FIRS to penalise companies over undocumented transactions, undisclosed office address

The newly enacted Nigeria Tax Administration Act, 2025, has outlined sweeping penalties for individuals and companies who fail to comply with tax obligations.

This includes steep fines for failing to register, file returns, use tax technology, or disclose basic information like a change of business address.

The Act is among the tax laws signed by President Bola Tinubu on June 26.

The tax administration law is expected to take effect from January 1, 2026, under a renamed agency — the Nigeria Revenue Service (NRS), currently known as the Federal Inland Revenue Service (FIRS).

TheCable looks at major offences and penalties under the new law.

The Act, which is an updated version of previous fragmented tax enforcement provisions, outlines a comprehensive list of offences and corresponding penalties, with fines ranging from N10,000 to N10 million, as well as prison terms of up to 10 years for serious breaches.

PENALTY FOR NON-COMPLIANCE 

Under the general offences and penalties section of the law, a taxable person who fails to register with the relevant tax authority is liable to a N50,000 fine in the first month and N25,000 for each subsequent month of default.

The Act stressed that companies that award contracts to unregistered vendors will face a N5 million penalty.

The law also imposes a N100,000 fine for failure to file tax returns, plus N50,000 monthly for as long as the failure continues.

“A taxable person who fails or refuses to file returns or knowingly files incomplete or inaccurate returns to the relevant tax authority in accordance with the provisions of this Act, shall be liable to pay an administrative penalty of (a) 100,000 in the first month in which the failure occurs; and  (b) N50,000 for each subsequent month in which the failure continues,” the Act reads.

“A taxable person who  Failure to books  (a) fails to keep accounts, books and records of business transactions and income, to allow for the correct ascertainment of tax and filing of returns to the relevant tax authority; or  (b) upon request by the relevant tax authority, fails to provide any record or book prescribed in this Act shall be liable to pay an administrative penalty of-  (i) in the case of a person other than a company, N10,000, and (ii) in the case of a company, N50,000.”

Also, the law states that failure to notify the tax authority of a change of address within 30 days of such change, gives a wrong address or fails to comply with the requirement for notification of permanent cessation of trade or business under the relevant tax laws shall be liable to an administrative penalty.

“A taxable person who fails to notify the relevant tax authority –  Failure to notify change of address  (a) N100,000 for the first month in which the failure occurs; and  (b) 45,000 for each subsequent month failure persists,” the law reads.

DIGITAL TAX COMPLIANCE AND FISCALISATION 

In a bid to modernise tax compliance, the Act makes it compulsory for businesses to allow the Federal Inland Revenue Service (FIRS) to deploy fiscalisation technology or face a N1 million fine for the first day of refusal and N10,000 for each day after.

Any business that fails to process sales through the fiscalisation system will also be fined N200,000, pay 100 percent of the tax due, and accrue interest at the prevailing Central Bank of Nigeria (CBN) monetary policy rate.

WITHHOLDING, ATTRIBUTION, AND SELF-ACCOUNTING 

The Act is especially punitive toward those who fail to deduct or remit taxes.

“A person, that deducts, collects or withholds any tax under this Act, and fails to remit the amount deducted, collected or withheld by the 21st day of the month immediately succeeding the month in which the amount was deducted, collected or withheld, is liable to pay,” it added.

“Failure to remit tax deducted source or self-account  (a) the amount deducted, collected or withheld but not remitted;  (b) an administrative penalty of 10% per annum of the tax deducted, collected or withheld but not remitted; and  (c) interest at the prevailing Central Bank of Nigeria monetary policy rate.

“A person convicted of any of the offences under this section, shall be liable to a term of imprisonment not exceeding three years, or a fine of not less than the principal amount due plus penalty of not more than 50% of the sum, or both.

“A person who  (a) fails to comply with the requirements of a notice served under this Act or any other tax law;  (b) fails to attend or provide answers to a notice, summons or process served under this Act or any other tax law; or  (c) having attended, fails to answer any question lawfully put to him, is liable to an administrative penalty of N100,000 in the first day of default and N10,000 for every subsequent day where the default.”

BIG FINES FOR VIRTUAL ASSET PROVIDERS (VASPs)

Virtual asset service providers (VASPs), such as crypto platforms, that fails to comply with provisions of the Act will be fined N10 million in the first month of default and N1 million for every additional month.

In addition to the aforementioned, their operating licence could also be suspended or revoked by the Securities and Exchange Commission (SEC).

FRAUD, FALSE DECLARATIONS, AND OBSTRUCTION

The law criminalises a broad range of infractions, including false statements, forged documents, and obstructing tax officers with fines ranging from N1 million to N2 million, and in some cases, imprisonment for up to five years.

The law says a person who impersonates a tax officer faces a N1 million fine or three years in jail.

Also, false or fictitious VAT refund claims attract a 100 percent penalty of the amount, plus interest.

Any individual or company that hinders tax collection or destroys evidence can be penalised administratively and, if convicted, jailed for up to three years.

The Act also holds company directors, trustees, or partners personally liable for tax offences committed by the organisations they manage unless they can prove the violation occurred without their knowledge or consent.

For offences not specifically listed, the law prescribes a general penalty of N1 million, or up to three years in prison, or both.