Tax is a charge imposed by governmental authority upon property, individuals, or transactions to raise money for public purpose. Tax is assessed in accordance with the reasonable rule of apportionment on persons or property within the tax administration and it is purely statutory. The 1999 Nigerian Constitution puts the collection of taxes in the 2nd schedule item 7-10 under the concurrent list thereby giving the 3 tiers of government the ability to collect tax. This means the three tiers of government i.e. the Federal Government, State Government and Local Government have the power to make provisions for the collection of tax. The various types of tax payable in Nigeria are :
VALUE ADDED TAX: Which was brought into existence by Decree 2 of 1993 to replace the sales tax. The Value Added Tax is five percent and it is a consumption tax that has been embraced by many countries and very easy to administer and difficult to evade as it has been added from source and paid to the Federal Board of Internal Revenue periodically by the supplies of goods and services . In the case of Imported goods, this tax is paid directly to the Federal Board of Internal Revenue at the same time as import duties. It is governed by the Value Added Tax Act 2004.

CAPITAL GAINS TAX: This is tax charged on the proceeds of property sold off by a taxpayer. The tax is ten percent of chargeable gain proprietary right, sale or lease of property. The aim of the tax to boost revenue by government by deducting certain specified amount from gains accruing to any person on disposal of assets. What amounts to disposal includes sales, lease, transfer, assignment and compulsory acquisition. The tax is not easy to access like the value added tax because the person meant to pay such tax end up not paying because in most cases, the person who has bought the asset willing to perfect his title will be made to pay instead of the transferor. Also the process of determining chargeable gain as proper records are not kept or records are falsified to reduce the tax burden. This tax is regulated by the capital Gains Tax Act 2004.

EDUCATION TAX: This evolved from the idea of private sector participation in the finding of education in Nigeria. The tax is two percent of the rehabilitation, restoration and consolidation of higher education. The tax is payable to the Federal Board of Inland Revenue. The problem encountered is that how accessible profit determined and that companies are in opposition to the tax.

PERSONAL INCOME TAX: The tax is on the Pay As You Earn (PAYE) basis, that is the tax payable depends on how much is earned by the tax payer. The tax is easy to collect among civil servants as it is deducted from source by the appropriate authorities unlike the private sector who will have to file returns of each tax payer which in most cases is not done. The tax payer is payable to both the Federal Board of Inland Revenue and the state Board of Internal Revenue depending on the sector in which the tax payer is employed. The tax is regulated by the Personal Income Tax Act 2004.

COMPANY INCOME TAX: This is thirty percent of the profit of a company accruing in, derived from, brought into or received in Nigeria. This tax is payable to the Federal Tax of Inland Revenue. The rational behind the tax is to levy tax on the company which is juristic person as different from its shareholders as the company becomes a distinct legal entity at incorporation. The tax is regulated by the Companies Income tax Act 2004.