Nigeria

Taxable period

The taxable period is the fiscal year, which runs from 1 January to 31 December.

Tax returns

Companies are required to register with the Nigeria Revenue Service (NRS) and obtain a Tax ID (Taxpayer Identification Number).  After registration, every company must file its annual tax returns on a self-assessment basis within six months after the end of its financial year or within 18 months after incorporation, whichever comes first. A company may apply for an extension of up to two months to file its tax returns, subject to the discretion of the NRS.   

Each annual filing must include the tax computation for the relevant year of assessment, the audited financial statements prepared in accordance with International Financial Reporting Standards (IFRS), a duly completed and signed self-assessment form for Companies Income Tax (CIT), and evidence of payment of the income tax liability either in full or in part.  

For companies engaged in petroleum operations, Petroleum Profits Tax (PPT) and Hydrocarbon Tax (HCT) are payable on an actual year basis. Estimated tax returns must be filed within two months of the start of the fiscal year, while actual tax returns must be filed within five months after the end of the accounting period, and in any case not later than 31 May.  

Taxable persons must file Value Added Tax (VAT) returns on or before the 21st day of the month following the transaction, whether or not an economic activity has taken place. Similarly, monthly returns for mineral royalties must be filed by the 21st day of the following month, while monthly returns for petroleum royalties must be filed by the 14th day of the following month. In addition, taxable persons who collect or withhold VAT (i.e. withholding VAT agents, including Federal, State and Local Government bodies, their Ministries, Departments or Agencies, and any other person appointed by the Service) are required to remit the VAT withheld to the Service on or before the 14th day of the month immediately following the month of the transaction.

Virtual Asset Service Providers (VASPs) are required to file monthly returns detailing virtual asset transactions. Tax incentive returns must be filed annually, and withholding tax returns must be filed monthly. Banks and other financial institutions are required to submit quarterly information returns, and any person entering into a disclosable tax arrangement must report it to the NRS.

Assessment

Nigerian companies are required to file tax returns using a self-assessment system. This means that the taxpayer computes its own tax liability and submits the prescribed returns to the relevant tax authority . Once filed, the tax authority may accept the return as submitted, make an additional assessment, or reject it and issue an assessment based on its best judgement. Additionally, where a taxpayer fails to file returns within the stipulated period or where the tax authority believes that the returns are incorrect or deliberately misstated, it may determine the tax payable using a best-of-judgement assessment.  

Payment of tax

CIT

A company that files its self-assessment return within the statutory timeline (generally six months after the end of its accounting year) may apply in writing to the relevant tax authority for permission to pay its assessed income tax in instalments. Such application must be accompanied by a portion of the tax due and submitted on or before the filing deadline. The tax authority may approve instalment payments, provided the final instalment is paid by the due date for filing.  

PPT/HCT

For companies engaged in upstream petroleum operations, income tax, hydrocarbon tax (HCT), and petroleum profits tax (PPT) for an accounting period of 12 months are payable in equal monthly instalments, together with a final instalment at the time of filing the self-assessment return to reconcile any underpayment. The first monthly instalment is due no later than the third month of the accounting period, and subsequent instalments are payable at the end of each month. The final instalment must be paid on or before the due date for filing the self-assessment return.

Penalty for non-compliance

Failure to file company income tax (CIT) returns attracts an administrative penalty of ₦100,000 for the first month of default and ₦50,000 for each subsequent month. In addition, late payment of any tax due, including CIT incurs a penalty of 10% of the unpaid amount and interest at the prevailing monetary policy rate of the Central Bank of Nigeria plus a spread determined by the Minister.  

Companies engaged in upstream petroleum operations, late submission of estimated or actual returns attracts a penalty of ₦10,000,000 on the first day of default and ₦2,000,000 for each subsequent day the failure continues. Late payment of petroleum-related taxes, including PPT and HCT, attracts a penalty of 10% of the unpaid amount and interest at the prevailing SOFR plus 10% for foreign currency transactions or 2% above the CBN Monetary Policy Rate for Naira transactions. 

Tax audit process

The Act allows the relevant tax authority to review a taxpayer’s returns after filing through desk examinations and monitoring exercises, which can include on-site visits and interviews . It also has powers to access books, records, and premises for verification of any information provided.  

Tax audits may be conducted within six years from the date of assessment.  However, where deliberate misstatement, fraud, or wilful default is suspected, the authority may raise additional assessments at any time beyond the six-year limit.  These audits can be random or targeted and may involve joint audits between federal and state tax authorities.   

Statute of limitations

The tax authority can issue additional assessments within six years from the date of the original assessment where a taxpayer has been under-assessed or not assessed. However, this six-year limitation does not apply in cases involving deliberate misstatement, fraud, or willful default. In such circumstances, the authority may raise additional assessments at any time and as often as necessary to recover any tax lost due to the misstatement or fraud.  

Topics of focus for tax authorities

1. VAT Fiscalisation: VAT fiscalisation rules and mandatory e-invoicing for businesses operating in the country has now been codified under the new tax laws. Companies in Nigeria are now mandated to implement the fiscalisation system deployed by the NRS for the collection of VAT. The penalty for non-compliance is ₦200,000 fine plus 100% of tax due plus interest at CBN MPR.  
2. Disclosure of tax planning arrangements: The NTAA requires companies to voluntarily and proactively notify the tax authorities of tax planning transactions or schemes which can provide a tax advantage. “Tax advantage" refers broadly to any situation where a person or entity benefits from a favorable tax outcome and may include obtaining new or increased tax reliefs, receiving or increasing tax repayments, reducing or avoiding tax charges or assessments, deferring tax payments or accelerating tax repayments, and avoiding obligations to deduct or account for tax.   
3. Joint audits: As part of its efforts to promote effective tax administration and compliance, tax authorities now collaborate with each other and exchange information with each other. There are systematic exchange of relevant information to ensure compliance with applicable tax laws, as well as coordinated enforcement efforts. Where instances of non-compliance relating to taxes administered by another tax authority are identified during audits, the NRS will ensure timely referrals and, where appropriate, undertake joint audits with the relevant authority.