ICAN Taxation
Past Questions
24+ verified Taxation past questions for ICAN. Step-by-step worked answers in 5 Nigerian languages.
Taxation topics (2)
Sample Taxation past questions
1. VAT rate in Nigeria (2024).
- A. 5%
- B. 7.5%
- C. 10%
- D. 12%
Answer: B
2. PAYE applies to:
- A. Companies
- B. Employees' salaries
- C. Imports
- D. Property
Answer: B
AI Explanation
**The reasoning** PAYE stands for **Pay As You Earn** — it's a tax system where income tax is deducted directly from your salary *before* you receive your pay. The principle here is **withholding tax on employment income**. Your employer calculates the tax you owe based on your earnings, removes it from your gross salary, and sends it straight to the Federal Inland Revenue Service (FIRS). You "pay as you earn" — hence the name. This only applies to **employees receiving regular salaries or wages**. **Why the wrong options tempt you** - **A (Companies)**: Companies pay *Company Income Tax (CIT)*, not PAYE. The similar "tax on income" idea confuses people. - **C (Imports)**: Imports attract *customs duties* and VAT at the border — completely different tax category. - **D (Property)**: Property owners pay *Tenement Rate* or *Capital Gains Tax* when selling — not related to regular earnings. **Quick takeaway** PAYE = salary earners only — if you work and collect salary monthly, your tax is deducted before the money hits your account.
3. Companies income tax in Nigeria is administered by:
- A. CBN
- B. FIRS
- C. NDIC
- D. SEC
Answer: B
4. Withholding tax is best described as:
- A. A final tax always
- B. An advance payment of tax
- C. A penalty
- D. A refund
Answer: B
5. VAT in Nigeria is currently:
- A. 5%
- B. 7.5%
- C. 10%
- D. 15%
Answer: B
6. PAYE is deducted from:
- A. Profits
- B. Employee salaries
- C. Sales
- D. Imports
Answer: B
7. A tax year in Nigeria runs from Jan 1 to:
- A. Mar 31
- B. Jun 30
- C. Sep 30
- D. Dec 31
Answer: D
8. Standard CIT rate for large Nigerian companies:
- A. 20%
- B. 25%
- C. 30%
- D. 35%
Answer: C
AI Explanation
Companies with turnover above ₦100 million pay CIT at 30%.
9. Small companies (turnover ≤ ₦25 million) pay CIT at:
- A. 20%
- B. 10%
- C. 0% (exempt)
- D. 30%
Answer: C
AI Explanation
Per Finance Act, small companies are exempt from CIT.
10. Tertiary Education Tax rate is:
- A. 1%
- B. 2.5%
- C. 3%
- D. 5%
Answer: C
AI Explanation
TET is 3% of assessable profit (raised by Finance Act amendments).
11. Standard VAT rate in Nigeria:
- A. 5%
- B. 7.5%
- C. 10%
- D. 15%
Answer: B
AI Explanation
Finance Act 2019 raised VAT to 7.5% from 5%.
12. Capital gains tax rate in Nigeria:
- A. 5%
- B. 10%
- C. 20%
- D. 30%
Answer: B
AI Explanation
CGT under CGTA is 10% on chargeable gains.
13. WHT on dividends:
- A. 5%
- B. 7.5%
- C. 10%
- D. 15%
Answer: C
AI Explanation
WHT on dividends is 10% (5% in some treaty cases); final tax in recipient's hands.
14. WHT on consultancy paid to a Nigerian company:
- A. 5%
- B. 10%
- C. 15%
- D. 20%
Answer: B
AI Explanation
WHT on professional/management/consultancy fees to corporates is 10%.
15. VAT returns due by which day each month?
- A. 7th
- B. 15th
- C. 21st
- D. 30th
Answer: C
AI Explanation
VAT returns and payment are due by the 21st of the following month.
16. Capital allowances are granted in place of:
- A. salaries
- B. depreciation (which is disallowed for tax)
- C. audit fees
- D. interest
Answer: B
AI Explanation
Tax law disallows accounting depreciation but grants statutory capital allowances on qualifying capex.
17. Minimum tax under CITA generally applies when:
- A. company has high profits
- B. ordinary tax computation yields a low/zero tax amount
- C. company is exempt
- D. company is small
Answer: B
AI Explanation
Minimum tax (0.5% of gross turnover, with exemptions) ensures some contribution when CIT would be very low.
18. Pioneer status under IDITRA grants:
- A. additional tax
- B. a tax holiday up to 5 years on qualifying industries
- C. free office space
- D. loan
Answer: B
AI Explanation
Pioneer status (IDITRA) — tax holiday, initially 3 years extendable to 5.
19. PAYE remittance is due by which day next month?
- A. 5th
- B. 10th
- C. 15th
- D. 21st
Answer: B
AI Explanation
PAYE deductions remitted by the 10th of the following month.
20. Personal income tax is administered by:
- A. FIRS only
- B. the State IRS where the taxpayer resides
- C. Local Government
- D. CBN
Answer: B
AI Explanation
PITA assigns PIT to the SIRS of the place of residence; FIRS handles FCT residents and security agencies.
21. Transfer pricing requires related-party transactions to be:
- A. free
- B. at arm's length (as between independent parties)
- C. at cost-plus 100%
- D. at market premium
Answer: B
AI Explanation
Nigeria's TP Regulations 2018 (as amended) implement OECD arm's-length principle.
22. Tax 'evasion' differs from 'avoidance' in that evasion is:
- A. legal planning
- B. illegal misrepresentation to escape tax
- C. tax credit
- D. deferred tax
Answer: B
AI Explanation
Evasion is criminal. Avoidance is legitimate planning within the law.
23. Filing deadline for CIT returns is:
- A. 3 months after year-end
- B. 6 months after year-end
- C. 12 months after year-end
- D. 1 month after year-end
Answer: B
AI Explanation
CITA requires returns within 6 months of accounting year-end.
24. Tax appeal beyond objection stage goes to:
- A. Supreme Court directly
- B. Tax Appeal Tribunal (TAT)
- C. ICAN
- D. CBN
Answer: B
AI Explanation
TAT (under FIRS Act) is the first-instance tribunal for unresolved tax disputes.
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