New Tax Laws: 12 Things Employers Must Know as PAYE Filing Deadline Nears
- January is the key month for employers to file annual PAYE returns under Nigeria's updated tax framework
- Employers must report all paid individuals, including temporary workers, consultants, and contractors in their annual filing
- LIRS offers electronic filing and extensive support to ensure compliance and address employer concerns about new tax laws
As the deadline for filing annual Pay-As-You-Earn (PAYE) returns approaches, employers across Nigeria are under renewed pressure to comply with the country’s updated tax framework.
January has once again emerged as a critical compliance month, particularly under the newly introduced tax reforms that reshape personal income tax administration.
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Speaking during a media briefing, Tokunbo Akande, special adviser to the executive chairman of the Lagos State Internal Revenue Service (LIRS), clarified filing obligations, addressed concerns over penalties and Tax Identification Numbers, and dispelled widespread misconceptions about the new regime.
Why January matters for employers
January is the statutory filing window for employers of labour. Immediately after the close of the financial year, employers are required to submit annual PAYE returns detailing employee compensation, taxes deducted, and remittances made in the previous year.
Unlike individual taxpayers, who have until 31 March to file, employers must begin the process from 1 January, making early compliance essential.
Who qualifies as an employer of labour?
An employer of labour includes any individual or organisation that pays compensation to natural persons for services rendered.
This definition goes beyond full-time staff to cover temporary workers, consultants, contractors, and even vendors. Crucially, the obligation to file applies even when PAYE has been correctly deducted and remitted on a monthly basis. The January filing is about disclosure and reconciliation, not additional payments.
What the annual return must contain
Employers are required to report all individuals paid during the year, including those who worked for only a month or who exited during the year.
The return must include names, Tax Identification Numbers, gross compensation, tax deducted, net pay, and evidence of remittance. The process captures historical transactions and is not limited to an employer’s current workforce.
How employers can file
Manual filing has been discontinued since 2022. All returns must now be submitted electronically via the LIRS e-tax platform. Employers can file using phones, laptops, or desktops.
For those who need help, LIRS provides free filing assistance at its offices, a dedicated helpdesk line, and an internal escalation system. Plans are also underway to introduce USSD-based filing to widen access.
Deadlines, penalties, and reputational risk
Failure to file attracts stiff penalties even where PAYE payments are up to date. An initial fine of ₦100,000 applies, followed by ₦50,000 for every additional month of default until compliance is achieved.
Beyond financial sanctions, non-compliance can damage corporate reputation and regulatory standing, especially for organisations that value governance and transparency.
Support available to employers
LIRS offers extensive support, including in-person assistance, call centre guidance, and online publications that explain filing requirements. Employers are encouraged to seek help early to avoid errors and penalties.
What the new tax laws are about
The new tax laws represent one of Nigeria’s most significant fiscal reforms since independence.
They aim to protect low-income earners, support small businesses, and reduce the cost of compliance while improving fairness and efficiency in tax administration.
Why reform became necessary
Many legacy tax provisions were outdated, with penalties that failed to reflect current economic realities. In some cases, non-compliance was cheaper than compliance.
The reforms modernise tax rules, adjust penalties for inflation, and align obligations with taxpayers’ ability to pay.
Who really pays more under the new rates
Contrary to fears, data analysis by LIRS shows that 54.5 per cent of taxpayers will pay no tax, 43.9 per cent will pay less than before, and only 1.6 per cent will see an increase.
Even then, Nigeria’s tax rates remain low by global standards, with the reforms expected to boost disposable income and consumption.
Clearing the tax ID confusion
Nigeria is transitioning to a unified Tax Identification Number under the Joint Tax Board. Existing LIRS PAYE IDs remain valid during the transition and are being mapped to the new system.
Exemptions and record-keeping
Low-income earners and qualifying SMEs are exempt from tax, but filing and record-keeping obligations may still apply. Proper documentation helps taxpayers avoid presumptive assessments.
Source: UGC
LIRS’ final message to employers
There is nothing to fear in the new tax laws. Early, accurate filing, rejection of misinformation, and timely engagement with tax authorities remain the safest path to compliance under the new framework.
Taxpayers in Lagos issued deadline
Legit.ng earlier reported that taxpayers in Lagos have until March 31, 2021, to pay their outstanding tax to the state government as Governor Babajide Sanwo-Olu plans to meet its monthly tax revenue target of N60.318 billion.
Seyi Alade, the director of legal services for the Lagos state internal revenue service, said taxable persons shouldn't wait until a notice is sent or demand is made, NAN reported.
He said self-employed and salary earners should meet the deadline as failure to file tax returns will attract punishment. Explaining what the law says about tax payment.
Source: Legit.ng
