Tax Relief: Expert Proposes Penalty Waiver to Boost Compliance
A leading tax economist has proposed a bold strategy to boost Nigeria’s voluntary tax compliance: a temporary waiver on penalties and accrued interest for businesses with outstanding filings.
Dr Ernest Abegbe, a prominent tax practitioner, says the initiative could transform corporate attitudes toward tax obligations while supporting ongoing reforms to strengthen the nation’s revenue system.
Abegbe explained that Late Returns Penalties (LRP) and accumulated interest often discourage companies from regularising their tax positions. “Many businesses are willing to comply,” he said, “but the financial strain of backdated penalties makes compliance costly and daunting.” He recommends a time-limited relief window where firms pay only the principal amounts, leaving past penalties and interest waived — a measure aimed at incentivising prompt settlement without forgiving the taxes themselves.
The proposal, anchored in Section 66 of the Nigerian Tax Administration Act 2025, is seen as a strategic approach to enhance revenue collection, reduce administrative bottlenecks, and foster a collaborative relationship between taxpayers and authorities. Abegbe also pointed to international precedents, citing voluntary disclosure programmes that successfully bring undeclared liabilities into formal systems without punitive action.
As Nigeria implements new tax laws from January 2026, experts argue that combining enforcement with incentives is crucial for broadening the tax base, cultivating a culture of compliance, and boosting domestic resource mobilisation, ensuring the country benefits from both stricter regulation and practical, business-friendly reforms.
