FG to fine unregistered taxpayers N50,000 as it tightens tax enforcement

The Federal Government has announced tougher penalties for tax defaulters under the Nigeria Tax Administration Act, 2025, as part of renewed efforts to curb revenue leakages and strengthen compliance nationwide.

Under the new law, taxable individuals and entities that fail or refuse to register for tax will now be subjected to graduated administrative sanctions, in line with Chapter Four of the Act, which deals with offences and penalties.

Section 100 of the Act stipulates that any taxable person who defaults on tax registration will pay a fine of N50,000 for the first month of default and an additional N25,000 for every subsequent month the failure persists.

In a further move to tighten compliance, the Act provides that any statutory body or company that awards contracts to unregistered persons will be fined N5 million. This measure is aimed at preventing informal operators from accessing public-sector contracts and expanding the tax net.

Beyond registration requirements, the Act introduces stiffer penalties across the tax compliance process. Section 101 states that failure to file tax returns, or knowingly submitting 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 required to keep proper accounting records. Section 102 prescribes penalties for failure to maintain books of accounts or present them upon request by tax authorities, with individuals liable to a N10,000 fine and companies required to pay N50,000.

As part of the broader fiscal reforms, low-income earners earning N100,000 or less per month will be exempted from personal income tax starting from January next year.

In addition, the reforms are designed to ease the tax burden on middle-income earners. Individuals earning between N100,000 and about N2 million monthly are expected to pay less tax under the new framework, effectively increasing their disposable income without a salary increase.

The Act also introduces technology-driven enforcement mechanisms. Section 103 provides that refusal to grant tax authorities access or failure to deploy required tax technology within 30 days of official notice will attract a N1 million penalty on the first day, followed by N10,000 for each additional day of default.

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

The law further targets withholding tax violations. Under Section 105, failure to deduct or withhold tax attracts a 40 per cent penalty on the amount due, while failure to remit withheld taxes will result in payment of the principal sum, a 10 per cent annual penalty, and applicable interest. Serious offences may attract fines exceeding the principal tax liability or imprisonment for up to three years.

Analysts say the new legislation underscores the Federal Government’s resolve to boost non-oil revenue, strengthen tax discipline, and align Nigeria’s tax administration with global best practices amid rising fiscal pressures. (Nigerian Tribune)