The Nigeria Tax Administration Act establishes a framework that demands accuracy and honesty from every taxpayer when filing returns or providing information to tax authorities. Untrue declarations, whether made deliberately or through negligence, attract consequences that can escalate quickly from financial penalties to legal action.
Under the Act, a taxpayer who makes a false statement or submits a document containing inaccurate information to a tax authority commits an offence. The law does not distinguish between the taxpayer and an authorised agent when liability for an untrue declaration is assessed. Both may be held accountable.
Penalties for untrue declarations typically include administrative fines, which may be calculated as a percentage of the tax underpaid or as a fixed sum. In more serious cases, the Act empowers the relevant tax authority to initiate criminal proceedings. Conviction can result in imprisonment, substantial fines, or both.
The Federal Inland Revenue Service and state internal revenue services have increased their audit and enforcement capabilities in recent years, utilising data-matching technologies and third-party information to detect discrepancies. Taxpayers who might have previously relied on limited information sharing between government agencies now face a more integrated compliance environment.
Beyond the immediate legal and financial consequences, untrue declarations can trigger deeper investigations into a taxpayer's affairs across multiple tax types and periods. A single false statement on a value-added tax return, for instance, can lead to a full review of the taxpayer's company income tax, withholding tax, and personal income tax obligations.
The reputational damage from being associated with tax offences should not be underestimated. For businesses, this can affect relationships with banks, investors, regulators, and business partners. For individuals, it can impact professional licences, board positions, and travel.
Tax practitioners advising clients must also exercise due diligence. The NTAA holds intermediaries accountable where they facilitate or aid in making untrue declarations. Professional bodies may impose additional disciplinary measures beyond what the law prescribes.
The most prudent approach for any taxpayer remains full, timely, and accurate disclosure. Where errors are discovered after filing, the voluntary disclosure mechanisms available under Nigerian tax law should be utilised promptly to mitigate exposure to penalties.
