THE PRESUMPTIVE TAX SYSTEM

Presumptive Tax

Presumptive Tax is Personal Income Tax on individuals who are in business that is chargeable under the Personal Income Tax Act Cap P8 LFN 2004 as amended. Presumptive Tax is not another type of tax but a method of assessing to tax those business operators whose incomes it is impracticable in the opinion of the relevant tax authority to assess to tax on account of failure to keep proper accounting records and documents. This Presumptive Tax Regime covers businesses in informal sector of the economy such as artisans, sellers of primary products, food canteens, etc.

Presumptive Tax System

The Presumptive Tax System shall apply to the following categories of taxable persons:

  • Individuals and entities not covered under the Pay-As-You-Earn or Direct Assessment provisions of the Revenue Administration Law of Oyo State.
  • Individuals and entities whose income for all practical purposes cannot be ascertained.
  • Individuals and entities whose financial records of business undertakings are not kept in a manner to enable proper assessment of income tax payable to be readily ascertainable.

The Finance and Accounts Departmentis saddled with the responsibility of taking charge of all the financial activities and accounting duties of the Board. The underlisted are the brief outline of the schedule of duties of the department.

  • Oyo State Internal Revenue Service shall be responsible for administering and enforcing the presumptive tax system.
  • All individuals and entities subject to the presumptive tax system shall register with the Oyo State Internal Revenue Service within 60 days of the publication of this Order.
  • Taxable persons shall file annual returns on or before 90 days from the commencement of each year.
  • The Oyo State Internal Revenue Service shall prescribe the mode and procedures for payment of presumptive tax.
  • Upon payment of all tax assessments, the taxable persons shall be issued a Tax Clearance Certificate.

  • Presumptive tax helps to expand the tax base.
  • It also helps to reduce tax evasion.
  • Taxable persons who maintain up-to-date records and file returns within the specified period shall be granted a rebate of 2% of the tax payable.

However, any taxable person who falls under the informal sector of the economy and fails or neglects to make payment of the tax due shall be liable to pay the sum and a penalty equal to 10% per annum.

Kindly note that, going forward, it is imperative for the taxable person to maintain some form of records in order to exit from the presumptive tax regime and be assessed to tax accordingly

Payment can be made either through any of the designated banks approved by the State Government or in any of the designated Point of Sale (POS) or through the online payment platform via the link https://payment.oyostatebir.com and the payment code is 4010001.

Do you earn any income?

Yes you do, and, you are not paying tax under the Pay-As-You-Earn System?

And, you are also not under the Direct Assessment for Income Tax?

But, why are you not paying income tax?

If your income is small;

Or your business keeps no full accounting records;

Or it is difficult to calculate your income;

And, you are not exempt from income tax, then,

Like other person with much income, You are a taxable person - a person who must pay income tax

Don’t worry, there is a simple and more convenient way to pay your tax. The presumptive tax is the answer.

What is Presumptive Tax?

It is a simplified method that is designed for small income earners and people whose income cannot be easily calculated. It is the same Personal Income Tax, but in a simplified way. In addition to its root in the Personal Income Tax Act, LFN, 2004, as amended, it is guided by a National Regulation - And, In Oyo State, the Presumptive Tax is further mandated by ….. the Executive Order No 005 signed by His Excellency, Governor Seyi Makinde.

How much will you pay?

For the sake of justice, since your income is small, your tax is also small - just a token For every artisans, small traders, micro and small entrepreneurs, service providers with small and medium-sized office/shop, there is a set of tax amount. Please ask your trade association, check online at www.oyostateirs.com or visit any of our offices. Will tailors, mechanics and plumbers also pay presumptive tax? Yes, they are to pay. Other artisans, traders and service providers are also required to pay tax. Remember, income tax is compulsory on every income earner who has taxable income.For a comprehensive list, visit our website www.oyostateirs.com/index.html

What are my benefits for paying the presumptive tax?

You have all the rights and benefits of a taxpayer, including the right to Tax Clearance Certificate. In addition, your business gain the recognition of the government, and you can trade with the government.

Will I stay permanently on the Presumptive Tax System?

You, on your own volition, move out, or The Internal Revenue Service, may move you out to the regular (Direct Assessment) system, if your income is no longer small or you business keep reliable accounting records;

How will I make the payment of my tax?

Payment should be made through our agents directly into the accounts of Oyo State Government. You may use the dedicated POS Machine, or pay online on https://payment.oyostatebir.com No cash payment to anybody, except, where expressly permitted for payment to be made through recognized trade associations.

Will I get any evidence for the payment of my presumptive tax?

Yes, every payment would be receipted with valid Receipt of Oyo State Government

If I don’t pay, what is the consequence?

Every tax evader is a criminal, even if the evasion is under the Presumptive Tax System. Tax criminals can loose their licence, will pay the tax and the penalty, and may face prosecution.

What else do I need to know?

  • You must register yourself and your business with Oyo State Internal Revenue Service, not later than the 26th of February, 2024; and,
  • You must file your Annual Tax Returns, not later than 31st of March, of every year;
  • You will be granted a rebate of 2% of the tax payable if you maintain records and file tax returns within the specified period.

For further information Visit www.oyostateirs.com; or contact 09034423126 , 07012990552 ; or visit any of our Tax Stations (OYIRS maintain Tax Station in each Local Government Area)