What Happens if You Break Nigeria’s Tax Laws from January 2026?

From January 1, 2026, Nigeria’s tax system will enter a new phase, one designed to close loopholes, punish tax offenders, and strengthen revenue collection across the country. 

The Nigerian Tax Act 2026, signed by President Bola Tinubu in June 2025, introduces some of the toughest penalties seen in years. The goal is simple: improve fairness, support workers, and ensure the government has enough resources to invest in infrastructure and public services.

But the real question for everyday Nigerians and businesses is this: what exactly happens if you break the new rules?

Stricter enforcement starts in 2026

Beginning next year, defaulters can face fines running into millions of naira and in some cases, jail time of up to 10 years. 

The law targets everything from small offences like failing to update an address, to more serious crimes like tax fraud, assaulting officers, or using weapons to obstruct enforcement. The idea is to make compliance easier but to make disobedience expensive.

Penalties for not registering or filing tax returns

The first step in obeying tax laws is registering and filing your returns. Under the new system, ignoring this responsibility comes with consequences.

If you fail to register:

• You pay N50,000 in the first month and N25,000 for every following month.
  

If you do not file VAT returns:

• You pay N100,000 for the first month and N50,000 afterwards.
  

Companies that fail to keep proper financial records will also pay N50,000.
It may look small compared to other fines, but it adds up fast once months start piling up.

Technology compliance is now a big deal

Nigeria is pushing towards a more digital tax system, which means technology is at the center.

If you block or refuse access to tax monitoring technology:

• The fine is N1 million on the first day and N10,000 for each day after.
  

If you refuse to use the fiscalisation system required by law:

• You pay N200,000,
  
• plus 100% of the tax you owe,
  
• plus interest at the CBN rate.
  

This section is meant to eliminate hidden sales and strengthen transparency in digital reporting.

Deductions and remittances – No more excuses

If your business deducts tax but fails to remit it, the law treats it as a serious offence.

Failure to deduct tax attracts:

• 40% of the amount that should have been deducted.
  

Failure to remit deducted tax attracts:

• Full tax owed,
  
• 10% yearly administrative penalty,
  
• plus interest at the CBN monetary policy rate.
  

More serious cases can lead to up to three years imprisonment, fines, or both.
The government wants to ensure that once money is deducted from workers and customers, it does not “disappear.”

Ignoring tax requests or notices? It will cost you

If the tax authorities send you a notice and you pretend not to see it, prepare your wallet.

Failure to respond:

• N100,000 for the first day
  
• N10,000 for every day after
  

If you ignore regulations or circulars:

• N1 million for the first day,
  
• N10,000 daily afterwards
  

Simple administrative negligence can easily become a heavy financial burden.

Stamp duty offences come with their own rules

If you fail to stamp dutiable documents:

• You pay 10% of the unpaid duty plus interest.
  

If you hide important information in those documents:

• You pay N100,000 or N50,000,
  
• or face up to three years in prison.
  

Even failing to notify authorities about a change of address comes with a penalty:

• N100,000 for the first month,
  
• N5,000 afterwards.

Fraud, Impersonation, and Obstruction Are Treated as Crimes

This is where the penalties become heavier.

Fraud related to stamps:

• Up to three years imprisonment,
  
• or N2 million fine,
  
• or both.
  

Impersonating a tax officer or helping someone evade tax:

• Up to N1 million fine,
  
• or three years in prison,
  
• or both.
  

Obstructing a tax officer:

• N1 million administrative penalty,
  
• plus more fines or jail once convicted.
  

Using weapons during a tax offence:

• Up to five years imprisonment
  Injuring a tax officer while armed:
  
• Up to 10 years imprisonment
  

Inducing or corrupting a tax officer:

• Individuals pay N500,000
  
• Companies pay N2 million
  
• Possible jail term of up to three years, plus all unpaid tax.

Virtual Asset Service Providers (VASP) also face heavy penalties

Crypto and virtual asset companies are not exempt.

Non-compliance leads to:

• N10 million for the first month,
  
• N1 million monthly afterwards,
  
• or even suspension or loss of SEC licence.

Will taxes go Up in 2026? Government says “No”

Despite rumours of new taxes, the government insists the reforms will make life easier, not harder.

Officials say:

• No new taxes are being added.
  
• Most Nigerians especially 98% of income earners will pay less or nothing.
  
• VAT on essentials like food, healthcare, and education will be removed, making them cheaper.
  

The tougher penalties are not about raising taxes they are about stopping evasion and making the system fairer.