New Nigerian Tax Act Takes Effect January 1, 2026
The new Nigerian Tax Act will officially come into force on January 1, 2026, introducing reforms designed to stimulate the economy, promote fairness, improve financial capacity for low- and middle-income earners, and help bridge the nation’s infrastructural gaps.
To ensure compliance, the law includes guidelines and penalties for violations. Key offences and their corresponding penalties include:
Unauthorised disclosure – Convicted offenders face a fine of up to N1,000,000, imprisonment of up to three years, or both.
False tax refund claims – Attract a penalty of 50% of the claimed amount plus interest at the prevailing CBN monetary policy rate.
False VAT refund claims – Penalty is 100% of the amount plus interest at the prevailing CBN rate.
Default in payment of mineral royalties – A 10% penalty is added to the royalty due. For foreign currency transactions, the rate is SOFR +10%.
False declarations – Individuals making untrue statements or documents for tax purposes face an administrative penalty of N1,000,000, plus payment of undercharged taxes, or on conviction, a fine of N1,000,000 and/or up to three years’ imprisonment.
Document counterfeiting – Liable for N100,000 administrative penalty; conviction may lead to three years’ imprisonment, a N1,000,000 fine, or both.
Corporate offences – Directors, managers, trustees, partners, or similar officers of entities can be held liable for offences committed by their organisations unless they prove non-involvement or lack of consent.
General penalty – Any unlisted violation carries an administrative penalty of N100,000, or conviction can lead to up to three years in prison, a fine, or both.
Failure to remit deducted taxes – Attracts the unpaid tax, an administrative penalty of 10% per annum, and interest at the prevailing CBN rate. Convicted persons may face three years imprisonment or a fine of at least the principal sum plus 50%.
Failure to notify change of address – N100,000 for the first month, N5,000 for each subsequent month.
Inducement of tax officers – Individuals face N500,000, corporates N2,000,000, or up to three years imprisonment, in addition to the tax owed.
Use of weapon during offences – Imprisonment up to five years; if a tax officer is injured, penalties rise to ten years.
Government Clarifies Purpose of Reforms
The Federal Government has stressed that the reforms are intended to ease economic burdens, not worsen citizens’ hardships.
Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, emphasized during a visit to the National Orientation Agency (NOA) that misinformation is creating unnecessary fear.
He explained that the reforms include exemptions for small businesses, low- and middle-income earners, and large companies, harmonizing taxes and offering 50 reliefs and exemptions. Oyedele warned that false narratives—such as claims that farmers would have a portion of their produce seized—are misleading and damaging.
The government intends to leverage NOA to educate citizens in local languages and via relatable channels such as farmers, students, and business leaders.
Apapa and Tin Can Ports Modernisation Project
In a related development, the Federal Government is upgrading Lagos’ Apapa and Tin Can Island Ports with a total budget of $1 billion (N1.5 trillion).
The project, scheduled to begin Q2 2026, aims to tackle congestion, improve infrastructure, expand berths, dredge channels to 16.5 meters, digitize operations, and enhance cargo handling.
The Nigerian Ports Authority is leading procurement, with private and state partnerships involved, aligning with broader deep-sea port reforms in Bayelsa and Akwa Ibom.
Tax Refunds for Erroneous Payments
For tax paid in error, banks can reverse payments within 24 hours if notified promptly. Otherwise, the FIRS can process refunds via the e-payment platform, with an option to offset future taxes.
