Key Offences and Penalties Under Nigeria’s New Tax Act (Part 1)

The Nigerian Tax Act, 2025, effective January 1, 2026, introduces reforms aimed at transforming the economy, promoting equity, improving the financial capacity of low- and middle-income earners, and closing Nigeria’s infrastructure gap. To ensure compliance, the Act prescribes penalties for various breaches, summarized below:

1. Failure to Register

• N50,000 for the first month of default; N25,000 for each subsequent month.

2. Failure to File VAT Returns

• N100,000 for the first month of default; N50,000 for each subsequent month.

3. Failure to Keep Books

• N50,000 for companies.

4. Failure to Grant Access for Technology Deployment

• N1,000,000 for the first day of default; N10,000 for each subsequent day.

5. Failure to Use Fiscalisation System

• N200,000 plus 100% of tax due and interest at the prevailing CBN monetary policy rate.

6. Failure to Deduct Tax

• 40% of the amount not deducted.

7. Failure to Make Attribution

• N100,000 penalty.

8. Failure to Remit Tax

• Deducted at source: Pay the tax withheld but not remitted, plus 10% administrative penalty per annum and interest at CBN rate.
• Self-accounted tax: Pay the unpaid tax, plus 10% administrative penalty per annum and interest at CBN rate.

9. Conviction for Offences under the Act

• Imprisonment up to 3 years, or a fine of not less than the principal amount due plus a penalty of up to 50%, or both.

10. Failure to Respond to Demands, Requests, or Notices

• N100,000 on the first day; N10,000 for each subsequent day.
• Failure to provide requested tax information, documents, or records: N200,000 first day; N10,000 for each subsequent day.

11. Non-compliance with Legal Arrangements, Rules, or Circulars

• N1,000,000 on the first day of default; N10,000 for each subsequent day.
• Additional penalties may apply, including suspension or revocation of operating licenses.

12. Failure to Stamp Documents

• 10% of unpaid duty plus interest at prevailing CBN rate.

13. Failure to Disclose Facts in a Dutiable Instrument

• N100,000, or on conviction, a fine of N50,000 or imprisonment up to 3 years, or both.

14. Failure to Notify Change of Address

• N100,000 for the first month; N5,000 for each subsequent month.

15. Fraud Related to Stamps

• Imprisonment up to 3 years or a minimum fine of N2,000,000, or both.

16. Offences by Authorised or Unauthorised Persons

• Fine of 200% of the sum in question, or imprisonment up to 3 years, or both.

17. Inducement of an Authorised Officer

• Individual: N500,000; Corporate body: N2,000,000; or imprisonment up to 3 years, or both, plus tax payment.

18. Use of Weapon in Committing Tax Offences

• Carrying a weapon: imprisonment up to 5 years.
• Injuring a tax officer while armed: imprisonment up to 10 years.

19. Impersonation of an Authorised Officer

• Fine up to N1,000,000, or imprisonment up to 3 years, or both.

20. Aiding and Abetting an Offence

• N1,000,000 or imprisonment up to 3 years, or both.

21. Obstruction of Tax Officials

• Obstructing, assaulting, or impeding officers: N1,000,000 administrative penalty; on conviction, fine up to N1,000,000 or imprisonment.

This framework ensures accountability, discourages tax evasion, and promotes effective enforcement of tax laws in Nigeria.