Uche Amunike
Lifeandtimes News Writer
One of the most persistent challenges in Nigeria remains the tax filing errors, which make taxpayers continuously injure avoidable penalties as a result of mistakes in documentation, computation and reporting.
Even though there are ongoing reforms and rollout of digital filing systems, the gaps in tax awareness and record-keeping have made individuals and businesses become exposed, especially among small enterprises and self-employed professionals.
According to Uboh Sunday & Co, a huge share of penalties imposed on Nigerians yearly, is as a result of recurring errors that reflect weak compliance systems instead of the complexity of tax laws. As filing cycles increase, these underlying issues become more pronounced and end up increasing the likelihood of costly errors.
Some of these tax filing issues and the penalties are as follows:
MISSING FILING DEADLINES: One of the most widespread compliance issues concerning tax filing is the failure to meet statutory deadlines like value Added Tax (VAT), and Withholding Tax (WHT), which are particularly due by the 21st of the following month and always frequently missed.
The March 31 deadline for individuals for annual personal income tax returns for individuals, presents particular challenges, especially for those that have multiple income streams.
Companies are also mandated to file within six months of their financial year-end, but even at that, there are still common delays.
Section 101 of the Nigeria Tax Administration Act (NTAA) 2025 states that failure to file returns attracts a penalty of N100,000 for the first month, plus N50,000 for each subsequent month the failure continues.
INCORRECT TAX COMPUTATIONS: another major source of penalties is the error made in calculations. These errors include misapplying tax rates, incorrectly computing taxable income and the failure of accounting for allowable deductions.
Some taxpayers underestimate their liabilities which leads to underpayments and subsequent penalties, while overpayment can tie up the flow of cash unnecessarily. This is a particular concern for small businesses. Section 101 of the NTAA 2025 treats the filing of incorrect returns with the same severity as non-filing and this subjects taxpayers to the same penalties for missed deadlines.
FAILURE TO REMIT COLLECTED TAXES: It is considered a serious breach of compliance to collect taxes like VAT or WHT from customers or vendors without remitting them to the appropriate authorities. It is an issue that is prevalent among small and medium sized enterprises where internal controls may be weak.
Section 107(1)(a-c) of the NTAA 2025 stipulates that failure to remit tax deducted, collected or withheld by the due date attracts a penalty and interest equivalent to the amount of tax not remitted, administrative penalty of 10% per year, of the unremitted amount and interest of the prevailing Central Bank of Nigeria Monetary Policy Rate. This applies to VAT, WHT, and other collected amounts unpaid by the 21st of the month following deduction or collection.
Other tax filing errors are inaccurate income declaration; failure of filing ‘nil’ returns; withholding tax mismanagement; record-keeping and incomplete documentation, as well as inaccurate income declaration.
