Offences and penalties in new Nigerian Tax Act (2)

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The new Nigerian Tax Act comes into effect on January 1, 2026. The new tax law is intended to transform the nation’s economy, promote equity among the populace, improve the financial capabilities of low and medium class workers and to bridge the nation’s infrastructural gap.

To enforce compliance and effective implementation, some guidelines, including penalties for flouting the laws, have been put in place. In the second part of this report, some of the offences and the penalties they attract are outlined below.

Offenders are liable on conviction to a fine not exceeding N1,000,000 or imprisonment for a term not exceeding three years or both.

Liable to a penalty of 50% of that amount plus interest at the prevailing Central Bank of Nigeria’s monetary policy rate.

Penalty of 100% of that amount plus interest at the prevailing CBN monetary policy.

A penalty of 10% of the amount of the royalty payable shall be added to the royalty due. For foreign currency transactions, it’s the prevailing SOFR or successor rate plus 10%.

A person that makes or signs, or causes to made or signed in addition to the provisions of subsection (1) the licensee or lessee N10,000,000 or US dollar equivalent on the first day of failure to pay the tax, royalty or remittance and any declaration, notice, certificate, document or statement produced or made for any purpose of tax, which is untrue is liable to an administrative penalty of N1,000,000 in addition to the payment of tax undercharged or not charged, or on conviction to a fine of N1,000,000 or to imprisonment not exceeding three years or both. A person who gives a required tax related statement or document that is untrue is liable to an administrative penalty of N1,000,000 or on conviction to a fine of N1,000,000 or to imprisonment not exceeding three years or both.

Liable to an administrative penalty of N100,000, and on conviction, to an imprisonment not exceeding three years or fine of N1,000,000 or both.

Outlines that when an offence under the act is committed by a body corporate, firm, trust, association of individuals, or any other legal arrangement, the individual who can be held responsible include a director, manager, secretary, or other similar officer of the body corporate, a partner or officer of the firm, trustees, settlors, beneficiaries or any other person involved in the management of a trust or an association or legal arrangement including those who merely purport to act in such capacities, can be held liable and punished for an offence committed. This liability applies unless the person can prove the act or omission occurred without his/her knowledge, consent or connivance.

Any person who contravenes or commits an offence against this act for which no specific penalty is provided is liable to an administrative penalty of N100,000 or on conviction to imprisonment for a term not exceeding three years or to a fine or both.

For failure to remit tax deducted is to pay the amount deducted, collected or withheld but not remitted. An administrative penalty of 10% per annum, and the interest at the prevailing CBN monetary policy rate.

For self-account under this act is liable to pay the tax not self accounted for, an administrative penalty of 10% per annum of the amount not self accounted for, an interest at the prevailing CBN monetary policy rate.

A person convicted of any of the offences under this section shall be liable to imprisonment up to three years or a fine of not less than the principal amount due plus penalty of not more than 50% of the sum or both.

N100,000 for the first month of default and N5,000 fine for each subsequent month of the failure.

An individual, a penalty of N500,000 and a body corporate, N2,000,000 or imprisonment for a term not exceeding three years or both, in addition to paying the tax due.

Carrying an offensive weapon while committing an offence under this act can lead to imprisonment for a term not exceeding five years.

Anyone who injures a tax officer while armed with a weapon during a tax-related duty faces up to 10 years in prison on conviction.

The Federal Government says the new tax act is aimed at lessening economic burdens on Nigerians and not to worsen any hardship on the citizens.

The government believes widespread misinformation is fuelling needless fear and anger across the country.

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, made the clarification during a courtesy visit to the National Orientation Agency in Abuja.

Oyedele said the purpose of the visit was to seek NOA’s support in educating citizens about the tax policies, noting that misinformation was threatening to derail a reform package he described as “the most consequential and beneficial” of his career.

“You can say subsidy removal came with some amount of pain and sacrifice. Naira floatation also means people have to pay more, but this tax reform is coming with benefits.

“Exemption for small businesses, exemption for workers, low-income earners, middle class; reduce their taxes, big companies reduce their taxes, harmonise taxes,” he said.

The committee chairman explained that the committee had compiled ‘50 tax exemptions and reliefs’ that would benefit Nigerians, lamenting that many citizens, misled by online falsehoods, believed the reforms would impose more burdens.

“Sadly, as good as the reform is, if you go on the streets and ask people about the tax reform, there are people who say they can’t wait to protest on the 1st of January.

“Unfortunately, in our environment, if you have good news, it doesn’t go viral… but misinformation goes viral very quickly,” he said.

Oyedele cited a false information circulating among farmers in the North that government planned to seize one out of every four baskets of produce, describing it as a deliberate distortion.

He added that misinformation had also taken ethnic and religious dimensions, stressing the need for NOA’s involvement in communicating the reform’s benefits in local languages and through relatable characters—farmers, students and CEOs.

The Apapa and Tin Can Island Ports modernisation project in Lagos is a Federal Government investment to upgrade two of the country’s busiest seaports, addressing chronic congestion and outdated infrastructure.

Cost

Total approved funding stands at $1bn (about N1.5tn)

Timeline

Procurement began in October 2025, with implementation expected to start in the Second Quarter of 2026 and ongoing as part of phased nationwide port reforms.

Apapa Tin Can Ports modernisation

Work includes infrastructure rehabilitation, berth expansion, quay wall rehabilitation and channel dredging to 16.5 meters for larger vessels, faster cargo handling, capacity boosts to international standards, and digitisation for a paperless system to cut turnaround times and corruption.

New features encompass technology-driven operations, strengthened quays, and enhanced landside facilities for balanced national development.

Contractors

Procurement processes are underway led by the Nigerian Ports Authority with no specific contractors named yet. Private investors and state collaborations are involved for equitable rollout. The project integrates with broader efforts like the deep seaports in Bayelsa and Akwa Ibom.

Q&A: What is the process involved in getting back tax payment erroneously credited in the name of the depositor instead of the taxpayer?

Any tax paid in error can be reversed by the collecting bank within 24 hours if the bank is put on notice within the period. However, if the error is not detected on time, refund can be made by FIRS on request through e-payment platform with the option to use it to set off future tax.

Taxable Line: A tax reform without public outcry is not a reform. Tax invaders will always fight back – President Bola Tinubu on January 12, 2025

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