Understanding Consumption Tax

Consumption Tax is a small amount of money added to the price of goods and services you sell. In Ebonyi State, this tax is 5%.

This means that if you are selling something, you need to add 5% of the selling price as tax.

Simple Example:

If you are selling an item for ₦1,000, you will add ₦50 as Consumption Tax.

So, the total amount you will collect from the buyer is:

₦1,000 + ₦50 = ₦1050

Step 1: Identify the cost of the product or service you are selling. Let's call this the Base Price.

Step 2: Multiply the Base Price by the rate (5%). This gives you the amount.

Formula:
Amount = Base Price × 5%

Example:
If Base Price = ₦1,000, then:

Consumption Tax Amount = ₦1,000 × 0.05 = ₦50

Step 3: Add the Consumption Tax Amount to the Base Price to get the Total Price.

Formula:
Total Price = Base Price + Consumption Tax Amount

Example:
Total Price = ₦1,000 + ₦50 = ₦1050

This means, for every ₦100 you collect, ₦5 is for Consumption Tax.

Remember, this Consumption Tax is not your profit. You must give it to the government.

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