With just a few hours to the March 31 deadline, many taxpayers in Nigeria are still uncertain about how to file their personal income tax returns and comply with legal requirements.
Under the Nigeria Tax Act 2025, every individual earning income in Nigeria is required to file an annual tax return, covering earnings from the preceding year.
It was reported in January that the Minister of State for Finance, formerly Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, had urged Nigerians to file their annual tax returns before March 31.
He stressed that both employers and individuals must comply with the law, adding that individual taxpayers must also file their self-assessment, noting that compliance in this area remains very low.
Here is a detailed guide on how the process works and what taxpayers need to know:
1. Understand your tax category
Personal income tax is administered by the state’s internal revenue service in the state where an individual resides, not necessarily their state of origin.
For salaried employees, taxes are typically deducted at source through the Pay-As-You-Earn system. However, filing an annual return is still encouraged in many states for record purposes, verification of deductions, and obtaining a tax clearance certificate.
For self-employed individuals, freelancers, traders, and business owners, filing is compulsory, as they are responsible for declaring and calculating their own taxes.
2. Get your Tax Identification Number (TIN)
Before filing, taxpayers must obtain a Tax Identification Number, which serves as a unique identifier for all tax-related activities.
The TIN can be generated online using the National Identification Number or obtained through the Federal Inland Revenue Service or the relevant state tax authority.
3. Determine your total income
Taxpayers are required to declare all sources of income earned within the year. This includes:
- Salaries and wages
- Business or professional income
- Freelance or consulting earnings
- Rental income
- Dividends and interest income
- Foreign income, where applicable
- After determining total income, allowable deductions and reliefs are applied to arrive at taxable income. Nigeria operates a progressive tax system, with the first ₦800,000 of taxable income taxed at 0%.
4. Prepare and file your return
Tax returns must reflect total income, deductions/reliefs, and tax payable. Filing can be done online through the relevant State Internal Revenue Service portal or physically at designated tax offices.
Each state operates its own platform, and taxpayers are required to file with the authority in their state of residence. During filing, individuals are expected to provide accurate personal details, employment information, and a breakdown of all income sources.
5. Claim reliefs and deductions
Under the Nigerian Tax Act 2025 (effective from 1 January 2026), the Consolidated Relief Allowance has been abolished. In its place, taxpayers who pay rent can claim rent relief, calculated as the lower of ₦500,000 or 20 percent of the actual annual rent paid (provided they declare the rent paid and furnish supporting evidence as required by the tax authority).
Other allowable deductions, such as pension contributions and National Housing Fund contributions, continue but generally require documentation to claim.
The new tax structure also provides that the first ₦800,000 of taxable income is taxed at 0% (zero-rate band).
6. Submit before the deadline
The statutory deadline for filing personal income tax returns is March 31 each year, covering income earned in the previous calendar year.
Failure to file within the stipulated period may attract penalties, including fines and additional charges for continued non-compliance, depending on the duration of default and applicable state regulations.
Tax authorities also advise early filing to avoid last-minute delays on online portals and ensure adequate time to resolve any issues that may arise during the process.
7. Who must file tax returns?
While employees under PAYE may have taxes deducted by their employers, filing becomes necessary in several situations, including:
- Earning income beyond salary, such as rent or freelance work
- Running a business or professional practice
- Having multiple sources of income
- Changing employers within the year
- Self-employed individuals and those with mixed income streams are required to file returns to ensure proper tax assessment.
8. Documents required for filing
To ensure a smooth filing process, taxpayers are advised to prepare relevant documents in advance. These may include:
- Tax Identification Number
- Valid means of identification
- Payslips or income statements
- Bank statements
- Records of business or freelance income
- Evidence of deductions such as pension or insurance contributions
- Proof of rent paid (for rent relief claim)
- Previous tax filing receipts, where applicable
- Accurate documentation helps reduce errors and prevent delays or disputes with tax authorities.
9. After submission
Once a return is filed, taxpayers typically receive an acknowledgement. The State Internal Revenue Service may accept the filing as submitted or review it and issue an assessment where necessary.
Taxpayers have the right to object to any assessment they disagree with within the legally specified timeframe.
10. Why compliance matters
As the March 31 deadline approaches, swift preparation and timely submission remain key to ensuring compliance and avoiding unnecessary penalties.
Source: Punch.ng