Nigerian Tax Act introduces sweeping penalties, from multimillion-naira fines to jail terms, as the government works to strengthen compliance now.
Nigeria is preparing for one of its toughest tax enforcement eras yet, as the country’s new Tax Act—set to take effect on January 1, 2026—introduces sweeping penalties aimed at boosting compliance and modernizing the nation’s revenue system.
The legislation outlines a wide range of sanctions for individuals, companies, and virtual asset service providers, signaling the government’s determination to close loopholes, improve tax administration, and raise revenue in the face of growing economic demands.
One of the most stringent provisions targets virtual asset service providers. Failure to comply with regulations will attract a fine of ₦10 million in the first month and ₦1 million for every additional month. Non-compliant firms also face possible suspension or revocation of licenses issued by the Securities and Exchange Commission.
The Act also criminalizes acts of intimidation or violence against tax officials. Individuals who assault a tax officer may receive up to three years in prison, while the use of a weapon during a tax-related offence can lead to a five-year jail term. Injuring a tax officer while armed carries a maximum sentence of 10 years.
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Basic compliance failures also attract steep penalties. Businesses that do not register with tax authorities will pay ₦50,000 in the first month and ₦25,000 for each subsequent month. Companies that fail to file VAT returns face ₦100,000 initially and ₦50,000 for every following month. Firms that neglect proper bookkeeping will be fined ₦50,000.
As part of Nigeria’s push toward digitizing tax operations, the new law penalizes any attempt to obstruct technological deployment. Denying access to digital systems attracts a ₦1 million penalty for the first day and ₦10,000 for every additional day. Businesses that fail to adopt fiscalization tools will pay ₦200,000 plus 100 percent of the tax owed and applicable interest.
The Act takes an equally tough stance on tax deduction failures. Companies that fail to deduct required taxes will pay 40 percent of the amount not deducted, while failure to remit withheld taxes attracts the full amount due, an annual 10 percent administrative penalty, and interest pegged to the Central Bank’s policy rate. More serious cases carry imprisonment of up to three years or fines equal to the principal tax plus a 50 percent penalty.
Stamp duty violations, impersonation of tax officers, aiding and abetting tax evasion, and obstructing officials all carry substantial fines and, in many cases, possible jail time.
Upon implementation less than a year away, Nigeria’s new Tax Act marks a decisive turn toward stricter enforcement, signaling that non-compliance will carry far more serious consequences as the government works to strengthen revenue collection and transparency.
