As the March 31 deadline ends today, the majority of Nigerian taxpayers are still unaware of the processes involved in filing their personal income tax returns in line with the new tax laws, findings have shown.
Under the Nigeria Tax Act 2025, every Nigerian earning income is mandated to file an annual tax return, which captures earnings from the previous year, reports Daily Trust.
Personal Income Tax (PIT) is usually administered by the State Internal Revenue Service in the taxpayer’s state of residence, not their state of origin.
For salary earners, taxes are usually deducted through the Pay-As-You-Earn (PAYE) system.
However, the new Act now mandates employees to file annual returns for record purposes, verification, and for obtaining a Tax Clearance Certificate (TCC).
Required documents for tax filing
Before filing, taxpayers must have a Tax Identification Number (TIN), which serves as a unique identifier for all tax-related activities.
The TIN can be generated online using a National Identification Number (NIN) or obtained through the Nigeria Revenue Service or the relevant state tax authority.
Also required when filing tax returns are a valid means of identification, as well as payslips or income statements.
Other requirements include bank statements, business or freelance income records, evidence of deductions (e.g., pension and insurance), proof of rent paid (for those seeking rent relief claims), and previous tax filing receipts (if applicable).
How it works
For employees of corporate organisations, taxpayers are required to declare all sources of income earned within the year, including salaries and wages, business or professional income, as well as freelance or consulting earnings.
Also, included among the income to be declared are dividends and interest income, as well as foreign income (where applicable).
According to the new tax laws, tax returns must include total income, deductions or reliefs, and the tax payable.
Subsequently, filing can be done digitally via the relevant state internal revenue service portal or physically at designated tax offices.
Importantly, taxpayers must file in their state of residence and provide accurate personal, employment, and income details.
Who should file tax returns
For employees under PAYE, filing is required if the individual earns additional income (e.g., rent or freelance work), runs a business or professional practice, has multiple sources of income, or has changed employers within the year.
After filing, taxpayers will automatically receive an acknowledgement from state internal revenue service.
Authorities may accept the return as filed or issue an assessment after review.
However, taxpayers have the right to challenge any assessment within the legally specified timeframe.
Why it matters
Filing tax returns has now become a legal obligation for all income earners in Nigeria.
Beyond avoiding penalties, compliance is often required for accessing essential services such as government contracts, loans, and visa applications, which typically require a Tax Clearance Certificate.
Also, failure to comply may attract penalties, including fines and additional charges, depending on the duration of default and state regulations.
Fines and penalties
The new tax laws specify that the deadline for filing individual tax returns is March 31 of every year.
Consequently, failure to file may attract penalties of N100,000 for the first month and N50,000 for each additional month of default, according to the new tax laws.
Similarly, the law states that persistent refusal to pay an established tax liability could trigger what is known as the power of substitution, which allows the tax authority to recover the debt through third parties.
The power of substitution applies where a taxpayer refuses or fails to pay an established tax liability after due notice.
Under this provision, the tax authority may appoint any person or institution holding funds on behalf of the taxpayer— such as a bank, business partner, or tenant — to remit those funds directly to settle the outstanding tax debt.
However, the measure is only applied after the liability has been properly established and the taxpayer has failed to comply.
