Blog

FEBRUARY 2026 Vol. I

In general term, taxation is a medium which government introduces to raise money for its agenda or program to meet its obligations to its citizen. Tax payment is a statutory obligation imposed on individuals and corporate entities operating in Nigeria to raise money for
public purposes.

In Nigeria, all persons in employment, individuals in business, non-residents who derive income from Nigeria as well as companies that operate in Nigeria are liable to pay tax. The main purpose and
aim of paying of tax are to generate income to meet government expenses. Nigerian tax system is regulated by various laws which prescribe the timelines within which taxes must be filed and paid, as well as penalties for non-compliance.

Some taxes are payable to the Federal Government (and administered by the Federal Inland Revenue Services) while some are payable to the State Governments and some to the Local Government. Compliance with these statutory timelines is essential to avoid penalties, interest, and enforcement actions by tax authorities such as the Federal Inland Revenue Service (FIRS) and the respective State Internal Revenue Services.

STATUTORY PRESCRIBED PERIOD FOR PAYMENT OF TAX.
1. Companies Income Tax (CIT) Under the provisions of the Companies Income Tax Act (CITA), companies are required to file their tax returns and pay taxes due within: Six (6) months after the end of the company’s accounting year; or Eighteen (18) months after incorporation, whichever is earlier (for newly incorporated companies). Where a tax assessment is issued, the tax becomes payable within the period specified in the notice of assessment, typically within 30 days.

2. Personal Income Tax (PIT) The Personal Income Tax Act (PITA)
regulates personal income tax obligations.

• Individuals must file their annual tax returns on or before 31st
March each year.
• Under the Pay-As-You-Earn (PAYE) system, employers must
remit deducted taxes not later than the 10th day of the following month.

3. Value Added Tax (VAT) Pursuant to the Value Added Tax Act, taxable persons must remit VAT collected to the Federal Inland Revenue Service on or before the 21st day of the month following the transaction. This obligation applies whether or not VAT was collected during the relevant
period.

4. Withholding Tax (WHT) Withholding Tax deducted from payments must be remitted within the following statutory periods:
• Within 21 days from the date of deduction, where payable to the Federal Inland Revenue Service; and
• Within 30 days from the date of deduction, where payable to State Internal Revenue Services. Penalties for Late Payment of Tax in Nigeria Failure to pay tax within the statutory prescribed period attracts penalties and interest under the relevant tax laws.
1. Penalty under the Companies Income Tax Act Under the Companies Income Tax Act, failure to file returns attracts:
• ₦25,000 penalty for the first month of default; and
• ₦5,000 for each subsequent month of default. Additionally, interest accrues on unpaid taxes at the prevailing commercial rate.
2. Penalty under the Personal Income Tax Act Failure to file returns under the Personal Income Tax Act attracts:
• ₦5,000 penalty for individuals; and
• ₦500,000 penalty for corporate employers for failure to remit PAYE.
Interest also accrues on unpaid tax liabilities until payment is made.
3. Penalty under the Value Added Tax Act Failure to remit VAT attracts:
• ₦50,000 penalty for the first month of default; and
• ₦25,000 for each subsequent month of default. Interest is also charged on outstanding VAT.
4. General Penalty and Enforcement Measures In addition to statutory penalties, tax authorities may take enforcement actions including:
• Imposition of interest on unpaid taxes
• Issuance of demand notices
• Freezing of bank accounts
• Seizure of assets
• Legal proceedings for recovery of tax debt
These enforcement powers are supported by the Federal Inland Revenue Service (Establishment) Act.

Conclusion
The statutory prescribed time for payment of taxes in Nigeria is clearly defined under various tax laws. Tax payers are required to comply strictly with these timelines to avoid penalties, interest, and enforcement actions. Timely compliance not only ensures adherence to the law but also promotes sound corporate governance and financial accountability.

Taxpayers are therefore advised to maintain accurate financial records, monitor tax deadlines, and seek professional guidance where necessary
to ensure full compliance with Nigerian tax laws.

For further information, please contact: Cynthia Eze (Mrs.)
Email:info@ikejianiandco.com
Tel: +234-8130145629

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