The Federal Government has introduced stiffer penalties for tax non-compliance under the Nigeria Tax Administration Act, 2025, signalling a tougher stance on revenue leakages and weak compliance across the tax system.

Under Chapter Four of the Act — Offences and Penalties, taxable persons who fail or refuse to register for tax will now face graduated administrative sanctions.

According to Section 100 of the Act, any taxable individual or entity that defaults on tax registration is liable to a fine of N50,000 in the first month of default and N25,000 for every subsequent month the failure continues.

In a further clampdown, the Act provides that any statutory body or company that awards contracts to unregistered persons will be penalised N5 million, a move aimed at blocking informal operators from public-sector transactions and strengthening the tax net.

Beyond registration, the Act imposes heavier sanctions for failures across the tax compliance chain.

Section 101 states that failure to file tax returns—or knowingly filing incomplete or inaccurate returns—will attract a penalty of N100,000 in the first month and N50,000 for each additional month of default.

Taxpayers are also mandated to maintain proper accounting records.

Section 102 prescribes penalties for failure to keep books and records or to present them upon request by tax authorities.

Individuals face a N10,000 fine, while companies will pay N50,000.

Under the proposed reforms, low-income earners on N100,000 or less per month will no longer be required to pay personal income tax from January next year.

Beyond the exemption for low-income earners, the reforms are also designed to reduce the tax burden on middle-income workers. Individuals earning between N100,000 and about ?2 million per month will pay less tax under the new regime, effectively increasing their disposable income without any corresponding salary increase.

The Act introduces technology-driven enforcement measures as well.

Under Section 103, refusal to grant access to tax authorities or failure to deploy required tax technology within 30 days of official notice attracts a N1 million penalty on the first day, followed by N10,000 for each subsequent day of default.

Similarly, failure to process taxable supplies through the government-approved fiscalisation system will attract a N200,000 fine, plus 100 per cent of the tax due and interest at the prevailing Central Bank of Nigeria (CBN) Monetary Policy Rate.

Further provisions target withholding tax violations. Section 105 stipulates a 40 per cent penalty on taxes not deducted or withheld, while failure to remit withheld taxes attracts the principal amount, a 10 per cent annual penalty, and interest. Serious breaches may result in up to three years’ imprisonment or fines exceeding the principal tax liability.

Analysts say the new law reflects the government’s determination to boost non-oil revenue, improve tax discipline, and align Nigeria’s tax administration with global best practices, especially as fiscal pressures continue to mount. (Nigerian Tribune)