Penalties for late Nigerian returns and payments
What a late or incorrect Nigerian tax return, a late payment or unremitted withholding tax costs a client, and how a firm helps clients avoid it.
By Achekam · · 4 min read · For Accountants & audit firms in Nigeria
Clients tend to treat tax penalties as an occasional misfortune. In Nigeria under the Nigeria Tax Administration Act 2025 they are better thought of as a predictable cost of being late, set out in the law and charged month by month. A return a few months late, or a withholding obligation ignored for a year, can cost more than the tax itself.
For a firm, penalties are also a reputational risk. A client who pays a penalty will ask whether the firm told them the date. This article sets out what late and incorrect returns, late payments and withholding failures cost at the time of writing, and how a firm can keep its clients clear of them.
Late or incorrect returns
A late or incorrect Nigerian return costs ₦100,000 for the first month and ₦50,000 for each month after.
Two features of that rule deserve attention:
- It covers incorrect returns, not only late ones. A return filed on time but wrong can attract the same penalty. Review before filing is therefore not a courtesy; it is part of avoiding the charge.
- It accumulates. The charge continues month after month until the default is put right, so a forgotten return is far more expensive than one filed slightly late.
The dates that trigger it differ by tax. A company's annual self-assessment return is due within 6 months after its year end, for a company in business more than 18 months. A VAT return, including a nil return, is due on or before the 21st of the following month. A small company paying 0% company income tax, or a business with nothing to declare for VAT in a month, still has a return to file.
Late payment and interest
Late payment attracts a 10% penalty plus interest. The interest runs at the Central Bank of Nigeria's monetary policy rate plus a spread, so its cost moves with monetary policy.
A late payment and a late return are separate defaults. A client that files on time but pays late faces the payment penalty and interest; a client that does neither faces both charges. Remind clients that paying with the return, on time, avoids both.
Cash flow is the usual reason clients pay late, and it is worth addressing directly. A client who cannot pay the full amount on the due date is still better off filing on time, so that only the payment default runs, than holding back the return as well. Make that point early in the conversation, before the deadline, when there is still time to plan.
Withholding tax not remitted or not deducted
Withholding tax carries its own charges, and they fall on the payer, which may be your client.
| Default | Cost at the time of writing |
|---|---|
| Withholding tax not remitted to the NRS by the 21st of the following month | 10% a year plus interest |
| Failing to deduct withholding tax at all | A 40% penalty |
The second is the larger risk for many clients. A business that pays suppliers in full without deducting the tax it should have withheld is exposed to a heavy penalty on the amount it failed to deduct. Remittance dates for State revenue services are uncertain in the research, so check the State's own guidance for State taxes.
The NRS page on penalties and sanctions describes the kinds of non-compliance it penalises, such as late filing, late payment, failure to register and false declarations, and the practical steps that avoid penalties, including keeping accurate records.
A filing calendar that leaves out contested dates
A calendar is the firm's main defence, and it must be honest about what it does not know.
Achekam computes objection and appeal deadlines for Nigerian assessments from the approved administration rule, and its filing calendar leaves out any deadline whose rule is awaiting approval or contested, and says why. One contested date in particular, the PAYE remittance day, is not used until one platform administrator chooses a candidate with a reason and a different administrator approves it.
So the calendar may not show every date the firm needs. Keep a short list of the dates the calendar leaves out, and for each one decide which date the firm will work to, usually the earlier candidate, so that whichever turns out to be right, the client is not late. Staff keep Nigerian tax profiles and returns in the Revenue Service Centre, where returns move through prepare, review and approve by different people, and the timetable for those steps should be set back from the earliest date.
Evidence of on-time filing
Penalties are sometimes charged in error, and the firm needs evidence to challenge them. Two kinds of record matter:
- Proof of filing. Achekam does not file Nigerian returns. A person with the firm's NRS filing permission files on Rev360 and uploads the receipt, and a different person verifies it before the return counts as filed. The receipt's date is the evidence.
- Proof of payment. Achekam records a Nigerian tax payment with the authority's own reference and receipt, an RRR or a DIN, and a second person confirms it.
Keep both for every return, filed under the client, the tax and the period, so that a penalty notice can be answered with a document rather than a recollection. Nigerian company self-assessment returns and Nigerian VAT return deadlines set out the main filing timetables, and withholding on fees is covered in withholding tax on a firm's fees in Nigeria.
A quarterly penalty check
Each quarter, list every Nigerian client return due in the next three months with its date, the person responsible and the date the firm will file, set a fortnight earlier. Check that last quarter's returns each have a filing receipt and a payment receipt on file, and chase any that do not.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
