Penalties under the Nigeria Tax Administration Act 2025

Your payroll system processed December salaries under the old personal income tax bands, and January landed under entirely new rules. Companies that missed the switch are now stacking penalties they may not even realize they owe.

The Nigeria Tax Administration Act (NTAA) 2025, signed by President Bola Ahmed Tinubu on June 26, 2025, replaced the procedural backbone of every major tax statute. It took effect on January 1, 2026, alongside the Nigeria Tax Act and the Nigeria Revenue Service (Establishment) Act.

For employers, the penalty structure is where the real disruption sits, reaching further than most finance teams expected. This guide breaks down NTAA penalties, compares them with the old regime, and closes with a self-audit checklist.

NTAA penalties for failure to deduct PAYE and withholding tax now start at 40%

The single most consequential penalty targets employers who fail to withhold tax at the point of payment. Under the NTAA 2025, any person required to deduct tax who does not faces a penalty equal to 40% of the un-deducted amount, RemoteSolutionsAfrica reported in its analysis of the new tax statutes.

More on Nigeria taxes:

• Nigeria Tax Act 2025 explained: every change that takes effect in 2026
• Nigeria Tax Act transition rules — what to do for 2025 vs 2026 income

That 40% penalty lands on top of the original tax liability, meaning the employer owes 140% of what should have been withheld. Under the repealed PITA, the general non-compliance penalty was a fine of up to ₦5 million or imprisonment for three years, but the law did not prescribe a specific percentage surcharge on un-deducted amounts, PwC Nigeria noted.

Taiwo Oyedele, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, has framed the enforcement logic plainly during a courtesy visit from the Chartered Institute of Taxation of Nigeria (CITN) marking the 2026 National Tax Awareness Day.

“We are still not getting enough revenue from tax. It is not about increasing tax, but making sure that those who are supposed to pay tax pay.” — Taiwo Oyedele, as reported by The Nation

Late filing and late remittance penalties under the NTAA compound fast

Section 101 of the NTAA prescribes a ₦100,000 fine for the first month of non-filing and ₦50,000 for each subsequent month, according to the NTAA statute published by the National Assembly. A company that misses filing for six months accumulates ₦350,000 in penalties alone, excluding any tax owed, Bizedge noted.

Late remittance carries a separate penalty: Section 65 applies a 10% administrative surcharge on the unpaid amount. Interest then accrues at the Central Bank of Nigeria’s monetary policy rate, which stood at 26.5% as of the CBN’s May 2026 decision. A ₦10 million WHT liability left unremitted for six months could generate approximately ₦2.3 million in combined penalties and interest.

Criminal liability for directors and officers under NTAA Section 126

Section 126 specifies that penalties against a corporate entity can be enforced against its directors, managers, and company secretaries, the Banwo & Ighodalo analysis documented. Section 161 allows personal liability for willful or negligent breaches, SimplVest confirmed.

Section 130 prescribes ₦20 million for failure to comply with a tax authority notice, plus ₦2 million for each day the default continues. The offender also faces imprisonment for up to six months, the Banwo & Ighodalo analysis confirmed. Under Section 159(3), the NRS can temporarily close non-compliant business premises.

Employer-specific NTAA penalties cover registration, vendors, and records

Section 100 imposes ₦50,000 in the first month and ₦25,000 for each subsequent month a taxable person fails to register for a Tax Identification Number. Companies awarding contracts to vendors without a TIN face a ₦5 million penalty under Section 100(2), the Baker Tilly Nigeria review confirmed.

Employers must also file annual returns for all employees by January 31, disclosing gross emoluments, allowances, and total deductions. The NRS can deploy technology to verify payroll data directly, and refusing access triggers additional penalties.

How NTAA penalties compare with the old CITA and PITA penalty regime

The old framework spread tax compliance penalties across separate statutes, and consequences for non-compliance were vague or inconsistently enforced. The shift across the most common offenses is summarized below, sourced from the EY global tax alert and the NTAA statute.

Key penalty comparisons: old regime vs. NTAA 2025

• Failure to deduct PAYE/WHT: Old regime had general fines up to ₦5 million; NTAA imposes a specific 40% surcharge on the un-deducted amount.
• Late filing of returns: Old penalties were less standardized; NTAA sets ₦100,000 first month plus ₦50,000 for each additional month.
• Late remittance: Old regime imposed interest with less explicit rate linkage; NTAA prescribes 10% penalty plus CBN monetary policy rate interest.
• TIN registration failure: Old enforcement was limited; NTAA imposes monthly fines plus ₦5 million for contracting unregistered vendors.
• Director liability: Old regime rarely reached individuals; NTAA Section 126 extends penalties to directors and partners directly.

Self-audit checklist to spot NTAA penalty exposure before the NRS does

The NRS has expanded powers to cross-reference payroll data, bank transactions, and remittance records using AI-driven tools. Running through this checklist quarterly can help you catch gaps before they attract compounding fines.

Quarterly employer tax compliance checklist

• TIN verification: Confirm every employee and vendor has a valid Tax Identification Number registered with the NRS.
• PAYE deduction accuracy: Verify that your payroll applies the 2026 NTA bands, including the ₦800,000 zero-rate threshold.
• Monthly remittance timing: Check that all PAYE, WHT, and VAT remittances were submitted by the prescribed deadline each month.
• Vendor contract compliance: Audit vendor agreements to confirm TIN documentation exists for each, guarding against the ₦5 million penalty.
• Director awareness: Brief board members and officers on personal liability under Sections 126 and 161 of the NTAA.

Nigeria’s tax compliance penalties under the NTAA 2025 are designed to make non-compliance more expensive than the tax itself. Employers who adapt early will spend less time managing penalties and more time managing their businesses.