The new tax regime introduced by the Federal Government requires every individual who earns taxable income to file a self-assessment return declaring all sources of income by March 31 every year.
Corporate organisations, on the other hand, are to submit their annual returns by January 31 each year, covering their employees’ pay and tax deductions.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, made these clarifications while drawing attention to key filing deadlines that employers and individuals must take seriously under the new tax system.
Oyedele made the clarifications in an online engagement session held for human resource managers, payroll officers, chief financial officers, and tax managers.
The session was organised yesterday in collaboration with the Joint Revenue Board to explain how the new Tax Reform Acts should be implemented in workplaces and businesses across the country.
He added that there is now a new requirement for people and businesses that enjoy special tax incentives to file a separate return showing the incentives they benefit from.
The Joint Revenue Board, which brings together federal and state tax authorities, is expected to oversee the coordination of these rules to ensure that taxpayers experience a smooth and clear process.
Oyedele explained that individuals who earn income through partnerships must pay their personal income tax to the state where each partner lives; not to a central national tax office.
This approach, according to him, is meant to reflect fairness and ensure that states receive the tax revenue linked to residents living and working within their areas.
Speaking on his WhatsApp platform yesterday, Oyedele said personal income tax remains the responsibility of state tax authorities.
“Personal Income Tax remains payable to the relevant State Internal Revenue Services, not the NRS,” he said.
“All revenue agencies will work together under the Joint Revenue Board to ensure a harmonised and seamless experience for taxpayers.”
Oyedele also spoke about how the new tax laws are designed to protect low-income earners. He said workers who earn the national minimum wage or less are automatically exempted from paying personal income tax.
“The new laws protect low-income earners with automatic exemption for anyone earning the national minimum wage or less,” he said.
He added that even workers who earn slightly more may still not have to pay tax once legal deductions and reliefs are applied.
“Where deductible contributions and rent relief are taken into account, employees earning up to ₦100,000 per month may also see their tax liability drop to zero,” he explained.
On the issue of remote work and foreign companies, Oyedele said Nigeria’s tax system has been adjusted to attract global talent and investment.
He noted that foreign employers will no longer be taxed in Nigeria just because they have staff working remotely from within the country.
“Nigeria is now more competitive for global talent,” he said.
“Foreign employers are no longer deemed taxable in Nigeria solely because they have employees working remotely in the country.”
To help payroll managers and employers correctly apply the new tax rules, Oyedele outlined a clear process for calculating workers’ taxes so that employees can benefit fully from the reliefs provided by law.
“Start with gross income, add benefits-in-kind if applicable, then grant reliefs for pension, NHIS, NHF and similar deductions,” he said.
“After that, apply rent relief, which is 20 per cent of actual rent paid capped at ₦500,000. The first ₦800,000 is exempted and taxed at zero percent, and progressive rates are applied to the remaining amount.”
He explained that although the top tax rate under the new law is 25 per cent, most workers will not actually pay that level of tax.
“While the top marginal rate is 25 per cent, the effective rate is much lower due to these deductions,” he said.
Oyedele said the overall goal of the reforms is to create a fairer, simpler, and more worker-friendly tax system while also ensuring that government at all levels receives the revenue it needs to provide public services.
As businesses and workers begin to adjust to the new rules, understanding and timely filing will be key to avoiding penalties and making full use of the reliefs built into the law.
