Tax reform is the current buzz word in the Nigerian labour and business arena following a lot of concerns relating to implications on individuals and organizations. Personal Income Tax (PIT) is an integral part of the reforms in the nation’s tax system.
The Nigeria Tax Act (NTA) 2025 and the Nigerian Tax Administration Act (NTAA) 2025 establish a new framework for the administration of personal income tax (PIT), forming part of a broader tax reform initiative launched in 2024 by the Federal Government of Nigeria. These legislative changes aim to address long-standing challenges within the PIT system, including outdated income thresholds, inconsistent practices across states, and low compliance rates.
The reforms set some obligations for all parties to the system for effective administration. Below are the implications relating to range of new compliance requirements under the 2025 PIT framework. These include:
- Payroll System Updates: Employers must revise payroll structures to reflect the new tax bands, income exemptions, and rent relief deductions.
- TIN Verification: Employers are responsible for verifying and maintaining accurate TINs for all employees.
- Digital PAYE Filing: Monthly PAYE returns must now be submitted electronically, requiring system upgrades and process changes.
- Standardised Obligations: Harmonised rules across States mean employers operating in multiple jurisdictions must align with unified procedures for deductions, remittances, and record-keeping. For instance, a company operating in Lagos and Rivers State previously had to navigate different PAYE filing formats and remittance procedures despite uniform legal obligations. With the new framework, both states are expected to adopt harmonised digital platforms and enforcement protocols, reducing administrative friction for multi-state employers.
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There is no doubt that compliance with the above will require effective coordination, stakeholder adaptability, and sustained investment in infrastructure and capacity development.
