If you’re a founder, CEO, or business owner in Nigeria, you’ve probably seen a lot of tax myths posing as “tax advice” everywhere lately. WhatsApp forwards, TikTok “experts,” Instagram reels promising shortcuts… the list goes on.
The problem? Much of it is wrong, misleading, or dangerously incomplete. With the Nigeria Tax Act 2025 (NTA) and the Nigeria Tax Administration Act 2025 (NTAA) now in full effect, acting on misinformation can quietly cost millions of naira.
Here are the most common tax myths in 2026 with real risks that you need to know.
Table of Contents
Myth 1: “Tax payable is now higher for everyone.”
You know those side talks at the office, at church, or even during Saturday visitations where someone casually says, “Ah! I heard they’re increasing tax for everyone this year”?
Here’s the truth: Under the Nigeria Tax Act 2025, there are real exemptions and reliefs.
For Individuals: Only those earning above ₦800,000 a year start paying Personal Income Tax. Low-income earners aren’t automatically hit.
Small companies: The definition of a “Small Company” has been expanded for your benefit. Businesses with turnover ≤ ₦100 million and assets ≤ ₦250 million are largely exempt from Corporate Income Tax (CIT) and Capital Gains Tax.
The Development Levy: You might have heard people panicking about a “new” 4% tax.
In reality, the Consolidated Development Levy (4% of assessable profits) simply replaces old, fragmented taxes like the 3% Education Tax, the NITDA levy, and the NASENI levy. Even better? If your turnover is ≤ ₦100 million, you are exempt from this levy entirely!
The real risk isn’t higher rates. It’s believing the gossip, missing available reliefs, or filing late. When you plan ahead, you’ll see the “everyone’s paying more” chatter is just a rumour.
Myth 2: “Withholding tax is double taxation or I’m covered.”
You might have had a client deduct some tax from your payment and thought, “Ah! They’re taking my money again!” That’s where the panic starts.
Here’s the truth: Withholding tax isn’t a separate tax. It’s a prepayment—a deposit toward what you’ll owe at the end of the year.
The problem comes when business owners assume, “It’s already paid, I’m safe,” and skip filing their returns or reconciling properly with the Nigeria Revenue Service (NRS).
That’s when penalties or overpayments sneak in. WHT is a credit; filing correctly keeps you in control and avoids surprises.
Myth 3: “Foreign business owners don’t pay Nigerian tax unless they register here.”
Many think, “We don’t have an office in Nigeria, so we’re not taxable.” The new law says otherwise. What now matters is Significant Economic Presence.
If your business earns money from Nigeria digitally, you may still be taxed, office or no office. This is where many foreign and online businesses get caught off guard.
Myth 4: “NGOs don’t pay tax at all.”
You might assume that because your work is “good” or charitable, taxes don’t touch you. That’s partly true, but exemptions only apply to your charitable activities, not any commercial or revenue-generating activities.
Even if your NGO doesn’t earn taxable income, you are still required to file annual returns. Skipping this under the NTAA 2025 can trigger heavy regulatory scrutiny.
Myth 5: “E-invoicing means automatic taxation.”
E-invoicing does not mean tax is taken the moment you issue an invoice, but it does introduce a high-speed compliance rule.
The 2026 Reality: The new law introduces a 72-hour validation window. Once an e-invoice is issued via the NRS system, the transaction is digitally recorded.
If you don’t dispute or correct a mistake within 72 hours, the NRS considers it a final, taxable record. It’s not “automatic tax,” but it is automatic record-keeping that you can’t easily undo later.
Myth 6: “TaxPro Max automatically deducts tax.”
Some founders see the e-tax portal and think, “Great! It does everything for me.” Not exactly.
TaxPro Max is just a tool to help you do your self-assessment. The risk comes if you assume it automatically pays your tax. Skipping your part can lead to late fees that the system now triggers automatically without human intervention.
Myth 7: “Money will be deducted from all bank accounts.”
You might have seen posts saying the government can just take money from your account. That’s not true.
The tax authority must follow proper steps: assess your tax, send a notice, and give you a deadline. While the NRS has better digital visibility in 2026, they still follow the legal process before taking action.
Myth 8: “If my contractor has no Tax ID, it’s their problem.”
This is not true. Actually, the responsibility now falls on you. If you fail to verify a contractor’s Tax ID, you may lose the deduction on that expense or even face a massive fine (up to ₦5,000,000 for certain contracts with unregistered entities). You end up paying more tax because you couldn’t prove who you paid.
Myth 9: “VAT now applies to everything.”
Whether it’s a software subscription, consulting fee, or your company’s catered lunch, you might have noticed VAT showing up and thought: “Do they want a piece of everything?”
The truth is: VAT doesn’t apply to everything, but it does apply to certain digital services and professional fees. Knowing which items are taxable, zero-rated, or exempt keeps your business compliant and protects your cash flow.
Myth 10: “As long as I’m not qualified to pay tax, I don’t need to file anything.”
Even if your income is below the threshold, you still need to file. This is a “silent trap.”
If you don’t file a “Nil Return,” the law provides that you’ll pay ₦100,000 for the first month and ₦50,000 for each following month until you comply.
Myth 11: “If I just write ‘food’ or ‘gifts’ in my bank narration, I won’t pay tax.”
Bank narrations are just words. Think about it: how long can a construction company keep marking huge payments as “food and gifts” before the NRS starts asking questions?
With advanced data analytics in 2026, patterns are easy to spot. Being smart about bank narrations won’t save you; staying on the right side of the law will.
Myth 12: “Landlords can charge VAT on all rent.”
This myth is leading to a lot of wrong charges. Under the Nigeria Tax Act, interest in land or buildings (which includes rent for shops, offices, or flats) is VAT-exempt. Don’t pay VAT on rent just because “everyone is doing it.” Follow the law, not WhatsApp advice.
Myth 13: “My workplace already deducts PAYE, so I’m tax-covered.”
This catches people with side hustles. PAYE only covers your salary. Any extra income outside employment must still be declared. If you ignore it, the NRS can link your BVN data to your tax profile and raise backdated assessments. Remember: PAYE handles your salary; you are responsible for everything else.
Final Thoughts: Why Proper Tax Advice Matters in 2026
Tax compliance in 2026 is no longer about guessing. Missteps can silently cost millions in penalties or denied deductions. Having a lawyer who understands the NTA 2025 helps you:
- Interpret the law correctly
- Structure transactions (like those catered lunches or software subs) properly
- Avoid the ₦100k “silent” filing penalties
Social media can spark awareness, but it cannot replace professional advice. In 2026, “I didn’t know” is no longer a defence.
Quick caveat:
This is tax advisory, not tax computation or filing services. We help you understand your obligations and available reliefs so you can stay on the right side of the law.
If you need clarity, structure, and peace of mind, you can click here to get started.
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