What PAYE means in Nigeria
PAYE stands for Pay-As-You-Earn. It is the mechanism used to collect Personal Income Tax from employees through payroll. The employer computes the employee's tax for each pay period and remits it to the relevant State Internal Revenue Service (SIRS).
In practice: employee earnings → statutory reliefs/deductions → taxable income → graduated tax bands → PAYE withheld and remitted.
Who is responsible (employee vs employer)
- Employee: ultimately bears the tax (it reduces take-home pay).
- Employer: is responsible for calculating, withholding, and remitting PAYE, keeping payroll records, and responding to SIRS queries.
What documents matter
- Employment contract, payslips, and payroll registers
- Employee biodata and Tax Identification Number (where applicable)
- Evidence for allowable deductions (pension, NHF, NHIS, life assurance, etc.)
Good recordkeeping reduces compliance risk and audit stress.
Next steps: calculate PAYE correctly
Use the free calculator to estimate PAYE and net pay, then operationalize it inside your payroll workflow.
FAQ
Is PAYE the same as income tax? ▾
PAYE is the payroll method used to collect personal income tax from employees. The tax itself is personal income tax.
Who remits PAYE in Nigeria? ▾
Employers calculate and remit PAYE to the relevant State Internal Revenue Service (SIRS).