The Fiscal Discipline and Development Advocacy Centre (FIDAC) has called on businesses across Nigeria to immediately begin adapting their operations to meet the requirements of the newly enacted Nigerian Tax Acts, 2025.
The Centre warns that failure to comply before enforcement begins in January 2026 will expose businesses, small, medium, and large, to avoidable penalties, disputes, and financial risks.
In a statement on Tuesday, FIDAC Executive Director, Dr. Abdussalam Muhammad Kani, noted that the 2025 reform package introduces significant changes across Personal Income Tax, Corporate Income Tax, Value Added Tax (VAT), Capital Gains Tax, Stamp Duties, Withholding Tax, and the newly established Fossil Fuel Surcharge.
Dr. Kani emphasized that “This is the most far-reaching tax reform in Nigeria’s recent history. Every business must understand its obligations and take proactive steps to avoid penalties and position itself for incentives embedded in the Act.”
According to him, 14 smart actions have become essential for Nigerian businesses under the new fiscal regime:
1. Strengthen Financial Record-Keeping
FIDAC urges businesses to improve daily documentation of sales, expenses, inventory, payroll, and all supporting evidence such as receipts, invoices, contracts, bank statements, and supplier payments.
Accurate records, the Centre noted, remain the strongest protection during tax audits.
2. Understand What Is Taxable
The new law does not tax capital, stock, or bank balances. Instead, tax applies strictly to income and profit, including benefits-in-kind, grants, prizes, and compensation above N50 million. Corporate tax now applies even to service-based enterprises.
3. Take Advantage of Tax Incentives
Individuals earning below N800,000 annually will pay no personal income tax. Companies with a turnover below N50 million are exempt from Corporate Income Tax. Start-up expenses within six years are now deductible, and simplified accounts are acceptable for small firms.
4. Formalize and Structure Business Operations
FIDAC encourages all operators to register their businesses, obtain Tax Identification Numbers (TIN), and separate personal funds from business finances to reduce exposure to penalties.
5. Transition to Digital Accounting and Reporting
Businesses are advised to adopt digital tools such as POS systems, electronic receipts, and simple accounting applications to track VAT, WHT, and income. Digital footprints reduce disputes with tax authorities.
6. Ensure VAT Compliance
VAT remains at 7.5%, with reforms allowing claims on input VAT for services and fixed assets. Returns must be filed monthly, including zero-return months.
7. Deduct Withholding Tax Correctly
The Act mandates timely deduction and remittance for companies on contracts, rent, consultancy, and professional services.
8. Prepare for the New 5% Fossil Fuel Surcharge
Businesses dependent on fossil fuels, such as logistics firms, manufacturers, and fuel distributors, must adjust their pricing and cost structures accordingly.
9. Comply with Updated Stamp Duty Regulations
FIDAC highlights those agreements below N1 million are now exempt, while some documents attract a fixed N1,000 duty. Businesses must ensure proper stamping of contracts, loans, and corporate documents.
10. Use the Office of the Tax Ombud
The new law establishes the Tax Ombud to address unfair assessments, harassment, delayed refunds, and administrative misconduct. Businesses are advised to report all irregularities.
11. Engage Competent Professionals
FIDAC recommends consulting tax experts, conducting annual tax health checks, and training staff to ensure compliance.
12. Pay Taxes Early
Businesses are reminded that late filings attract penalties, interest charges, account freezes, and in extreme cases, closure of premises.
13. Avoid Common Operational Mistakes
These include mixing personal and business finances, failure to issue receipts, ignoring VAT and WHT obligations, poor stock records, and undocumented transactions.
14. Start Preparing Now
FIDAC stressed that early preparation ahead of January 2026 will significantly reduce risk, improve tax efficiency, and prevent disputes with authorities.
Dr. Kani concluded by reaffirming FIDAC’s commitment to supporting businesses through advocacy, public enlightenment, and capacity-building initiatives. He encouraged business owners to reach out to FIDAC for guidance and compliance support.
