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.
Unauthorised disclosure
Offenders are liable on conviction to a fine not exceeding N1,000,000 or imprisonment for a term not exceeding three years or both.
False claim of tax refund
Liable to a penalty of 50% of that amount plus interest at the prevailing Central Bank of Nigeria’s monetary policy rate.
False or fictitious claim of value added tax refund
Penalty of 100% of that amount plus interest at the prevailing CBN monetary policy.
Default in payment of mineral royalties
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%.
False declaration
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.
Counterfeiting documents
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.
Offence by body corporate
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.
General penalty
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.
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