Why Tax Compliance Matters As March 31 Deadline Expires

As Nigeria’s March 31 tax deadline expires, compliance challenges persist amid low awareness and last-minute rush. The Nigeria Tax Act 2025 mandates all income earners to file annual returns, beyond PAYE deductions. Improved compliance is vital for revenue growth, economic stability, and access to essential services requiring valid tax clearance certification.

With only hours to the March 31 deadline for filing personal income tax returns, a familiar pattern is once again playing out across Nigeria—last-minute rush, uncertainty, and, for many, incomplete compliance.

Yet beyond the annual scramble lies a deeper issue: Nigeria’s persistent challenge with tax compliance and the urgent need to build a culture of voluntary participation in revenue generation.

Under the Nigeria Tax Act 2025, every individual earning income in the country is legally required to file an annual tax return, covering earnings from the preceding year.

This obligation applies broadly—from salaried workers and business owners to freelancers and professionals operating within the informal economy.

Despite this clear legal requirement, compliance levels remain low, a concern repeatedly highlighted by fiscal policy experts and government officials.

Former Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has consistently stressed that filing tax returns is not optional. According to him, both employers and employees have responsibilities under the law, and individuals must go beyond Pay-As-You-Earn (PAYE) deductions to file their own returns.

This clarification is critical. Many salaried workers mistakenly assume that once taxes are deducted from their salaries by employers, their obligations end. However, the law requires annual returns to ensure transparency, proper documentation, and eligibility for tax clearance certification.

At the heart of the system is Personal Income Tax, administered by State Internal Revenue Services in the state where a taxpayer resides. For residents of the Federal Capital Territory, the responsibility falls on the FCT Internal Revenue Service.

Understanding one’s tax category is the first step toward compliance. While employees under PAYE have taxes deducted at source, filing annual returns remains important for record-keeping and verification. For self-employed individuals, traders, and professionals, the obligation is even more direct—they must declare income, calculate liabilities, and remit taxes accordingly.

A key requirement in this process is the Tax Identification Number (TIN), a unique identifier that links taxpayers to their financial records. Obtaining a TIN has been simplified in recent years, with options to generate it online using the National Identification Number or through tax authorities.

Beyond identification, taxpayers must accurately determine their total income. This includes not only salaries and wages but also business earnings, freelance income, rental proceeds, dividends, and even foreign income where applicable.

The breadth of this requirement underscores the government’s effort to widen the tax net and capture economic activities that have historically escaped formal assessment.

Once total income is established, allowable deductions and reliefs are applied. The Nigeria Tax Act 2025 introduced notable changes in this area, including the abolition of the Consolidated Relief Allowance and the introduction of rent relief.

Taxpayers who pay rent can now claim relief calculated as the lower of N500,000 or 20 per cent of annual rent, provided proper documentation is submitted.

Other deductions, such as pension contributions and National Housing Fund payments, remain valid, reinforcing the importance of maintaining accurate financial records.

The tax structure itself has also been adjusted to ease the burden on low-income earners. Notably, the first N800,000 of taxable income is now exempt from tax, reflecting a policy shift toward equity and inclusiveness.

Filing the return involves compiling all relevant information—income, deductions, and personal details—and submitting it either online through state portals or physically at designated offices. Each state operates its own system, making it essential for taxpayers to file with the authority in their state of residence.

Documentation plays a crucial role in this process. From payslips and bank statements to proof of rent and pension contributions, accurate records help prevent errors and reduce the risk of disputes with tax authorities.

Once submitted, returns are acknowledged and may be reviewed by the relevant Internal Revenue Service. Where discrepancies arise, authorities can issue assessments, which taxpayers have the right to contest within specified timelines.

Compliance is not merely about avoiding penalties—though those penalties can be significant. Failure to file within the deadline may attract fines and additional charges for continued default, depending on applicable regulations.

More importantly, tax compliance is increasingly becoming a prerequisite for participation in the formal economy. Access to government contracts, business loans, and even visa applications often requires a valid Tax Clearance Certificate.

That makes tax filing not just a legal duty, but a gateway to economic opportunity.

For the government, improved compliance is central to strengthening domestic revenue mobilisation.

With fluctuating oil revenues and growing fiscal pressures, authorities are placing greater emphasis on non-oil tax collection as a sustainable source of funding for infrastructure, healthcare, education, and social services.

The Nigeria Revenue Service and state tax authorities have, in recent years, intensified efforts to simplify processes, deploy digital platforms, and expand taxpayer education.

The reforms are aimed at building trust and making compliance less burdensome.

Yet, challenges remain. System inefficiencies, limited awareness, and a deeply entrenched informal sector continue to hinder progress.

This is why experts advocate a balanced approach—one that combines enforcement with education and service delivery. Taxpayers are more likely to comply when they understand the system, see the benefits, and encounter minimal friction in the filing process.

As the March 31 deadline closes, the message is clear: tax compliance is no longer an administrative afterthought. It is a civic responsibility and an economic imperative.

For individuals, early preparation and timely filing are the best safeguards against penalties and disruptions. For authorities, ensuring seamless systems and responsive support will be critical in sustaining compliance gains.

Ultimately, building a robust tax culture requires collective effort. When citizens meet their obligations and institutions deliver on their mandates, the result is a stronger, more resilient economy—one where development is funded not by chance, but by shared responsibility.