Human resources professionals, payroll officers, and private-sector executives have been urged to familiarise themselves with Nigeria’s new tax reforms and ensure full compliance.
The call was made during a Knowledge Sharing Session (KSS) hosted on Zoom by the Nigeria Employers’ Consultative Association (NECA). The session, titled “The Evening Before Tax Reforms Implementation: What Else to Know?”, featured Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, who outlined the rationale behind the reforms, their key provisions, and practical steps for employers and employees.
NECA’s Director-General, Mr. Adewale Smatt Oyerinde, welcomed Mr. Oyedele and commended the committee for its extensive stakeholder engagement. “In the history of stakeholder engagement in this country, I am not sure there has been any presidential or state committee, even the Constitutional Review Committee, that has engaged so widely, both vertically and horizontally,” he said. He cited initiatives such as content-creator and volunteer schemes designed to bring the conversation to grassroots Nigerians, and stressed that private-sector participation remains critical to the successful roll-out of the reforms.
Speaking on the theme, “The Evening Before Tax Reforms Implementation: What Else to Know?”, Mr. Oyedele emphasised that Nigeria’s tax system has long required urgent reform. “These reforms should have been done 20 years ago, and the next best time is now,” he said. He noted that the country’s tax architecture is complex, compliance levels are low, and public mistrust of government spending discourages voluntary payment.
Drawing on World Bank and national studies, he explained that many citizens avoid taxes because the system is cumbersome and, in some cases, vulnerable to corrupt practices. “If we want a nation where development works, we cannot have a tax system that fails,” he added, underscoring the crucial role of HR professionals in payroll administration and compliance management.
In clarifying what the reforms mean for different categories of workers, Mr. Oyedele stressed that retirees remain exempt from tax on pensions, retirement benefits, and voluntary contributions. However, he made it clear that retirees who choose to engage in income-generating activities such as consulting or business must pay tax like any other worker. “Even if you are retired, if you make money, you pay tax,” he said.
He also explained that employees are eligible to claim rent relief of up to ₦500,000, provided they can supply evidence such as bank transfers or receipts. He noted that HR and finance departments will need to work closely to gather this documentation in a way that minimises administrative burden for both staff and employers.
On the recurring issue of contract staffing, Mr. Oyedele clarified that individuals engaged in roles that constitute an employment relationship should not be placed under withholding tax. Instead, they must be taxed under the Pay As You Earn (PAYE) regime, just like formal employees. “If someone is working for you as an employee, even temporarily, the correct tax treatment is PAYE, not withholding tax,” he said. He advised employers to review the classification of temporary and outsourced staff to prevent penalties or retroactive tax assessments.
A major change introduced by the reforms is that every adult taxpayer must now file an annual tax return, regardless of whether PAYE is already deducted monthly. “PAYE alone is no longer enough. Filing is now compulsory for everyone, including salary-only employees,” Mr. Oyedele said. He urged HR departments to begin preparing employees who earn additional income—through side hustles, rental properties, freelance engagements, or digital platforms—to declare such earnings properly. He added that income below the taxable threshold will not attract tax but must still be declared to the authorities.
To protect taxpayers, the reforms also introduce a Tax Ombud Office, which workers and employers may approach at no cost to challenge wrongful tax assessments or instances of harassment. Describing this as a landmark development, Mr. Oyedele said: “For the first time, taxpayers, including workers, will have a defender.”
Addressing the spread of misinformation, he warned stakeholders not to rely on unqualified sources for guidance. “Use our website, email, and even social media, including TikTok, to understand the new tax laws,” he said. He explained that a QR code had been provided during the session to enable participants to download the new laws in a searchable PDF format.
Mr. Oyedele further noted that harmonising taxes and reducing liabilities represent meaningful progress for the country, even as concerns about government accountability persist. He encouraged HR professionals to play an active role in educating employees, ensuring proper compliance, and strengthening the link between tax payment and public accountability.
In his closing remarks, Mr. Oyerinde described the session as a “masterclass” for HR and business leaders. “We will continue to advocate for alignment with tax reforms and create platforms to share accurate information with stakeholders,” he said, stressing the long-term benefits for both employers and employees.
