Nigeria's New Tax Regime: Comprehensive Changes and Stricter Enforcement
The Federal Government of Nigeria has officially implemented the Nigeria Tax Act (NTA) 2025, which became fully operational in January 2026. This landmark legislation introduces significant reforms to the country's tax compliance framework, establishing clearer filing timelines, payment obligations, and substantially increased penalties for non-compliance. The government emphasizes that these changes aim to enhance revenue certainty, reduce ambiguity in tax administration, and strengthen enforcement mechanisms across major tax categories.
Consolidated Stamp Duty Provisions with Fixed Deadlines
Under the new Act, Stamp Duty regulations have been consolidated into Sections 124–127 of the NTA 2025, effectively replacing the previous Stamp Duties Act. A crucial change requires that all dutiable instruments executed in or relating to Nigeria must be stamped within 30 days of execution by the transferee or beneficiary, at the applicable rate. Tax experts highlight that this fixed deadline eliminates long-standing uncertainties surrounding timing and enforcement. Non-compliance now attracts the unpaid duty amount, a 10% penalty, plus interest calculated at the current Monetary Policy Rate (MPR).
Revised Personal Income Tax and PAYE Requirements
The Act introduces specific modifications to personal income tax administration. Employers are mandated to deduct Pay-As-You-Earn (PAYE) tax from employees' salaries at progressive rates ranging from 0 to 25%, with annual income up to N800,000 exempt. Monthly PAYE remittances must be completed by the 10th day of the month following deduction. For instance, deductions for December 2025 are due on January 10, 2026, while those for January and February 2026 are due on February 10 and March 10 respectively.
Late remittance incurs a 10% penalty plus MPR interest, while failure to deduct carries a substantial 40% administrative penalty on the amount not deducted. Additionally, employers must file annual PAYE returns by January 31 each year, with penalties of ₦100,000 for the first month of default and N50,000 for each subsequent month. Individuals, including salaried employees, must file annual personal income tax returns covering all income sources, with tax professionals anticipating a March 31 deadline despite the Act not specifying a precise date.
Value Added Tax Regulations and Compliance Deadlines
Value Added Tax remains at 7.5% on taxable supplies, with zero-rating extended to essential items such as food, medical products, educational materials, and exports (excluding crude oil and gas). VAT returns and payments must be filed with the Nigeria Revenue Service (NRS) on or before the 21st day of the month following the transaction. For example, December 2025 returns are due on January 21, 2026.
Late filing or submission of inaccurate returns attracts penalties of N100,000 in the first month and N50,000 for each subsequent month. Late payment draws a 10% penalty plus applicable interest charges, emphasizing the government's focus on timely compliance.
Enhanced Withholding Tax Requirements
The Act also tightens regulations concerning Withholding Tax, which must be deducted at source on qualifying transactions including dividends, interest, rents, royalties, contracts, and directors' fees, at rates ranging from 2 to 20%. Companies are required to remit Withholding Tax to the NRS by the 21st day of the following month, while individuals and unincorporated entities must remit to State Internal Revenue Services by the 30th day.
Failure to deduct attracts a 40% administrative penalty, while late remittance incurs a 10% penalty plus interest. These measures underscore the government's commitment to leveraging digital banking data to enhance tax compliance, making accurate transaction descriptions increasingly important for taxpayers.
Tax experts strongly advise businesses and individuals to ensure full compliance with the new regulations to avoid accumulating significant penalties, which can reach up to 40% plus interest in certain cases. The Federal Government's comprehensive approach aims to create a more transparent and efficient tax system that supports national development objectives.
