Starting January 2026, the Nigeria Tax Administration Act (NTAA) 2025 will revolutionize how freelancers, content creators, small and medium enterprises (SMEs), and salaried employees in Nigeria handle their income, expenses, and tax reporting. This new law introduces fresh legal duties that will influence everyday financial management.
To clarify these upcoming changes, we hosted a Twitter Spaces session that drew over 2,000 attendees. The event featured expert tax and finance specialists who broke down the complex legislation into clear, actionable information.
Our expert panel comprised Kalu Aja, a financial analyst known for simplifying complex fiscal matters; Emmanuel Ifeanyi, a tax associate at Andersen Nigeria with deep experience in tax compliance guidance; and Olamilekan Eyinade, a tax supervisor at Smile Communications who focuses on tax issues affecting digital professionals and SMEs under the new regulations.
Moderated by Ifeoluwa Adebayo, a technology journalist at Technext, the discussion was engaging and practical, cutting through jargon to highlight what Nigerians must understand to adapt smoothly to the tax reforms.
Adopting Self-Assessment as the New Norm
The foundation of the revamped tax system is the implementation of self-assessment, which requires individuals to independently declare their income and file taxes.
Kalu Aja pointed out that this represents a major shift from previous tax collection methods, designed to enhance financial literacy among Nigerians.
“This initiative encourages individuals to take full responsibility for their earnings and tax duties. It fosters accountability and motivates people to be conscious of their income, spending, and tax reporting,” he remarked.
Traditionally, formal employees had taxes automatically deducted through the Pay-As-You-Earn (PAYE) system. However, the rise of remote work, freelancing, and digital entrepreneurship means many now earn outside conventional payroll frameworks.
“This reform isn’t about creating new taxes but ensuring fair contributions from all income earners. Being aware of your tax responsibilities also helps you understand your rights,” Kalu added.
Read also: A Comprehensive Guide to Calculating Income Tax for Nigerian Freelancers and Remote Workers
Why the Tax Identification Number (TIN) Matters
The reform announcement triggered concerns about the Tax Identification Number (TIN), with rumors circulating that bank accounts without a TIN would be frozen. Emmanuel Ifeanyi dispelled these myths.
“No law requires freezing accounts for those lacking a TIN. The government’s goal is to formalize the tax system and bring more people into compliance. Your Bank Verification Number (BVN) and National Identification Number (NIN) also function as tax identifiers,” he clarified.
Emmanuel emphasized that the TIN is intended to promote inclusion rather than enforcement. It connects your financial transactions to an official tax profile.
“Possessing a TIN means you are officially recognized, which can facilitate access to benefits like loans, grants, or government contracts. It’s about establishing your financial identity, not monitoring,” he explained.
Nonetheless, he cautioned that transparency is essential. “If you frequently transfer large sums without documented tax compliance, authorities may investigate,” he warned.
He encouraged freelancers and small business owners to prepare early: “Register for your TIN now, get acquainted with online tax filing, and don’t wait until 2026 to clarify your obligations. Early compliance is much easier than correcting mistakes later.”
Read also: How to Secure a Nigerian Tax ID Before the January 2026 Deadline
Clarifying Your Tax Responsibilities to Prevent Mistakes
Olamilekan Eyinade addressed the often confusing array of taxes in Nigeria and their relevance to different taxpayers.
“Taxes vary widely. Understanding which ones apply to you can save you from costly errors,” he noted.
“Individuals are liable for Personal Income Tax (PIT). Once you establish a business, Company Income Tax (CIT) applies, and if your annual turnover surpasses ₦25 million, you must also remit Value Added Tax (VAT),” he explained.
Read also: Nigeria’s Strategy for Taxing Cryptocurrency Holders and Traders from 2026
The Vital Role of Meticulous Record-Keeping
Olamilekan grounded the conversation in actionable advice for thriving under the new tax regime, noting frequent issues with poor documentation among small business owners.
“Neglecting proper record-keeping is a widespread mistake. Without clear proof of your income and expenses, you risk paying more tax than necessary,” he cautioned.
In the self-assessment system, documentation is crucial. “Taxes are calculated after deducting allowable expenses. Freelancers and entrepreneurs can claim deductions for business-related costs like internet bills, transport, and equipment-but only if they have supporting evidence,” he stressed.
He urged entrepreneurs to manage their businesses professionally. “Use a separate bank account for business transactions. Mixing personal and business funds causes confusion and may lead to penalties,” he advised.
Olamilekan also underscored the importance of withholding tax certificates, often overlooked by freelancers.
“If a client deducts tax on your behalf, always request a withholding tax receipt. This document serves as proof and can reduce your tax liability when filing returns,” he explained.
Effective Ways to Legally Reduce Your Tax Liability
Kalu Aja highlighted that Nigerians can take charge of their tax duties by learning how to legitimately lower their taxable income.
“Only the income remaining after allowable deductions is taxable,” he clarified.
A practical approach is to set up a retirement savings plan. Whether employed or self-employed, contributions up to 18% of your income to a pension scheme are deductible.
Self-employed individuals can open personal retirement accounts to reduce their taxable income accordingly.
Additionally, payments toward life insurance premiums-including those covering a spouse-as well as contributions to the National Housing Fund (NHF) and National Health Insurance Scheme (NHIS) further decrease taxable income. Even rent payments can be partially deducted.
“If you rent instead of owning a home, you can deduct up to 20% of your rent, capped at ₦500,000,” Kalu noted.
The key is proactive financial management. Track all eligible expenses and claim every applicable relief. Businesses with annual revenues above ₦50 million should consult tax professionals.
“Crossing that revenue mark subjects you to corporate taxes. Remember, legal tax avoidance is acceptable, but tax evasion is a crime. Aim to minimize your tax burden within the law, not evade it,” Kalu concluded.