employee's 8% of BHT (Basic + Housing + Transport) |
| NHF contribution | 2.5% of basic salary (if applicable) |
| NHIS contribution | Employee's health insurance contribution (if applicable) |
Taxable income = Gross income − CRA − Pension − NHF − NHIS
Small Companies and PAYE¶
Being a small company does NOT exempt a business from PAYE. Small company exemptions (NTA 2025 §56) cover CIT, CGT, and Development Levy only. If a business has employees, it must withhold and remit PAYE regardless of turnover. This is the most common source of confusion for small business owners.
State Authorities¶
| State | SIRS | Portal |
|---|---|---|
| Lagos | LIRS (Lagos Internal Revenue Service) | etax.lirs.net |
| Abuja | FCTA IRS | — |
| Rivers | RIRS | — |
| Other states | Respective SIRS | — |
PAYE returns are filed with the SIRS of the state where employees work, not where the business is registered.
Where This Appears in Finora¶
- PAYE Returns (
/tax/paye-returns) — 4-tab module (Returns, Employees, Payroll Runs, Schedules) - Tax Calendar (
/tax/calendar) — 10th deadline reminders - Tax Reports (
/tax/reports) — PAYE compliance status (Overdue if unremitted) - Filing Services (
/tax/filing-services) — PAYE filing ₦9,500 - Tax Compliance (
/tax/compliance) — PAYE is always an obligation if employees exist