Under recent tax administration reforms and evolving enforcement practices, employees and individual contractors—including freelancers, virtual assistants (VAs), consultants, and self-employed professionals—should clearly understand their income tax filing obligations.
1. Who Must File a Tax Return?
Under the updated framework, all individuals earning income in Nigeria are required to register for tax and file an annual income tax return. This obligation applies whether:
- You are self-employed
- You earn income from contracts or freelance work
- You have multiple income sources
- You already pay tax through another mechanism (such as PAYE)
In effect, this means that individual contractors must file their own returns based on income earned from contracts, consulting fees, freelance work, or other business activities.
2. Mandatory Tax Identification Number (TIN)
Before filing a tax return, you must obtain a Tax Identification Number (TIN). The TIN is now mandatory for all taxpayers, including employees, contractors, and self-employed individuals, and must be used for all tax-related activities such as filing and payment.
3. What the Tax Return Should Contain
An individual’s annual tax return should include:
- Total income earned from all sources (employment, contracts, freelance work, etc.)
- Applicable deductions and reliefs (such as personal reliefs and allowable business expenses)
- Tax computation showing how the tax liability was calculated
- Evidence of tax already paid, if applicable
This process is based on self-assessment, meaning the taxpayer is responsible for calculating their income and tax liability before submission.
4. When Are Tax Returns Due?
Under the Personal Income Tax Act (PITA) and current administrative practice:
The tax year runs from 1 January to 31 December
Individual annual tax returns are required to be filed within 90 days after the end of the tax year, which in practice falls on or before 31 March of the following year.
For example:
Income earned in 2026 should be filed by 31 March 2027
5. What If You Only Earn Salary Under PAYE?
Many individuals assume that because their employer deducts Pay-As-You-Earn (PAYE) tax monthly, they do not need to file a return. Under the updated framework, this is no longer sufficient.
While employers submit PAYE returns on behalf of employees, Employees may still be required to file annual personal tax returns, particularly where they earn income outside PAYE or where required by their State Internal Revenue Service.
6. Penalties for Late or Non-Filing
Penalties may include amounts such as ₦100,000 for the first month of default and ₦50,000 for each subsequent month, depending on the applicable State Internal Revenue Service.
Additional penalties may apply for:
- Failure to register for tax
- Filing inaccurate or incomplete returns
- Failure to maintain proper records
These penalties can accumulate quickly if compliance obligations are ignored.
7. Where and How to File
Most State Internal Revenue Services (SIRS) now allow individuals to file and pay taxes through:
- Online e-tax platforms (where available)
- Designated commercial banks using generated assessment or bill references
You will typically need:
- A valid TIN
- A completed self-assessment form (Tax Form A)
- Evidence of income, payments, and deductions
- Supporting documents such as bank statements, invoices, and receipts
Key Takeaways
- Employees and contractors must file annual personal tax returns in Nigeria
- PAYE deductions by employers do not remove the individual filing obligation
- The filing deadline is typically 31 March of the following year
- All income sources must be declared
- Penalties apply for late, missing, or inaccurate returns
Final Note
Maintaining accurate financial records throughout the year makes tax filing easier and helps ensure correct tax computation. Where income comes from multiple sources or allowable deductions are unclear, engaging a qualified tax professional can help ensure compliance and optimal tax positioning.
For professional support, contact: alphajanesolutions@gmail.com
https://tat.gov.ng/Nigeria-Tax-Act-2025.pdf
