[Nigeria] Closing the compliance gap under new tax regime

From 1 January 2026, Nigeria's payroll tax rules changed under the Nigeria Tax Act and Nigeria Tax Administration Act (the NTA/NTAA). Payroll systems using the old bands are producing incorrect deductions, DLA Piper reports.

The nation’s PAYE now runs on a progressive six-band structure of 0 per cent to 25 per cent. 

In addition, the new tax regime reportedly replaces the Consolidated Relief Allowance (CRA) with a Rent Relief which requires proof of rent payment.

National Housing Fund (NHF) deductions are now voluntary for private sector employees, gratuity is taxable, and the severance tax-free threshold has risen to NGN50,000,000.

Under the changes, employees have an independent duty to file personal tax returns even where their employer has already filed on their behalf.

Penalties for non-compliance are now administrative and compound monthly. 

Unresolved PAYE assessments will reportedly become final and binding if objections are not raised in time.

Source: DLA Piper

From 1 January 2026, Nigeria's payroll tax rules changed under the Nigeria Tax Act and Nigeria Tax Administration Act (the NTA/NTAA). Payroll systems using the old bands are producing incorrect deductions, DLA Piper reports.

The nation’s PAYE now runs on a progressive six-band structure of 0 per cent to 25 per cent. 

In addition, the new tax regime reportedly replaces the Consolidated Relief Allowance (CRA) with a Rent Relief which requires proof of rent payment.

National Housing Fund (NHF) deductions are now voluntary for private sector employees, gratuity is taxable, and the severance tax-free threshold has risen to NGN50,000,000.

Under the changes, employees have an independent duty to file personal tax returns even where their employer has already filed on their behalf.

Penalties for non-compliance are now administrative and compound monthly. 

Unresolved PAYE assessments will reportedly become final and binding if objections are not raised in time.

Source: DLA Piper