Personal Income Tax: March 31 deadline puts Nigeria’s new tax system to test

Personal Income Tax Deadline Looms, Nigeria's New Tax System Faces Stress Test

The Nigerian government's new tax system is facing a major test as the March 31 tax filing deadline approaches. Individuals, freelancers, and small business owners are struggling to understand what they need to do to stay compliant. Tax experts warn that widespread confusion among taxpayers could have serious consequences.

Innocent Ohagwa, president of the Chartered Institute of Taxation of Nigeria, recently emphasized the importance of tax compliance. "Filing tax returns is a constitutional requirement, not a suggestion," he said. "Compliance isn't just about revenue; it is about gaining the right to demand better governance."

The March 31 deadline mainly applies to individuals under the Personal Income Tax (PIT) system. Every taxable person, whether an employee, self-employed, or working in the informal sector, must file a return showing all income earned. Even those whose income was already taxed at source through Pay-As-You-Earn (PAYE) must file.

Penalties for non-compliance are severe, with fines of N100,000 for the first month of default and N50,000 for each month thereafter. Additional consequences can include automated audit alerts, interest on late payments at the Central Bank rate, and possible investigations.

Taxpayers must submit their 2025 income via their state's e-tax portal, such as the Lagos State Internal Revenue Service (LIRS) portal for Lagos residents or through other official platforms designated by the Joint Tax Board. Required documents typically include proof of income, PAYE summaries, and TIN/NIN information.

The Nigeria Revenue Service leads nationwide digital reforms, but PIT remains largely administered by state revenue services. Lagos, Abuja, and other states issue and enforce filing requirements, sometimes creating overlap for businesses operating in multiple states.

Experts warn that the deadline is already exposing gaps in understanding. "A company already under a desk review received an investigation notice covering the same period, creating confusion about which process should take priority," said Olatunji Abdulrazaq, founder of Taxmobile.Online.

The Nigerian government's decision to implement the March 31 tax filing deadline without adequate preparation has put the new tax system to a significant test. The Chartered Institute of Taxation of Nigeria's president, Innocent Ohagwa, is right to emphasize that tax compliance is not just about revenue but also about demanding better governance. However, the current state of affairs suggests that taxpayers are struggling to understand the requirements. The severe penalties for non-compliance, including fines and automated audit alerts, are a clear indication that the government is serious about enforcing tax laws. But what does this mean for everyday Nigerians? The confusion and overlap in tax administration could lead to unnecessary financial burdens and stress for individuals and businesses. The government must take immediate action to address these issues and provide clear guidance to taxpayers.