As we settle into the new year, it’s time to talk about your tax responsibilities. With the Nigeria Tax Act 2025 now officially in effect (as of January 1, 2026), there are a few important steps you need to take to stay compliant and avoid unnecessary penalties.
Understanding your taxes doesn’t have to be complicated. Here is a simple breakdown of what is expected of you in the coming weeks.
1. If You Are on PAYE (Pay-As-You-Earn)
If you are a full-time employee and your tax is deducted from your salary every month, you are already halfway there!
- Your Employer’s Job: By law, your employer must remit all the taxes they collected from you in 2025 to the government. They are also required to file their Employer Tax Returns by January 31, 2026.
- Your Job: Even though your employer has paid the money, you still have a personal legal duty to tell the government how much you earned and confirm that your taxes were paid. This is called “Filing a Return.”
2. If You Are NOT on PAYE (Self-Employed or Side-Hustlers)
If you are a freelancer, a contractor, or run a business alongside your job, you are responsible for both remitting (paying) your tax and filing your returns.
- The Difference: Paying the money (Remittance) and submitting the paperwork (Filing) are two separate legal obligations. Doing one does not exempt you from the other.
Let me try give an example using this - “Movie Ticket” Analogy: Think of paying your tax like buying a movie ticket. Your employer bought the ticket for you (Remittance). However, Filing your Return is like showing that ticket at the door to the usher. Even if you bought the ticket, you won’t be allowed in (or deemed compliant) unless you present the proof at the right time.
The law is very clear that every individual must file their own returns, regardless of whether they work for a company or themselves.
>Section 41 (1) of the Personal Income Tax Act (PITA): > “For each year of assessment, a taxable person shall, without notice or demand… file a return of income in the prescribed form… within 90 days from the commencement of every year of assessment.”
This means by March 31, 2026, you must have filed your individual returns for the 2025 earning year. Under the new Nigeria Tax Administration Act 2025, failing to do this now carries stiffer penalties than before, starting at ₦100,000 for the first month of default.
Be Guided
The fact that your tax is deducted from your salary is a great start, but it does not “absolve” (release) you from your responsibility to file your annual returns.
Don’t wait until the last minute! Filing early ensures you have your Tax Clearance Certificate (TCC) ready for any personal transactions, like visa applications, loan requests, or property purchases.