Method Of Operating P.A.Y.E

To facilitate the operation of the pay-As –You-Earn scheme by the employers and enable correct deduction of amount of tax from payments made by him to his employees; the Board provides tax Tables. The tax table guides the employer on the computations and deduction of each employee’s income tax. Slight variations.

May be noticed in monthly deduction but these are normal with the operations of the tax table. Ultimately at the end of the year, the correct tax would have been deducted.


All earning during each year of assessment, which is a year commencing on 1st January and ending 31st December, will be subject to tax deductions and under the system, earnings include salaries, wages fees, bonuses commissions and allowances paid or payable in money, except:

  • amounts which represent reimbursement of expenses incurred by the employee or officer in the performance of his duties, in respect of which it is not intended that he should make any profit or gain and a refund of traveling express:

  • Payments by an employer in respect of an employee’s medical and dental expenses:

  • Payment to an employee in respect of passage expenses to or from Nigeria.

  • In certain cases, particularly with respect to Directors of companies and senior employees, benefits in kind such as free Housing and transport are also taxable.