The implementation of Nigeria’s 2025 Tax Act, efficient from January, has sparked a shift within the nation’s enterprise software program market, creating a brand new sense of urgency round constructing preventive infrastructure moderately than fixing issues after they come up.
The tax overhaul, which was signed into regulation on June 26, 2025, includes 4 key items of laws: the Nigeria Tax Act (NTA) 2025, Nigeria Tax Administration Act (NTAA) 2025, Nigeria Income Service (Institution) Act (NRSEA) 2025, and Joint Income Board (Institution) Act (JRBEA) 2025.
In November 2025, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Coverage and Tax Reforms, introduced that Nigeria had entered agreements with over 100 international locations to gather knowledge on distant employees for tax enforcement functions.
Oyedele emphasised that each one distant employees in Nigeria, no matter their firm or nation, are required to declare their revenue.
However how possible is that this bold purpose?
In an unique interview with Nairametrics, Cossi Achille Arouko, CEO of Bujeti – a platform that automates the appliance of native taxes, together with withholding tax (WHT) and value-added tax (VAT) – together with COO Samy Chiba, focus on the challenges and dangers of tax compliance in cross-border funds.
Nairametrics: What gaps or challenges did the 2025 Tax Act reveal for Nigerian companies, particularly SMEs?
Cossi Achille Arouko: The Act didn’t create new issues, it uncovered structural ones that companies had been patching over with guide workarounds.
The largest hole is procedural, not conceptual. Most SMEs perceive they should pay tax, what they wrestle with is the mechanics, figuring out which price applies to which transaction, monitoring what they’ve collected versus what they’ve withheld, and preserving tax funds separate from working capital.
The Act compressed the timeline for all of those. What was once reconciled at year-end now must occur transaction by transaction. And it launched uneven penalties.
Companies with turnover beneath N50 million pay zero CIT, but when they miss a submitting deadline, they lose that exemption completely. So you’ve gotten this paradox – decrease burden, larger procedural stakes.
The businesses that profit most from the reforms are additionally probably the most uncovered to compliance failure as a result of they lack infrastructure.
Nairametrics: Which forms of companies are most affected by the brand new tax guidelines, and why?
Samy Chiba: Service companies like consultancies. Additionally, businesses, software program firms, logistics suppliers—are significantly uncovered as a result of their transactions usually contain withholding tax.
Each time they pay a vendor or contractor, they’re required to confirm the counterparty’s TIN standing and apply the right WHT price. If the seller doesn’t have a sound TIN, the speed is larger. That verification step was once casual. Now it’s obligatory, and non-compliance triggers penalties.
Retail and e-commerce companies face complexity on the VAT aspect. They’re amassing VAT from clients, however in addition they want to trace enter VAT on their purchases and reconcile the distinction. When you’re processing a whole bunch of transactions month-to-month, spreadsheets break down shortly. Then there are companies working throughout a number of states or international locations, they’re managing completely different tax jurisdictions concurrently, which multiplies the danger of misclassification.
The Act doesn’t care when you made an trustworthy mistake. The penalty construction treats errors as intentional.
Nairametrics: How do cross-border operations or a number of jurisdictions complicate tax compliance for African SMEs?
Samy Chiba: Cross-border provides layers of ambiguity that guide programs can’t deal with. Let’s say a Nigerian enterprise has shoppers in Kenya and Ghana. Every nation has completely different VAT charges, completely different thresholds for registration, completely different submitting calendars. If they’re utilizing spreadsheets, somebody has to manually keep in mind which price applies to which shopper, which forex the transaction was in, and what the change price was on the day of cost.
Then there’s the everlasting institution query. If a Nigerian firm does sufficient enterprise in Kenya, it would set off PE standing and owe Kenyan taxes. Most SMEs don’t know when that threshold is crossed as a result of they’re not monitoring transaction quantity by jurisdiction in actual time. They discover out throughout an audit, which suggests penalties and again taxes.
Switch pricing is one other one. If a Nigerian firm invoices its Kenyan subsidiary, tax authorities in each international locations need to make sure the pricing is arm’s size. Proving that requires documentation on the transaction degree. In case your information are fragmented—some in QuickBooks, some in spreadsheets, some in e-mail—you can’t reconstruct the justification six months later.
The irony is that cross-border is the place SMEs have probably the most progress alternative, however it’s additionally the place compliance threat is highest. So companies both keep away from enlargement, or they broaden and hope they don’t get audited.
Nairametrics: Are you able to share actual examples of compliance errors that companies generally make?
Cossi Achille Arouko: The most typical mistake we see isn’t dramatic, it’s making use of the improper price. A enterprise pays a contractor N100,000 and withholds 5% WHT when the right price is 10% as a result of the seller doesn’t have a TIN. That’s a N5,000 underpayment. Multiply that throughout dozens of transactions month-to-month, and by the point FIRS audits them, they owe penalties on prime of the shortfall.
One other factor is, companies accumulate VAT from clients and deposit it into their major working account. Two weeks later, they should cowl payroll or restock stock, in order that they spend it. When remittance is due, the cash’s gone. They both scramble to seek out money elsewhere—which creates a liquidity disaster—or they miss the deadline and pay penalties.
We’ve seen firms lose extra in fines than they might have spent on correct infrastructure.
Then there’s the submitting exemption misunderstanding. A enterprise qualifies for zero-rate CIT as a result of their turnover is beneath N50 million, in order that they assume they don’t have to file something.
Nairametrics: How do penalties and shortened reporting home windows have an effect on day-to-day operations and money stream?
Nairametrics: How do penalties and shortened reporting home windows have an effect on day-to-day operations and money stream?
Samy Chiba: Penalties don’t simply damage financially; they create operational drag. When a enterprise will get hit with a N200,000 penalty for late submitting, that’s cash that might have gone to hiring, advertising, or stock. However the greater concern is the time value. Finance groups spend hours reconstructing transaction histories, chasing receipts, and making an attempt to show what occurred three months in the past.
