New Tax Law: Awarding contracts to unregistered persons now a costly offence – Govt

Companies and statutory bodies that award contracts to unregistered individuals or entities will now face a stiff N5 million administrative penalty under Nigeria’s tax regime.

This provision is contained in the Nigeria Tax Administration Act (NTAA), which seeks to strengthen compliance and expand the country’s tax base. The law makes it mandatory for all taxable persons to register for tax, warning that failure or refusal to do so attracts financial sanctions.

Under the Act, any taxable person who defaults on tax registration will be liable to a penalty of N50,000 in the first month of default, with an additional N25,000 imposed for every subsequent month the failure continues.

Beyond individual defaulters, the law places responsibility on organisations that engage unregistered contractors. It states unequivocally that any statutory body or company that awards a contract to an unregistered person shall pay an administrative penalty of N5 million.

The Act also outlines penalties for non-compliance with filing obligations. Taxable persons who fail to file returns, or who knowingly submit incomplete or inaccurate returns, will pay N100,000 in the first month of default and N50,000 for each month the failure persists.

In addition, the law empowers tax authorities to deploy technology to aid tax administration. Where a person refuses to grant access for such deployment after 30 days of receiving notice, the offender will be liable to a penalty of N1 million on the first day of default and N10,000 for each additional day the refusal continues.

The NTAA further provides that failure to process a taxable supply through the approved fiscalisation system attracts an administrative penalty of N200,000, in addition to 100 percent of the tax due and interest calculated at the prevailing Central Bank of Nigeria monetary policy rate.

For persons with statutory obligations to collect, deduct or withhold taxes, the law prescribes an administrative penalty of 40 percent of the amount not deducted where such duties are ignored. It also imposes a N1 million penalty on individuals or entities required to make tax attribution but fail to do so or neglect to notify the relevant tax authority after attribution.

The Act goes further by introducing criminal consequences for serious violations. Any person convicted of offences under the law may face imprisonment for a term not exceeding three years, a fine of not less than the principal tax due plus a penalty of up to 50 percent of the sum, or both.

The new measures underscore the government’s determination to enforce tax compliance, curb revenue leakages, and discourage the award of public and private contracts outside the formal tax system.

Very Nigerian.

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