COMPANIES AND STATUTORY BODIES THAT AWARDS CONTRACTS TO UNREGISTERED PERSONS WILL FACE A N5 MILLION ADMINISTRATIVE PENALTY UNDER NIGERIA'S TAX LAW

Companies to Face ₦5 Million Penalty for Awarding Contracts to Unregistered Persons; Nigerians Who Refuse to Register for Tax to Be Fined ₦50,000

Companies and statutory bodies that award contracts to unregistered persons will pay an administrative penalty of N5 million under the Nigeria Tax Administration Act (NTAA).

The Act stipulates that any taxable person who fails or refuses to register for tax will be liable to a penalty of N50,000 in the first month of default and N25,000 for each subsequent month the failure continues. 

It further states that “a statutory body or company who awards a contract to an unregistered person shall be liable to pay an administrative penalty of N5,000,000.”

The law also prescribes sanctions for failure to file tax returns or for knowingly submitting incomplete or inaccurate returns. Such offenders will pay N100,000 in the first month of default and N50,000 for every additional month the failure persists.

Under the Act, any person who refuses to grant the relevant tax authority access to deploy technology after 30 days of receiving notice will be fined N1 million on the first day of default and N10,000 for each additional day the default continues. 

It adds that a taxable person who fails to process a taxable supply through the fiscalisation system will be liable to an administrative penalty of N200,000, plus 100 per cent of the tax due and interest at the prevailing Central Bank of Nigeria Monetary Policy rate per annum.

The NTAA also provides that any person required to collect, deduct or withhold tax who fails to do so will face an administrative penalty of 40 per cent of the amount not deducted. 

In addition, a N1 million penalty applies to any person who fails to make required tax attribution or notify the relevant tax authority after making such attribution.

The Act further states that a person convicted of any offence under this section may face imprisonment for up to three years, or a fine of not less than the principal amount due plus a penalty of up to 50 per cent of the sum, or both.

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