As compliance remains low, confusion persists over tax filing obligations under the Nigeria Tax Act 2025*
With the March 31 deadline only hours away, many Nigerians are still struggling to understand how to properly file their tax returns, exposing a wider gap in awareness and compliance across the country.
Despite repeated warnings from the government, a significant number of taxpayers remain either uninformed or uncertain about the process. Earlier this year, the Minister of State for Finance, Taiwo Oyedele, stressed that filing annual tax returns is a legal obligation for all income earners, regardless of their employment status.
He cautioned that employees should not assume their responsibility ends with Pay-As-You-Earn deductions, noting that every individual taxpayer is required to file a self-assessment return annually. According to him, compliance levels in this area remain very low, raising concerns about revenue generation and accountability.
Understanding the Law and Your Responsibility
Under the Nigeria Tax Act 2025, every individual earning income within the country must file an annual tax return detailing their earnings from the previous year. This requirement applies not only to business owners and self-employed individuals but also to salaried workers.
Many employees mistakenly believe that once their taxes are deducted at source, they have fulfilled their obligations. However, tax authorities emphasize that filing returns is essential for proper documentation, transparency, and eligibility for official financial transactions.
Who Must File a Tax Return?
Filing is mandatory for a wide category of Nigerians. This includes individuals who earn additional income outside their salaries, such as rent, freelance work, or investments. It also applies to business owners, professionals in private practice, individuals who changed jobs during the year, and those with multiple income streams.
For self-employed persons, the responsibility is even more critical, as they are required to calculate and declare their income independently without employer mediation.
The First Step Is Obtaining a Tax Identification Number
A Tax Identification Number, commonly referred to as TIN, is required before any taxpayer can file a return. This number can be generated online using a National Identification Number through the Federal Inland Revenue Service or the relevant State Internal Revenue Service portal.
Without a TIN, the filing process cannot proceed, making it the most important starting point for compliance.
Declaring Accurate Total Income
Taxpayers are required to declare all sources of income earned within the assessment year. This includes salaries, business profits, freelance earnings, rental income, dividends, and any applicable foreign income.
Nigeria operates a progressive tax system, meaning that tax rates increase as income rises. Notably, the first ₦800,000 of taxable income is not subject to tax, offering some relief to low-income earners.
How to File Your Tax Return
Filing can be done through the State Internal Revenue Service in the state where the taxpayer resides. This may be completed online via official tax portals or physically at designated tax offices.
The process involves submitting personal details, providing a comprehensive breakdown of income sources, and calculating the total tax payable. Accuracy is essential, as incorrect or incomplete information may lead to penalties or further scrutiny.
Changes to Reliefs and Deductions
A major update introduced under the Nigeria Tax Act 2025 is the removal of the Consolidated Relief Allowance. In its place, a more targeted relief system has been introduced.
Taxpayers who pay rent are now eligible for relief calculated as the lower of ₦500,000 or 20 per cent of their annual rent. However, this claim is only valid when supported with proper documentation.
Other deductions, including pension contributions and National Housing Fund payments, are still applicable but must also be backed by verifiable evidence.
Essential Documents for a Smooth Process
To ensure a seamless filing experience, taxpayers are advised to prepare all necessary documents in advance. These include a valid Tax Identification Number, means of identification, payslips or business records, bank statements, and proof of contributions such as pensions or insurance.
Where applicable, evidence of rent payments must also be provided to support claims for relief.
Deadline and Consequences of Non-Compliance
The deadline for filing tax returns remains March 31 each year. Missing this deadline may result in financial penalties, additional charges, and possible legal consequences depending on state regulations.
Tax authorities also warn that waiting until the last minute may lead to technical delays due to heavy traffic on filing platforms, making early submission a safer option.
What Happens After Submission
After a tax return is filed, the relevant tax authority acknowledges receipt and may proceed to review the submission. An official assessment may then be issued based on the declared income.
Taxpayers who disagree with the assessment have the legal right to file an objection within a specified period.
Why Filing Matters Beyond Avoiding Penalties
Beyond compliance, filing tax returns plays a crucial role in accessing key financial and official opportunities. A valid Tax Clearance Certificate is often required for securing loans, processing visas, bidding for government contracts, and conducting certain high-level business transactions.
In an increasingly structured economy, tax compliance is becoming a prerequisite for credibility and financial inclusion.
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Nigeria continues to face challenges with low tax compliance, a factor that affects government revenue and national development. Experts argue that improving awareness and simplifying the filing process are critical steps toward building a stronger tax culture.
As the deadline approaches, the urgency is clear. Filing a tax return is not merely a routine exercise but a civic responsibility with far-reaching implications.
Every eligible Nigerian must file their tax return before March 31. Understanding the process, preparing the necessary documents, and complying with the law are essential steps not only to avoid penalties but also to secure financial opportunities in today’s economy.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
