2026 Tax Law: The Offences That Could Land You in Jail or Shut Down Your Business
Mama Ronke, the owner of a small provisions shop in Surulere, sat behind her counter, scrolling through WhatsApp broadcasts. “New tax law will finish us! The government wants to collect one basket out of every four baskets of tomatoes!” the message read. She sighed, filled with confusion and fear.
However, what Mama Ronke doesn’t realise, and what many Nigerians still don’t grasp, is that the 2026 Tax Reform is not just about how much tax you pay; it’s also about the real-life consequences of breaking the law. The new regulations are structured and, in some instances, can seriously jeopardise your business and daily life.
To help you navigate this complex landscape, let’s break down some of the key offences you need to be aware of:
1. Unauthorised Disclosure
Picture Kunle, a fresh-faced tax officer, who spills the beans over drinks, bragging about a major company under investigation. It seems harmless until the next morning when he learns that sharing sensitive taxpayer information could cost him up to ₦1 million, three years in prison, or both.
The Act takes confidentiality seriously; this applies not just to officers but to businesses and individuals as well.
2. The “Sharp Guy” Penalty (False Refund Claims)
There’s always that one businessman who thinks he can outsmart the system. He files for a VAT refund he didn’t earn. Under the new law, this is serious business:
- Claiming a false tax refund? Expect to repay 50% of that amount, plus interest at the CBN’s monetary policy rate.
- A false VAT refund claim? That’s 100% of the amount, plus interest.
The days of thinking “government money isn’t anyone’s money” are officially over.
3. Mineral Royalties and the Big Boys’ Trap
For companies in natural resources, failure to remit royalties now attracts a 10% penalty added to the amount due.
If the transaction involves foreign currency? You’ll be looking at SOFR plus 10% interest. No sector is too powerful to escape regulation.
4. The Cost of Lying (False Declarations)
Tunde, a logistics entrepreneur, signs a tax declaration he didn’t fully read, a common Nigerian mistake.
Under this Act, ignorance isn’t bliss. A false declaration could mean:
- A ₦1 million administrative penalty,
- Repayment of any undercharged tax,
- Or even imprisonment for up to three years.
For mining licensees or lessees, penalties can start as high as ₦10 million on the very first day of failure to remit.
5. Forging Documents
Counterfeiting tax documents has long been shrugged off by some, but now it carries serious repercussions:
- An administrative penalty of ₦100,000,
- Up to three years in prison,
- Or a ₦1 million fine.
It’s no longer just a backdoor; it’s an escape route that leads to serious trouble.
6. Companies Are No Longer a Shield
If a company commits a tax offense, the Act extends its reach beyond the corporate entity, holding individuals accountable too: directors, managers, secretaries, trustees, and even those who merely act in these roles. Unless you can prove you weren’t aware or involved, liability is squarely on your shoulders.
7. The “General Penalty” Clause Is Waiting for Everyone Else
If you break a rule not specifically listed, don’t think you’ll slip through unnoticed. The Act has a provision for you:
- An administrative penalty of ₦100,000,
- Up to three year’s imprisonment,
- Or both. Essentially, it’s a reminder:
If you think you’ve found a loophole, think again.
8. When You Hold Government Money (Failure to Remit)
Employers who deduct taxes but delay remittance need to be especially wary. The penalties include:
- 10% per annum on the amount,
- Interest at the CBN’s policy rate,
- And on conviction? Up to three years in prison or fines starting from the principal amount plus an additional 50% penalty.
Withholding taxes is treated as a sacred trust; once you’ve collected it, it’s not yours to keep.
9. Even Your Address Matters
Failing to notify a change of address now carries a financial penalty:
- ₦100,000 for the first month,
- ₦5,000 for each subsequent month.
A simple oversight can lead to real consequences.
10. Weapons, Violence, and Tax Enforcement
Here’s where the Act takes a hardline approach:
- Carrying a weapon during a tax-related offence could lead to up to five years in prison.
- Injuring a tax officer while armed? That’s up to ten years.
Tax compliance has crossed over into national security.
SO, WHAT DOES THIS MEAN FOR NIGERIANS?
Yes, there’s a cloud of fear, confusion, and a lot of misinformation. Farmers might believe the government wants a cut of their harvest, workers may fear salary cuts, and businesses might anticipate heavier burdens. Yet, according to the Tax Reform Committee, the objective is quite the opposite:
- More exemptions for small businesses,
- Lower taxes for low- and middle-income earners,
- Reduced burdens for larger companies,
- A fairer system overall,
- And fewer overlapping taxes.
The real threat, therefore, is not the reform itself but the misinformation and potential for non-compliance. The Nigerians who will face consequences under this new law won’t be those who honor their tax obligations, but those who inadvertently slip up on the rules.
THE BOTTOM LINE
Tax reform is here, and while it promises relief, transparency, and fairness, it also introduces a new era of strict accountability. Whether you are a CEO in Lekki, a tailor in Kaduna, a shop owner in Aba, or a corporate entity on Lagos Island, understanding the offences and their consequences is no longer optional; it’s essential. For businesses, compliance could be the key to growth or the difference between success and shutdown.
If you’d like OAL to help audit your compliance strategy or interpret how the new Tax Act affects your operations, our team is ready to assist.