Nigeria’s new tax act, which will take effect on January 1, 2026, is designed to transform the economy, promote equity and enhance the financial capabilities of low‑ and medium‑income workers. It also seeks to narrow the country’s infrastructural gap. To ensure compliance and effective implementation, a set of guidelines and penalties has been established.
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 do not keep proper books will be fined N50,000. For refusing to grant access for the deployment of technology, the penalty is N1,000,000 for the first day of default and N10,000 for each subsequent day. Failure to use a fiscalisation system incurs a penalty of N200,000 plus 100 % of the tax due and interest at the prevailing CBN rate per annum. Failure to deduct tax results in a penalty of 40 % of the amount not deducted.
Individuals who fail to remit tax deducted at source or self‑account are liable to pay the amount deducted, collected or withheld but not remitted, together with 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 faces imprisonment for up to three years, a fine of not less than the principal amount due plus a penalty of up to 50 % of that sum, or both.
Additional penalties apply 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. Virtual Asset Service Providers (VASPs) face a penalty of N10,000,000 in the first month of default and N1,000,000 for each subsequent month, or possible suspension or revocation of their operating licence by the SEC.
The act also imposes penalties for failure to stamp documents, failure to disclose facts in a dutiable instrument, and failure to notify a change of address. Fraud involving stamps can lead to conviction, imprisonment for up to three years, a fine of at least N2,000,000, or both. Offences by authorized or unauthorized persons may result in a fine equal to 200 % of the sum in question, imprisonment for up to 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. While the government aims to promote equity and improve the financial capabilities of low‑ and medium‑class workers, it also seeks to bridge the infrastructural gap. As the act comes into force, individuals and companies must adhere to the guidelines to avoid penalties and ensure a smooth transition.
Comments are closed for this story.