The newly signed Nigeria Tax Administration Act, 2025, is set to shake up the country’s tax landscape with stringent penalties for individuals, businesses, and virtual asset service providers who fail to comply with tax obligations.
Signed into law by President Bola Ahmed Tinubu on June 26, the Act consolidates fragmented tax enforcement provisions into a single legislation. It introduces steep fines and criminal penalties, aiming to strengthen compliance ahead of its implementation on January 1, 2026. The law also rebrands the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS).
From non-registration and poor recordkeeping to tax evasion and digital non-compliance, the Act covers a wide range of offences with fines ranging from ₦10,000 to ₦10 million and jail terms of up to 10 years for serious breaches.
Hefty Fines for Registration and Filing Failures
The Act mandates that all taxable individuals and entities register with the tax authority. Those who fail to do so will be fined ₦50,000 for the first month, and ₦25,000 for each month thereafter.
Businesses that contract with unregistered vendors could face penalties of up to ₦5 million.
Failure to file tax returns attracts a ₦100,000 fine in the first month, followed by ₦50,000 per month for every month the failure continues. Submitting incomplete or inaccurate returns is treated the same.
Recordkeeping and Disclosure Obligations
Companies are also required to maintain proper books of accounts. Those that fail to do so will face:
- ₦10,000 fine for individuals
- ₦50,000 for companies
In addition, those who do not report a change of business address within 30 days face a ₦100,000 penalty for the first month, and ₦45,000 for each month thereafter.
Digital Compliance Now Mandatory
The Act ushers in a new era of digital tax enforcement, making it compulsory for businesses to adopt fiscalisation technology installed by the NRS. Refusal to comply draws:
- ₦1 million fine for the first day of refusal
- ₦10,000 daily thereafter
Businesses that bypass the fiscalisation system to process sales could face:
- ₦200,000 penalty
- 100% of the undeclared tax amount
- Interest at the prevailing Central Bank of Nigeria (CBN) monetary policy rate
Withholding, Remittance, and Self-Accounting
The law imposes strict penalties on individuals or companies that withhold or collect taxes but fail to remit them to the government.
Non-remittance by the 21st of the following month results in:
- Full payment of the withheld amount
- 10% annual administrative penalty
- Interest pegged to the CBN’s monetary policy rate
Convicted offenders face up to three years in prison, or a fine of the original sum plus up to 50%, or both.
Crypto Platforms and VASPs Face ₦10 Million Fines
Virtual Asset Service Providers (VASPs), including cryptocurrency platforms, face some of the most severe penalties in the Act. Failure to comply will attract:
- ₦10 million fine in the first month
- ₦1 million fine for every additional month of non-compliance
These firms also risk licence suspension or revocation by the Securities and Exchange Commission (SEC).
Criminal Offences: Fraud, Obstruction, and False Claims
The law criminalises a broad set of behaviours including:
- False statements
- Forged documents
- Obstructing tax officials
- Destroying tax records
- Impersonating tax officers
These offences can lead to:
- Fines ranging between ₦1 million and ₦2 million
- Prison sentences of up to five years
Fraudulent VAT refund claims carry a 100% penalty on the amount claimed, plus interest.
Personal Liability for Company Executives
The Act holds directors, trustees, and partners personally liable for offences committed by their organisations unless they can prove the violation occurred without their knowledge or consent.
For offences not explicitly detailed, a general penalty applies: ₦1 million, up to three years in prison, or both.
What This Means
With this legislation, Nigeria is pushing for a tighter, technology-driven tax regime that prioritises transparency, accountability, and enforcement. The penalties are intentionally severe not just to collect revenue, but to change taxpayer behaviour across both traditional and emerging sectors.
