Nigeria’s Tax Administration Act introduces stiff penalties for tax defaulters, contract violations, and non-compliance with digital tax systems
Companies and statutory bodies that award contracts to individuals or businesses not registered for tax will now face a ₦5 million administrative penalty, according to provisions of Nigeria’s Tax Administration Act.
The law makes tax registration mandatory for all taxable persons and places direct responsibility on organisations to verify the tax status of contractors before awarding any job.
Under the Act, any individual or business that fails or refuses to register for tax will be penalised ₦50,000 for the first month of default, followed by ₦25,000 for every additional month the failure continues.
However, the law goes further by holding contract-awarding entities accountable.
“A statutory body or company that awards a contract to an unregistered person shall be liable to pay an administrative penalty of ₦5,000,000,” the Act states.
Penalties for False or Late Tax Returns
The legislation also imposes strict sanctions for failure to file tax returns or for deliberately submitting incomplete or inaccurate information.
Defaulters will pay ₦100,000 in the first month of non-compliance and ₦50,000 for each subsequent month the default persists.
Sanctions for Blocking Tax Authority Access
Under the new framework, any taxable person who refuses to grant the relevant tax authority access to deploy approved technology after 30 days’ notice will face severe penalties.
Such offenders will be liable to a ₦1 million fine on the first day of default, followed by ₦10,000 for each additional day the refusal continues.
Fiscalisation and Withholding Tax Violations
The Act further targets non-compliance with Nigeria’s fiscalisation system. Any taxable person who fails to process taxable supplies through the approved system will be fined ₦200,000, in addition to 100 percent of the tax due, plus interest calculated at the prevailing Central Bank of Nigeria Monetary Policy Rate.
Similarly, individuals or entities required to collect, deduct, or withhold tax but who fail to do so will be liable to an administrative penalty equal to 40 percent of the unpaid tax.
Additional Penalties and Possible Jail Term
The law also imposes a ₦1 million penalty on persons required to make tax attribution who fail to comply or neglect to notify the relevant tax authority after doing so.
Beyond financial penalties, the Act introduces criminal consequences. Any person convicted of offences under the section may face up to three years’ imprisonment, or a fine of not less than the principal tax owed plus an additional penalty of up to 50 percent, or both.
The new provisions are part of the federal government’s broader effort to strengthen tax compliance, expand the tax net, and improve revenue collection through stricter enforcement and digital monitoring.
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