Types and Penalty for Tax Evasion in Nigeria

Tax offences and penalties in nigeria

The impact of tax evasion on government revenue cannot be overemphasized. In Nigeria, there are fines and penalties of taxation for defaulters.

In this article, we will be discussing the types and penalty for tax evasion in Nigeria. See the penalties for non-remittance of withholding tax.

How do you evade tax? You evade taxes by attempting not to pay taxes or avoid to pay the tax one is owing by using illegal ways.

Read Also: How to Improve Tax Collection in Nigeria

Types and Penalty for Tax Evasion in Nigeria
Penalty for Tax Evasion in Nigeria: Photo Source: https://infoguidenigeria.com

All citizens, including businesses operating in Nigeria have the right of taking lawful responsibility of paying their taxes to government when due.

Therefore, refusing to pay one’s tax using illegal means is considered criminal act hence, it is offense that attracts serious punishment. See the full list of tax offences and penalties in Nigeria below.

Read Also: How to Start Taxify Business in Nigeria

What Are The Types Of Tax Evasion?

There are however, various types of tax evasion, as I will be explaining some of the common form of tax evasion here.

Provision Of False Information

One of the various types of tax evasion is the provision of information that is not correct and reliable. False information.

When an individual or business organization failed to give correct and accurate information about the cash income, that is a way of evading paying of tax.

Sometimes, when the cash income is reported to be less than the actual cash income. More so, if an individual or business organization decided to hide money in the foreign country or overseas accounts, that individual or business organization is actually evading tax payment. Infact, to claim tax deductions improperly is a way of trying to evade tax payment.

Unauthorized Deductions Of Business Expenses

When one’s expenses or business expenses are deducted without being authorized, it is an attempt to avoid payment of tax, which is considered criminal act.

One should not be taking unauthorized steps of deducing personal or business expenses on tax return otherwise, it is punishable offense.

Read Also: Personal Income Tax Rate in Nigeria

Charitable Deductions Inflation

Charitable deductions inflation is another way of evading tax payment. Therefore, one should not claimed falsely or inflate such deductions. Once there is inflation and false claims, when it comes to charitable deductions, that is a form of evasion of tax.

Filling False Tax Return

The act of filling tax return that is not correct and accurate is a form of  tax evasion. One should not provides false tax return otherwise, it is punishable by law.

Under Reporting Estate’s Value:

While providing information on the value of an estate, and what you are reporting is under reported, that is another form of tax evasion.

Omitting properties in the process of giving this reports, is punishable by law. More so, if in the reports, you are overestimating the actual value of these properties which for instance, are donated for charity purposes, you are evading tax.

Salaries Payments Without Proper Documentation

Business organizations may attempt to avoid paying of taxes, when they pay their workers, may be in cash, and refused to fill in proper returns. Such acts by business organizations are considered criminal acts and they are punishable.

Procedures To Effect Punishment

At the instance, where the Internal Revenue Service IRS discovered this criminal act, they will notifies the individual or business organization of this suspected criminal act with a phone calls and a letter and sometimes a visit.

The Internal Revenue Service may decides to impose punishment immediately, and or may decide to investigate. Through investigation, friends, and employers, and co-workers, and neighbour’s of the suspected criminal can be contacted.

When found guilty, the taxpayer who owed tax more than what is found on the tax return, meaning, he was consciously trying to evade tax, he will be punished. Even if such money is in foreign account, the Internal Revenue Service has a way of tracking it.

Read Also: Prospects And Problems Of Tax Administration In Nigeria

Types Of Punishments:

Crimes can be charged against anyone or business that evade tax. In this article, we are looking at the most pronounced charges against tax evaders in Nigeria. And these include:

Cheating On Taxes That Are Owed To Government

Although, tax evasion has a broad spectrum, when government is cheated of its tax revenue, it is considered as a felony.

And this criminal act attracts about five years imprisonment or the offender may be fined up to two hundred and fifty thousand dollars for individual, and five hundred thousand dollars for organization.

Filing False Return Or Misleading Information

If the information about tax return is false or misleading, it attracts punishment. And this happened, when individual or business organization provides information that is false or misleading on tax return.

This act is also considered as felony and attracts punishment of about three years imprisonment or a fine up to the tune of two hundred and fifty thousand dollars for individual, and five hundred thousand dollars for organization.

Failing To Fill Tax Return Or Not Filling At All:

If an individual or business organization fails to fill tax return or purposely refused to fill tax return is also a serious offense, though it attracts less punishment compared to the two mentioned earlier.

This offense carries a one year imprisonment or a fine up to the tune of one hundred thousand dollars for individual, and two hundred thousand dollars for organization.

How Taxpayer Could Be Considered

However, whatever may be the case, the taxpayer who committed any of the above criminal offenses, would be asked to ensure to pay all outstanding taxes owed to the government, including every legal fee.

Be that as it may, after the Internal Revenue service might have discovered the crime on the part of the tax payer, the taxpayer could be considered, if he decides to file in the  amended tax returns, and as well, begins to pay the debt out of his own volition, then the Internal Revenue Service would rather decides to suspend criminal charges. Also, the likelihood is that, the Internal Revenue Service IRS would forgive such taxpayer.

Read Also: How To Get Tax Identification Number In Nigeria


To evade tax is a crime, and it attracts punishment, according to tax law. Therefore,  it is obvious that the only way to prevent oneself from such embarrassment  is to obey the law, by ensuring that you exercise your civic responsibility.

If you cannot fill your tax return and file in on time, ask for an extension time and the Internal Revenue Service would grant you.

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Ifiokobong Ibanga

Ifiokobong Ibanga is the founder of InfoGuideNIgeria.com. You can get in touch with him on Instagram @ifiokobong. If you need a personal assistance on this topic, kindly send a message. Much Love!

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