Nigeria has quietly ushered in one of its most sweeping tax overhauls in decades. Certified copies of four new laws.
The Nigeria Tax Act, Tax Administration Act, National Revenue Service Act, and Joint Revenue Board Act have been released, replacing a patchwork of statutes that governed taxation for more than ten years.
The reforms are not minor adjustments. They represent a unified framework that reshapes payroll, benefits, corporate taxation, record-keeping, and even how tax officials interact with businesses.
1. Employee Registration: No Longer Optional
- Every employee must now be registered with a Tax Identification Number (TIN).
- Employers bear responsibility for ensuring records are updated within 30 days of any change (address, name, personal details).
- Penalties apply monthly for non-compliance, making this a continuous obligation.
2. PAYE Filing: Sharper Rules
- Annual PAYE returns must be filed by January 31, detailing each employee’s earnings, deductions, and taxes paid.
- The law demands complete disclosure, leaving little room for error or omission.
3. Relief for Low-Income Earners
- The first ₦800,000 of income is now tax-free.
- This offers visible relief to lower-income workers, though benefits and allowances once in grey areas are now firmly taxable.
- Exemptions include work tools, uniforms, protective gear, staff canteen meals, and relocation expenses tied strictly to work.
4. Documentation and Compliance
- Employers must deduct and remit taxes by the 21st of the following month.
- Late remittance attracts penalties, interest pegged to CBN rates, and possible criminal liability.
- Records must be kept for six years, with tax authorities empowered to inspect physical premises, digital systems, and cloud storage.
5. Corporate Taxation: New Floors and Levies
- Small companies enjoy full exemption from corporate income tax.
- Larger firms remain at 30%, but must pay a minimum effective tax rate of 15%, regardless of incentives.
- A new 4% development levy on assessable profits replaces separate charges for education, IT, and cybersecurity.
6. VAT, Stamp Duties, and Withholding Tax
- VAT remains at 7.5%, but invoicing rules are stricter and enforcement more technology-driven.
- Stamp duties exempt small transfers and salaries but capture larger transactions.
- Withholding tax timelines have been tightened.
7. Technology at the Core
- Tax authorities can mandate electronic filing, real-time reporting, and fiscalisation systems integrated into business transactions.
- Non-compliance attracts steep daily penalties, signaling a shift toward continuous tax compliance.
8. Dispute Resolution and Incentives
- Mediation and settlement options are available before cases escalate to tribunals.
- Penalties may be waived for genuine mistakes.
- Advance rulings provide certainty for complex transactions.
- Incentives remain for agriculture, manufacturing, renewable energy, healthcare, exports, and startups, but with stricter thresholds.
9. The Bigger Picture
The intent behind these reforms is clear:
- Reduce ambiguity in tax law.
- Widen the tax net to capture more businesses and individuals.
- Make enforcement less discretionary and more predictable.
For employers, this is an operational reality that touches every aspect of business, from hiring and payroll to technology systems and corporate strategy.
