Understanding which expenses are tax-deductible can significantly reduce your company’s tax liability and increase profitability. At Faturoti Taiwo and Co., a leading accounting firm based in Lagos, Nigeria, we help businesses uncover tax-saving opportunities by identifying allowable deductions under Nigerian tax laws.
Here are the top 10 tax deductions Nigerian businesses should be leveraging:
1. Employee Salaries and Wages
Payments made to employees, including salaries, wages, bonuses, and other benefits, are fully deductible if properly documented and paid through appropriate payroll systems.
2. Rent and Utilities
Rent for business premises and associated utilities like electricity, water, and internet are allowable business expenses under the Companies Income Tax Act (CITA).
3. Repairs and Maintenance
Routine repairs and maintenance on business assets and office equipment are deductible as long as they are not capital in nature.
4. Training and Professional Development
Expenditures on staff training, seminars, and professional development courses are deductible, provided they are related to your business operations.
5. Marketing and Advertising
Costs incurred on brand promotion, advertising, and business marketing campaigns are allowable deductions that help drive business growth.
6. Interest on Business Loans
Interest paid on loans taken strictly for business purposes is tax-deductible, provided the loan agreement and bank documentation are maintained.
7. Legal and Professional Fees
Fees paid to legal advisers, accountants, auditors, and consultants for business-related services are tax-deductible.
8. Depreciation (Capital Allowance)
Although depreciation itself is not tax-deductible, businesses can claim capital allowances on qualifying fixed assets such as vehicles, machinery, and office equipment.
9. Bad Debts Written Off
Debts that have become irrecoverable and have been adequately provided for in the books may be claimed as deductible, subject to FIRS guidelines.
10. Transportation and Travel Expenses
Expenses related to business travel — including transport, accommodation, and subsistence — are allowable if they are wholly, exclusively, and necessarily incurred for business.
How Faturoti Taiwo and Co. Can Help
Tax compliance and optimization can be complex, especially in Nigeria’s dynamic regulatory environment. At Faturoti Taiwo and Co., we:
- Review your accounts to uncover eligible deductions.
- Ensure compliance with FIRS and LIRS tax laws.
- Provide strategic tax planning to reduce liabilities.
Contact us today for a tax health check and start saving your business money!
Maximizing allowable deductions is key to running a tax-efficient business. With the right professional support, you can remain compliant and profitable. Don’t leave money on the table — let Faturoti Taiwo and Co. help you get the most out of your business finances.