Nigeria’s new tax act, set to come into effect on January 1, 2026, aims to transform the nation’s economy, promote equity, and improve the financial capabilities of low and medium-class workers. The act also seeks to bridge the country’s infrastructural gap. To ensure compliance and effective implementation, guidelines have been put in place, including penalties for non-compliance.
The penalties for non-compliance include a fine of N50,000 for the first month of default and N25,000 for each subsequent month for failure to register. Failure to file VAT returns attracts a penalty of N100,000 in the first month and N50,000 for each subsequent month. Companies that fail to keep books will be fined N50,000.
Other penalties include N1,000,000 for the first day of default and N10,000 for each subsequent day for failure to grant access for the deployment of technology. Failure to use a fiscalisation system will attract a penalty of N200,000 plus 100% of tax due and interest at the prevailing CBN rate per annum. Failure to deduct tax will result in a penalty of 40% of the amount not deducted.
Individuals who fail to remit tax deducted at source or self-account will be liable to pay the amount deducted, collected, or withheld but not remitted, as well as an administrative penalty of 10% per annum and interest at the prevailing CBN monetary policy rate. A person convicted of any offense under this section shall be liable to imprisonment for up to three years or a fine of not less than the principal amount due plus a penalty of not more than 50% of the sum or both.
The act also provides for penalties for failure to attend to demands, requests, or notices, failure to provide requested tax information, documents, or records, and failure to comply with obligations to submit information relating to legal arrangements. The penalty for non-compliance by Virtual Asset Service Providers (VASPs) is N10,000,000 in the first month of default, plus N1,000,000 for every subsequent month that the default continues or suspension or revocation of operating license by the SEC.
The new tax act also provides for penalties for failure to stamp, failure to disclose facts in a dutiable instrument, and failure to notify change of address. Fraud related to stamps can lead to conviction and imprisonment for a term of not exceeding three years or a fine of at least N2,000,000 or both. Offenses by authorized and unauthorized persons can lead to a fine equivalent to 200% of the sum in question or imprisonment for a term of not exceeding three years or both.
The implementation of the new tax act is expected to have a significant impact on Nigeria’s economy and its citizens. The government aims to promote equity and improve the financial capabilities of low and medium-class workers, while also bridging the country’s infrastructural gap. As the act comes into effect, it is essential for individuals and companies to comply with the guidelines to avoid penalties and ensure a smooth transition.