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The new Nigerian Tax Act, which takes effect on January 1, 2026, has been widely praised for introducing reforms expected to strengthen the national economy, promote fairness, and improve the financial well-being of low- and middle-income earners. According to the Act, a series of enforcement guidelines and penalties have been established to ensure full compliance across all sectors.
Under the law, businesses and individuals who fail to meet their tax obligations face strict consequences. Failure to register attracts financial penalties that escalate with each month of default, while late filing of VAT returns also draws increasingly stiff charges. Companies that neglect to maintain proper books of account are liable for fines, and any organisation that refuses to grant access for the deployment of approved tax technologies risks heavy daily penalties.
The Act places strong emphasis on fiscal transparency. Entities that fail to use the required fiscalisation system will be penalised with both a fixed charge and an additional assessment based on the tax owed, including interest tied to the prevailing Central Bank monetary policy rate. Similar measures apply to taxpayers who refuse to deduct tax at source, fail to remit deductions, or neglect to self-account where necessary. In severe cases, offenders may face criminal prosecution, with penalties that include imprisonment.
The law also demands prompt response to official tax inquiries and requests for documentation. Delays in providing information—whether for legal arrangements, regulatory compliance, or routine verification—trigger significant administrative fines that continue to accumulate for as long as the failure persists.
Virtual Asset Service Providers face some of the toughest sanctions, including multi-million-naira penalties for extended non-compliance and the possibility of suspension or revocation of operating licences by the Securities and Exchange Commission.
Stamp-related violations also feature prominently. Failure to pay stamp duties, or to disclose relevant details in dutiable instruments, attracts fines, interest charges, and potential imprisonment depending on the severity of the infraction. Fraud, inducement of tax officers, impersonation, and obstruction of authorised personnel are treated as serious criminal offenses, with penalties ranging from heavy fines to jail terms of up to ten years in situations involving the use of weapons or violence.
Overall, the new Tax Act sets a far stricter enforcement regime than previous legislation, signalling the government’s intention to modernise revenue collection, close tax leakages, and ensure that all economic actors contribute fairly to national development.
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