Personal Income Tax: March 31 deadline puts Nigeria’s new tax system to test

As the March 31 tax filing deadline looms, Nigeria’s new tax system is facing a major stress test, and early signs point to widespread confusion among taxpayers.

Individuals, freelancers, and small business owners are trying to understand what they need to do to stay compliant.

“Filing tax returns is a constitutional requirement, not a suggestion. Compliance isn’t just about revenue; it is about gaining the right to demand better governance,” said Innocent Ohagwa, president of the Chartered Institute of Taxation of Nigeria (CITN), during a live show on Nigerian Television Authority this month.

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the March 31 deadline applies mainly to individuals under the Personal Income Tax (PIT) system. Every taxable person, whether an employee, self-employed, or working in the informal sector, must file a return showing all income earned.

Even those whose income was already taxed at source through Pay-As-You-Earn (PAYE) must file.

Section 101 of the Nigeria Tax Administration Act (NTAA) 2025 sets penalties for non-compliance: N100,000 for the first month of default and N50,000 for each month thereafter.

Additional consequences can include automated audit alerts, interest on late payments at the Central Bank rate, and possible investigations.

Taxpayers are expected to submit their 2025 income via their state’s e-tax portal, such as the Lagos State Internal Revenue Service (LIRS) portal for Lagos residents or through other official platforms designated by the Joint Tax Board.

Required documents typically include proof of income, PAYE summaries, and TIN/NIN information. Failing to provide these correctly can trigger fines under Section 101.

While the Nigeria Revenue Service (NRS) leads nationwide digital reforms, PIT remains largely administered by state revenue services. Lagos, Abuja, and other states issue and enforce filing requirements, sometimes creating overlap for businesses operating in multiple states.

Experts say the deadline is already exposing gaps in understanding. “A company already under a desk review received an investigation notice covering the same period, creating confusion about which process should take priority,” said Olatunji Abdulrazaq, founder of Taxmobile.Online in a LinkedIn post.

“Running both at the same time can lead to duplicate requests, conflicting instructions, and extra work,” he added.

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Many taxpayers still do not understand the difference between personal and company tax responsibilities. Some assume PAYE takes care of everything, only to realize they still need to file a return.

Small business owners are also unsure how new systems, such as electronic invoicing, connect to their obligations.

The changes, led by Taiwo Oyedele and implemented by the Nigeria Revenue Service (NRS), aim to bring more people and businesses into the tax system and make it more transparent.

Part of this effort is a national electronic invoicing system. Large companies are already using it, medium-sized companies will join from July 2026, and small businesses from July 2027.

Some businesses believe that sending invoices by email counts as filing, but authorities have made clear that this is not enough. Although e-invoicing primarily targets VAT-registered businesses, the system does not replace the need for individual income tax filing, meaning many entrepreneurs must navigate both platforms at the same time.

Data shows how important compliance is. In 2025, Nigeria collected N28.3 trillion in revenue, exceeding targets, with non-oil taxes contributing about N21.4 trillion.

For 2026, the government aims for N40.7 trillion in total revenue from taxes, petroleum royalties, and minerals. Reaching this target will require more taxpayers and businesses to file correctly.

Officials say the system will get easier over time. Zacch Adedeji, executive chairman of the NRS, said on a TVC show that the changes are designed to be fair and efficient. “Our goal is to tax fairly, not more. Digital systems will make compliance easier, improve transparency, and reduce money lost through leakages,” he said.

Still, the gap between rules and reality is clear. Many taxpayers are learning how to meet their obligations while the system is still being adjusted.

For some freelancers and small business owners, the pressure is immediate. Many are still unsure whether PAYE deductions settle their obligations or if they must still file, making the N100,000 penalty a real concern.

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the March 31 deadline will test not only taxpayers’ ability to adapt, but also the NRS and state revenue services’ capacity to handle a surge in filings and inquiries without triggering the confusion described by Abdulrazaq.

For many, this is the first real measure of whether Nigeria’s updated tax framework can deliver on its promise of fairness, transparency, and efficiency.