New Tax Law Imposes ₦10m Fines, 10-Year Jail Terms
Nigeria is set for a sweeping overhaul of its tax enforcement framework as the new Nigeria Tax Administration Act, 2025, comes into effect on January 1, 2026, introducing some of the toughest sanctions the country has ever seen.
The legislation marks a decisive shift from mild administrative penalties to stringent criminal liability for a wide range of offences, making it clear that tax evasion and obstruction will no longer be treated as minor infractions.
Under the new law, individuals and businesses — from small traders to virtual-asset service providers — will face stricter compliance demands. Crypto operators and other virtual-asset firms are among the most heavily targeted, with a ₦10 million fine imposed for the first month of non-compliance and ₦1 million for every additional month, alongside the possibility of a suspension or revocation of their SEC operating licence.
Failure to register as a taxpayer now attracts a ₦50,000 penalty for the first month and ₦25,000 for each month thereafter, while failure to file VAT returns or keep proper records will draw a ₦100,000 initial fine and ₦50,000 for subsequent months of default.
Businesses that refuse access to government tax-monitoring technology will be sanctioned with a ₦1 million fine for the first day and ₦10,000 daily after that. Those who reject the new fiscalisation system designed to curb tax evasion may also be required to pay ₦200,000 plus 100% of the tax due, along with interest linked to the Central Bank of Nigeria’s monetary policy rate.
The Act further raises penalties for withholding tax failures, compelling offenders to pay the outstanding tax, an annual administrative penalty of 10%, and interest at the prevailing rate. Convicted offenders risk up to three years in prison, a fine equal to the unpaid amount plus up to 50% penalty, or both.
The law introduces even tougher consequences where obstruction of tax authorities is involved. Acts such as blocking access, refusing to answer lawful questions, or ignoring document requests are now classified as criminal offences. Assaulting tax officers may lead to a jail term of up to five years, while offenders who use or carry weapons during such incidents face up to 10 years’ imprisonment and a ₦10 million fine. Injuring a tax officer while armed attracts the most severe penalties under the Act. Additionally, refusing to comply with statutory demands may result in a ₦100,000 fine on the first day and ₦10,000 for each day the defiance continues.
With the new legislation, the Federal Government has signalled its zero-tolerance stance toward evasion and obstruction, aiming to push individuals and corporate entities into full adherence with tax obligations. As the reforms take effect in 2026, the message is clear: tax evasion is no longer a bureaucratic inconvenience but a criminal act with real and escalating consequences.
