Under the Nigeria Tax Administration Act, 2025, claiming ignorance of the law provides no defence once a taxpayer has a legal obligation. Freelancers, traders, and landlords alike face penalties, interest, enforcement measures, and in serious cases possible prosecution, fines, or imprisonment if they fail to register, file returns, pay tax, or respond to official correspondence.
A common misconception is that tax enforcement targets only large companies. The legislation also applies to ordinary earners and small-scale operators whenever a tax obligation arises. Delaying action can turn a minor oversight into a substantial financial and legal burden.
Under Section 101 of the NTAA, late filing of tax returns—or filing incomplete or inaccurate returns—attracts an administrative penalty of ₦100,000 in the first month and ₦50,000 for each additional month the failure continues.
Where tax is due but unpaid, Section 65 imposes a charge of 10% of the outstanding tax plus compound interest linked to the prevailing Central Bank of Nigeria monetary policy rate and a ministerial spread.
Section 108 addresses the failure to comply with a notice, summons, or lawful tax question. Such non-compliance attracts ₦100,000 on the first day and ₦10,000 for each subsequent day. Refusal to provide records or documents carries a penalty of ₦200,000 on the first day and ₦10,000 per day thereafter.
These provisions can affect individuals in different ways. A freelancer—such as a graphic designer, writer, consultant, or digital marketer—might assume irregular income removes any tax exposure. Yet ignoring registration, filing obligations, or tax notices can trigger penalties before the seriousness of the situation becomes clear. Small or unstable earnings do not automatically shield a person from liability.
A market woman selling tomatoes, food items, or household goods may believe taxation concerns only registered businesses or salaried workers. Once she falls within an applicable tax obligation or receives a lawful notice, however, ignoring it can lead to penalties. The assumption that a business is too small can prove costly.
