As the March 31 deadline for filing annual tax returns closes, many Nigerian taxpayers remain unclear about the process despite new legal requirements under the Nigeria Tax Act 2025.
The law mandates that every income-earning Nigerian must file an annual tax return, covering earnings from the previous year. Personal Income Tax (PIT) is administered by the relevant State Internal Revenue Service based on where the taxpayer resides—not their state of origin.
For most salary earners, taxes are deducted automatically through the Pay-As-You-Earn (PAYE) system. However, the new law now requires employees to still file annual returns for proper documentation, verification, and to obtain a Tax Clearance Certificate (TCC).
Requirements for filing
To file successfully, taxpayers must have a Tax Identification Number (TIN), which can be generated using a National Identification Number (NIN) or obtained from tax authorities.
Other required documents include valid identification, payslips or income statements, bank statements, and records of business or freelance income. Taxpayers may also need proof of deductions such as pension contributions or insurance, rent receipts for relief claims, and previous tax records where applicable.
How the process works
Taxpayers are expected to declare all income sources, including salaries, business earnings, freelance income, dividends, interest, and any foreign income.
Returns must clearly state total income, applicable deductions, and the final tax payable. Filing can be done online through state tax portals or physically at designated tax offices. Importantly, submissions must be made in the taxpayer’s state of residence with accurate personal and financial details.
Who must file
Even under PAYE, filing is compulsory for individuals with additional income streams, multiple jobs, business activities, or those who changed employment within the year.
After submission, taxpayers receive an acknowledgment, and authorities may either accept the filing or issue a revised tax assessment. Taxpayers also retain the right to challenge any assessment within the legal timeframe.
Why compliance matters
Filing tax returns is now a legal obligation tied to access to key services such as government contracts, loans, and visa applications, all of which often require a valid TCC.
Failure to comply attracts penalties. Under the law, defaulters risk a fine of ₦100,000 for the first month and ₦50,000 for each additional month of default.
In extreme cases, tax authorities may invoke the “power of substitution,” allowing them to recover unpaid taxes through third parties such as banks, tenants, or business associates holding funds on behalf of the taxpayer.
The measure is typically enforced after due notice and when a taxpayer fails to settle established liabilities, reinforcing the government’s push for stricter tax compliance across the country.
