How to claim Tax deduction in Nigeria

Paying taxes is an essential civic duty, but that doesn’t mean you should pay more than you legally owe. For many Nigerians—whether you’re an employee under the PAYE system, a freelancer, or a small business owner—understanding tax deductions can make a big difference in how much you take home each year.

Sadly, most people miss out on legitimate deductions simply because they don’t know what they qualify for or how to claim them.

If you’re wondering how to claim tax deduction in Nigeria, this guide will show you everything you need to know. From identifying allowable expenses to filing your claims correctly with the Federal Inland Revenue Service (FIRS), we’ll break down the process step by step.

By the end, you’ll not only understand your rights as a taxpayer but also learn how to save money while staying fully compliant with Nigerian tax laws.

What Is a Tax Deduction?

A tax deduction is simply an expense you can subtract from your total income before calculating how much tax you owe. In other words, it reduces the portion of your income that is subject to tax. The lower your taxable income, the less tax you’ll be required to pay.

For example, if you earn ₦5,000,000 in a year and you have ₦500,000 in approved deductions—such as pension contributions, health insurance, or charitable donations—you’ll only be taxed on ₦4,500,000.

In Nigeria, tax deductions are recognized by the Federal Inland Revenue Service (FIRS) and the State Internal Revenue Services (SIRS) under the Personal Income Tax Act (PITA).

These deductions are designed to encourage savings, investments, and responsible financial behavior among individuals and businesses.

Understanding how tax deductions work is the first step toward paying the right amount of tax—not more than you should, and not less than required by law.

Types of Tax Deductions in Nigeria

Understanding the different types of tax deductions in Nigeria is key to maximizing your legal savings and ensuring full compliance with tax regulations.

Both individuals and businesses are eligible for certain deductions, depending on their income source and nature of expenses. Below are the main categories of deductions you should know.

1. Personal Income Tax Deductions in Nigeria

Individuals who earn salaries or wages under the PAYE (Pay As You Earn) system are entitled to specific tax reliefs and deductions recognized by the Personal Income Tax Act (PITA). These deductions help reduce taxable income and ensure employees are not overtaxed.

Common personal tax deductions include:

• Pension Contributions: Monthly payments made to an approved pension fund are fully tax-deductible.

• National Housing Fund (NHF): Contributions to the NHF are deductible from taxable income.

• Life Insurance Premiums: Premiums paid for life assurance policies are allowable deductions.

• National Health Insurance Scheme (NHIS): Payments toward health insurance are often deductible under approved schemes.

• Donations to Approved Charities: Contributions to organizations approved by the government or FIRS are tax-deductible.

• Mortgage Interest Payments: If applicable, interest paid on a mortgage for your primary residence may qualify as a deduction.

These deductions not only lower your taxable income but also encourage long-term savings and financial security.

2. Corporate Tax Deductions for Businesses

Businesses registered in Nigeria under the Companies Income Tax Act (CITA) are also entitled to claim deductions for certain allowable expenses. These deductions are meant to ensure that only profits, not operational costs, are taxed.

Common corporate tax deductions include:

• Employee Salaries and Wages

• Rent and Utilities for Business Premises

• Depreciation of Business Assets (Capital Allowances)

• Interest on Business Loans

• Staff Training and Development Expenses

• Donations to Approved Charitable Organizations

• Research and Development (R&D) Expenses

By claiming legitimate business deductions, companies can significantly reduce their corporate income tax obligations while reinvesting saved funds into growth and expansion.

3. Allowable Deductions under the Personal Income Tax Act (PITA)

The Personal Income Tax Act (PITA) outlines several deductions and reliefs that apply to individuals in both the public and private sectors. These allowable deductions include:

• Consolidated Relief Allowance (CRA): 20% of gross income plus ₦200,000 (whichever is higher).

• Pension Contributions (as mentioned earlier).

• National Housing Fund (NHF) Contributions.

• National Health Insurance Premiums.

• Life Assurance Premiums.

• Approved Donations and Charitable Contributions.

These provisions are specifically designed to make tax payments fair and proportionate to a taxpayer’s ability to pay.

By taking advantage of these tax deductions in Nigeria, individuals and businesses can reduce their tax liability legally and efficiently. Understanding what qualifies as a deductible expense ensures that you pay only what’s required—nothing more, nothing less.

Who Can Claim Tax Deductions in Nigeria?

Tax deductions in Nigeria are not limited to large corporations—every taxpayer has the right to claim allowable deductions, provided they meet the necessary requirements.

Whether you’re an employee, entrepreneur, or freelancer, understanding your eligibility can help you make the most of available tax benefits.

1. Employees under PAYE

If you work for an organization and your employer deducts Pay As You Earn (PAYE) tax from your salary, you are entitled to specific tax reliefs and deductions.

These include pension contributions, National Housing Fund (NHF) payments, life insurance premiums, and other statutory deductions recognized by the Personal Income Tax Act (PITA).

Your employer usually processes these deductions on your behalf, but it’s still important to review your payslip and ensure all allowable deductions are accurately applied.

2. Self-Employed Individuals

Self-employed Nigerians—such as artisans, traders, and professionals—can also claim tax deductions for expenses directly related to their business operations.

For instance, costs such as rent for office space, tools, professional fees, or transportation used for business purposes can be deducted from total income before calculating tax.

Proper record-keeping and receipts are essential to support these claims when filing your self-assessment tax returns with the Federal Inland Revenue Service (FIRS) or your State IRS.

3. Small Business Owners

Registered business owners, whether operating as a sole proprietorship, partnership, or limited liability company, can also take advantage of allowable deductions. Business expenses such as salaries, utilities, equipment purchases, and interest on business loans are legitimate deductions under Nigerian tax law.

For small and medium-sized enterprises (SMEs), claiming these deductions can make a huge difference in managing cash flow and staying compliant with Companies Income Tax (CIT) regulations.

4. Freelancers and Consultants

Freelancers, remote workers, and independent consultants—especially those earning income from multiple clients—are also eligible to claim deductions. Expenses such as internet costs, software subscriptions, office supplies, and business travel can all be deducted from total income before tax is computed.

Since freelancers often handle their own tax filings, keeping a clear record of invoices and receipts is crucial for a successful tax deduction claim.

Whether you’re an employee or a small business owner, knowing how to claim tax deduction in Nigeria can significantly reduce your annual tax burden. By understanding your eligibility and maintaining accurate documentation, you can ensure that you only pay the right amount of tax—no more, no less.

How to Claim Tax Deduction in Nigeria (Step-by-Step)

Claiming a tax deduction in Nigeria doesn’t have to be complicated. Whether you’re filing as an employee, freelancer, or business owner, following the right process ensures that your deductions are accepted and you stay compliant with tax laws.

Here’s a simple step-by-step guide on how to claim tax deduction in Nigeria:

1. Gather All Relevant Receipts and Documentation

The first step is to collect every document that proves your eligible expenses. This includes receipts for pension contributions, life insurance premiums, rent, donations, professional fees, or business expenses.

Keeping a well-organized record will make it easier to validate your claims during tax filing or in case of an audit by the Federal Inland Revenue Service (FIRS).

2. Identify Eligible Deductions Based on Your Income Type

Next, determine which deductions apply to you.

• Employees (PAYE): Pension, NHF, NHIS, and life insurance premiums.

• Self-Employed / Business Owners: Rent, utilities, professional expenses, equipment, and donations.
  Refer to the Personal Income Tax Act (PITA) or Companies Income Tax Act (CITA) to confirm allowable deductions that apply to your category.

3. Fill Out Your Tax Return Correctly via FIRS or State IRS Portal

Once you’ve identified your deductions, you’ll need to declare them accurately when filing your tax return.

• For federal taxes and businesses: Use the FIRS eTax portal → https://etax.firs.gov.ng

• For individual and PAYE taxpayers: File through your State Internal Revenue Service (SIRS) or the Joint Tax Board (JTB) online portal, if available.

Be sure to enter the correct figures for your income and deductions to avoid errors or penalties.

4. Attach Supporting Documents

Attach scanned copies or physical versions (where required) of your supporting documents such as receipts, payment proofs, invoices, and donation acknowledgements. These documents serve as evidence for your deduction claims and help verify your eligibility during tax review.

5. Submit and Follow Up for Confirmation

After submitting your tax return, keep your acknowledgement slip or digital confirmation. Follow up with the FIRS or State IRS to ensure your deductions have been accepted and processed correctly.

In some cases, the authorities may request additional clarification or documentation—respond promptly to avoid delays.

By following these steps, you can legally reduce your taxable income and ensure compliance with Nigerian tax regulations. Remember, accurate records and honesty in your declarations are key to a successful claim.

Common Mistakes to Avoid When Claiming Tax Deductions in Nigeria

Even though claiming tax deductions can significantly reduce your taxable income, many Nigerians make avoidable mistakes that lead to penalties or rejection of their claims. Understanding these common tax filing mistakes in Nigeria will help you stay compliant and make the most of your legal tax benefits.

1. Not Keeping Receipts and Proof of Payment

One of the most common tax filing mistakes is failing to keep receipts and other proof of payment for deductible expenses. Every deduction must be backed by credible documentation—such as receipts, invoices, or contribution statements.

Without these, your claim may be disallowed during an audit by the Federal Inland Revenue Service (FIRS) or your State Internal Revenue Service (SIRS).

Tip: Always store digital copies of your receipts or use an expense-tracking app to organize your financial records.

2. Claiming Non-Allowable Expenses

Not all expenses qualify for tax deductions in Nigeria. Many taxpayers mistakenly try to deduct personal or non-business-related expenses—such as family vacations, personal gifts, or private medical bills.

Only expenses that are “wholly, exclusively, necessarily, and reasonably incurred” in earning your income are tax-deductible under Nigerian tax laws.

Tip: Always cross-check your expenses with the Personal Income Tax Act (PITA) or Companies Income Tax Act (CITA) before filing.

3. Late Submission of Tax Returns

Filing your tax returns after the official deadline can result in penalties, interest charges, and even legal action. Whether you file through the FIRS eTax portal or your State IRS, it’s essential to submit your returns on time to stay compliant.

Tip: Mark tax filing deadlines on your calendar (usually March 31st for individuals) and file early to avoid last-minute issues.

4. Failing to Declare All Sources of Income

Another major mistake is not reporting all your income sources—especially for freelancers and business owners who earn from multiple clients or side jobs. Undeclared income is considered tax evasion and can attract heavy fines or audits.

Tip: Declare every legitimate source of income, even if you earn it part-time or online, to maintain full transparency with tax authorities.

By avoiding these common tax filing mistakes in Nigeria, you’ll not only make your tax deduction claims smoother but also protect yourself from unnecessary penalties and compliance issues. Proper record-keeping, timely filing, and honesty are the keys to stress-free tax management.

Benefits of Claiming Tax Deductions in Nigeria

Many Nigerians overlook the importance of claiming eligible tax deductions, missing out on opportunities to legally reduce their tax bills and improve their financial stability. Understanding the benefits can motivate individuals and businesses to take advantage of every allowable deduction under Nigerian tax laws.

1. Reduced Tax Liability

The most obvious benefit of claiming tax deductions is a lower tax liability. By deducting allowable expenses such as pension contributions, donations, or business costs, you reduce the portion of your income that is subject to tax.

This means you’ll pay less tax overall, freeing up more of your income for savings or reinvestment.

2. Better Cash Flow

When you pay less tax, you retain more money in your business or personal account, improving your cash flow. This extra cash can be used to cover operating costs, expand your business, or invest in other financial goals.

For small business owners and freelancers, improved cash flow can be the difference between growth and financial strain.

3. Legal Compliance

Claiming legitimate tax deductions helps ensure that you stay fully compliant with Nigerian tax regulations, especially those set by the Federal Inland Revenue Service (FIRS) and State Internal Revenue Services (SIRS).

Instead of avoiding taxes or underreporting income, which can lead to penalties, deductions allow you to save money legally while fulfilling your civic duty.

4. Business Credibility

For registered businesses, proper tax filing and deduction claims enhance credibility and transparency. Companies with accurate tax records are more likely to attract investors, qualify for loans, and win government contracts.

Maintaining compliant tax practices also builds a trustworthy reputation with clients and financial institutions.

By learning how to claim tax deduction in Nigeria, you can save more money while staying compliant with FIRS laws. Taking advantage of these benefits not only improves your financial health but also strengthens your long-term business or professional reputation.

Frequently Asked Questions

What Documents Do I Need to Claim Tax Deductions in Nigeria?

To claim tax deductions in Nigeria, individuals and businesses must present relevant financial and administrative documents that validate their income, expenses, and contributions. These records serve as evidence that deductions claimed are legitimate under Nigerian tax laws.

The Federal Inland Revenue Service (FIRS) and the State Internal Revenue Service (SIRS) require that taxpayers maintain proper documentation to ensure accuracy and compliance.

First, taxpayers need proof of income. This includes payslips, employment contracts, invoices (for self-employed persons or freelancers), and statements of account showing payments received.

These documents verify how much income was earned during the assessment year and help determine the taxable amount before deductions are applied.

Second, it is essential to provide receipts and records of deductible expenses. For individuals, this may include receipts for rent paid (if applicable to housing allowances), medical expenses, or educational costs that qualify for relief under the Personal Income Tax Act (PITA).

For businesses and self-employed individuals, deductible expenses could cover operating costs, utilities, transportation, and business equipment purchases. The key requirement is that these expenses must be “wholly, reasonably, exclusively, and necessarily” incurred in generating income.

Third, documentation for statutory contributions and reliefs is important. This includes proof of pension contributions, National Housing Fund (NHF) deductions, National Health Insurance Scheme (NHIS) payments, and life assurance premiums.

Payslips and deduction statements usually provide this evidence, but where an employer fails to remit contributions, a personal receipt or confirmation letter from the pension administrator can be used.

Additionally, bank statements and financial summaries should be kept. These provide a full picture of the taxpayer’s cash inflows and outflows and support any claims for deductions.

Businesses are also expected to keep audited financial statements, tax clearance certificates, and VAT returns to establish transparency.

Finally, identification documents such as a Tax Identification Number (TIN), employment ID, or Corporate Affairs Commission (CAC) registration documents (for businesses) must accompany tax submissions. These ensure the taxpayer’s identity and business legitimacy.

In summary, accurate recordkeeping is crucial. Keeping organized files of receipts, invoices, pension slips, and other related documents ensures that deductions can be easily verified.

Failure to produce these documents may result in disallowed deductions or penalties. Maintaining clear, accessible records simplifies tax filing, strengthens compliance, and helps taxpayers maximize their eligible deductions in Nigeria.

Can Freelancers Claim Tax Deductions in Nigeria?

Yes, freelancers in Nigeria are legally allowed to claim tax deductions, provided they meet the requirements set out by the Federal Inland Revenue Service (FIRS) and relevant state tax authorities.

Under the Personal Income Tax Act (PITA), freelancers are treated as self-employed individuals or sole proprietors. This means they are responsible for reporting their own income, paying taxes, and claiming deductions related to their business expenses.

Freelancers typically earn income from multiple clients rather than a single employer. Because of this, they can claim deductions for expenses that are directly related to their work. These deductions help reduce the total taxable income, ensuring that taxes are paid only on actual profits rather than gross earnings.

Examples of deductible expenses for freelancers include internet subscriptions, professional software, office rent, stationery, business calls, and equipment like laptops or cameras.

Transportation costs to client meetings or job sites can also be deducted if they are directly linked to work activities. The golden rule is that expenses must be “wholly, exclusively, reasonably, and necessarily” incurred in the process of earning income.

Freelancers must maintain accurate records of these expenses. Receipts, invoices, and proof of payments are essential for verification. In addition, keeping a simple bookkeeping system or hiring an accountant can make the process smoother.

At the end of the tax year, freelancers should file an annual self-assessment return to FIRS or the relevant State Internal Revenue Service, depending on their place of residence.

Moreover, freelancers can also claim statutory reliefs such as pension contributions, National Housing Fund (NHF) deductions, and life assurance premiums if they participate in these schemes. Although these are optional for freelancers, they offer both financial security and tax benefits.

Failure to declare income or to pay taxes can lead to penalties or loss of credibility with clients, especially when larger organizations require tax clearance certificates before contracting. Therefore, it is advisable for freelancers to register for a Tax Identification Number (TIN) and comply with tax regulations.

In conclusion, freelancers in Nigeria can absolutely claim tax deductions, but they must ensure proper documentation and honesty in reporting. Doing so not only reduces their tax liability but also strengthens their professional standing and compliance record with Nigerian tax authorities.

When Is the Deadline for Tax Filing in Nigeria?

The official deadline for tax filing in Nigeria depends on the type of taxpayer and the nature of the income being reported.

Generally, for individuals and self-employed persons, the deadline for filing annual income tax returns is March 31st of every year, covering income earned in the preceding calendar year. For example, income earned in 2024 should be reported by March 31, 2025.

Under the Personal Income Tax Act (PITA), all taxable individuals, including freelancers, professionals, and business owners, must submit their annual returns to the relevant State Internal Revenue Service (SIRS).

Employees who earn income solely through a company are often covered under the Pay-As-You-Earn (PAYE) system, where their employer handles tax deductions.

However, if such employees have additional sources of income—like rent, consulting, or investments—they must also file personal tax returns by the March 31 deadline.

For companies, the situation is slightly different. Under the Companies Income Tax Act (CITA), companies must file their annual returns within six months after the end of their financial year.

For instance, a company whose financial year ends on December 31 must file its tax returns by June 30 of the following year. If a company has a different accounting year, the six-month rule still applies.

It is important to note that late filing attracts penalties and interest. For individuals, failure to file by the March 31 deadline can result in fines, while companies may face monetary penalties and difficulties obtaining a Tax Clearance Certificate (TCC).

This certificate is vital for government contracts, tenders, and certain business transactions.

To simplify the process, taxpayers can now file returns electronically through the FIRS TaxPro Max portal or their state’s online tax platform. These platforms allow users to declare income, submit forms, and make payments conveniently.

In essence, Nigerian taxpayers must pay attention to deadlines to avoid penalties and maintain compliance. Filing on time reflects professionalism, financial discipline, and good citizenship.

Is Pension Contribution Tax-Deductible in Nigeria?

Yes, pension contributions are fully tax-deductible in Nigeria. Both employers and employees benefit from this provision, which is designed to encourage long-term savings and financial security.

Under the Pension Reform Act (PRA) 2014, contributions made to a registered pension fund administrator (PFA) are exempt from tax deductions at the time of payment.

For employees, pension contributions are automatically deducted from their monthly salaries under the Contributory Pension Scheme (CPS). Typically, an employee contributes 8% of their monthly emolument (basic salary, housing, and transport allowances), while the employer contributes 10%, making a total of 18%.

The employee’s share of this contribution is deductible from taxable income, meaning it reduces the amount on which personal income tax is calculated.

For self-employed individuals and freelancers, voluntary pension contributions are also tax-deductible, provided the contributions are made to an approved Pension Fund Administrator (PFA). This allows individuals without formal employment to enjoy the same tax reliefs as salaried workers.

However, voluntary contributions must comply with the rules set by the National Pension Commission (PenCom) to qualify for tax deductions.

It is important to note that while contributions are tax-free, withdrawals made before the age of 50 or before retirement may attract tax, unless certain conditions are met. Withdrawals after retirement remain tax-free, provided they come from a legitimate pension account.

From a corporate standpoint, employers’ pension contributions are also recognized as allowable business expenses, which means they can be deducted when calculating company income tax. This provides a dual benefit—supporting employee welfare and reducing the employer’s overall tax burden.

In conclusion, pension contributions serve as both a financial safety net and a tax-saving mechanism. Employees, freelancers, and employers are encouraged to participate actively in the pension scheme to maximize these advantages.

Proper documentation from the Pension Fund Administrator, including monthly statements or remittance confirmations, should be kept as proof of compliance and for future tax filing purposes.

What Is the Value Added Tax (VAT) System in Nigeria and How Does It Work?

The Value Added Tax (VAT) system in Nigeria is a consumption tax imposed on goods and services at each stage of production and distribution. It is governed by the Value Added Tax Act, Cap V1, Laws of the Federation of Nigeria 2004, as amended.

The tax is administered by the Federal Inland Revenue Service (FIRS), and its primary purpose is to generate revenue for the government while ensuring a fair contribution from consumers who purchase taxable goods and services.

In Nigeria, VAT operates as a multi-stage tax, meaning it is charged at every point in the supply chain—from manufacturers to wholesalers, retailers, and finally, to consumers.

However, the actual tax burden is borne by the final consumer. Businesses that collect VAT are simply acting as agents of the FIRS.

They are required to charge VAT on sales (known as output VAT) and can deduct VAT paid on their purchases (known as input VAT). The difference between output VAT and input VAT is what they remit to the government.

As of the latest amendment in 2020, the standard VAT rate in Nigeria is 7.5%. This rate applies to most goods and services, except for those specifically exempted or zero-rated.

Exempted goods and services include basic food items (such as rice, beans, and yam), medical services, educational materials, rent on residential properties, and exported goods.

On the other hand, zero-rated items are taxable but attract a 0% VAT rate, meaning exporters can reclaim the VAT paid on inputs without charging VAT on the exported goods.

All businesses with an annual turnover of ₦25 million or more are required to register for VAT with the FIRS and obtain a Tax Identification Number (TIN).

Businesses below this threshold are exempt from charging VAT but may still be required to pay VAT on their purchases. Registered businesses must file VAT returns monthly, usually by the 21st day of the following month, even if there were no transactions during the period.

Non-compliance with VAT regulations attracts penalties. Failure to register, charge, or remit VAT on time can lead to fines and legal action. For example, late filing incurs a penalty of ₦50,000 for the first month and ₦25,000 for each subsequent month of default.

In summary, the Nigerian VAT system ensures that the government earns revenue efficiently through consumption. Businesses must keep accurate VAT records and ensure timely remittance to maintain compliance and avoid sanctions.

What Is the Role of the Federal Inland Revenue Service (FIRS) in Nigeria?

The Federal Inland Revenue Service (FIRS) is Nigeria’s primary tax authority responsible for assessing, collecting, and accounting for taxes and other revenues on behalf of the federal government.

It operates under the FIRS Establishment Act of 2007, which provides it with the authority to administer federal taxes, enforce compliance, and promote tax education and transparency across the country.

The main function of the FIRS is to collect federally administered taxes, including Company Income Tax (CIT), Value Added Tax (VAT), Petroleum Profit Tax (PPT), Capital Gains Tax (CGT), and Stamp Duties.

These taxes form a significant portion of Nigeria’s internally generated revenue and are used to fund public infrastructure, education, healthcare, and other national development projects.

Beyond revenue collection, the FIRS also has a regulatory and enforcement role. It monitors taxpayers to ensure they comply with tax laws and regulations. The agency conducts tax audits, investigates evasion cases, and imposes penalties for defaulting individuals or businesses.

Through digital innovations like the TaxPro Max platform, the FIRS has modernized its operations, allowing taxpayers to register, file, and pay taxes online—making compliance more convenient and transparent.

Another critical role of the FIRS is taxpayer education and public enlightenment. It organizes seminars, awareness programs, and online campaigns to inform Nigerians about their tax obligations, rights, and benefits. This helps to reduce ignorance-related defaults and promote voluntary compliance.

The FIRS also plays an advisory role to the federal government, recommending tax reforms and policies to improve the efficiency and fairness of Nigeria’s tax system.

It collaborates with state tax authorities, international organizations, and the Joint Tax Board (JTB) to ensure harmony between federal and state tax systems.

Furthermore, the FIRS ensures Nigeria complies with international taxation standards. This includes overseeing the implementation of transfer pricing regulations, which prevent multinational corporations from shifting profits out of Nigeria to evade taxes.

In essence, the FIRS is more than just a collection agency—it is a vital institution ensuring accountability, fairness, and transparency in Nigeria’s fiscal system. Its work sustains government operations and contributes to economic stability and national development.

What Happens If I Fail to Pay or File Taxes in Nigeria?

Failing to pay or file taxes in Nigeria is considered a violation of the country’s tax laws and can lead to serious consequences, including financial penalties, interest charges, and even legal prosecution.

The Federal Inland Revenue Service (FIRS) and State Internal Revenue Services (SIRS) both have the legal authority to enforce compliance and recover unpaid taxes.

For individuals, failure to file a tax return by the deadline (March 31 for personal income tax) may attract fines as stipulated under the Personal Income Tax Act (PITA). The typical penalty includes a fine of ₦5,000 for late filing, followed by ₦100 per day for continued default.

Additionally, if a taxpayer deliberately understates income or provides false information, the authorities may impose more severe penalties, including back taxes and interest on the unpaid amount.

For companies, the consequences are heavier. Under the Companies Income Tax Act (CITA), late filing of returns attracts a penalty of ₦25,000 for the first month and ₦5,000 for every subsequent month of default.

Failure to remit Value Added Tax (VAT) or Withholding Tax (WHT) can also attract interest of 10% per annum and additional fines.

In extreme cases, persistent tax evasion may lead to the sealing of business premises, freezing of bank accounts, or even prosecution. The FIRS and SIRS have the power to obtain court orders to recover taxes from defaulters and to publish the names of chronic offenders.

Beyond penalties, failure to file or pay taxes can also damage a person’s or business’s reputation. In Nigeria, a valid Tax Clearance Certificate (TCC) is required for several official and business transactions, including government contracts, business registration renewals, and visa applications.

Without a TCC, individuals and companies lose access to many economic opportunities.

To avoid these consequences, taxpayers should file and pay taxes promptly. Even if one cannot pay the full amount owed, it is advisable to file returns and negotiate payment arrangements with the authorities. Timely compliance not only prevents penalties but also reflects integrity and responsible citizenship.

Are Charitable Donations Tax-Deductible in Nigeria?

Yes, charitable donations can be tax-deductible in Nigeria, but only if certain conditions are met. The Companies Income Tax Act (CITA) and the Personal Income Tax Act (PITA) both provide for tax relief on donations made to approved charitable organizations, educational institutions, or public bodies.

This incentive encourages individuals and corporations to contribute to social development through philanthropy.

However, not every donation qualifies for deduction. To be eligible, the donation must be made to an organization that is approved by the Federal Government or recognized by the Federal Inland Revenue Service (FIRS) as a public benefit organization.

These include educational institutions, hospitals, religious organizations (for charitable purposes), and registered non-governmental organizations (NGOs) involved in health, education, or community development.

For companies, allowable donations are typically limited to a maximum of 10% of the company’s total profits for that year. Any donation exceeding that percentage is not deductible.

The donations must also be made in cash or kind (for example, medical equipment, books, or food supplies), and must be supported by official receipts and acknowledgment letters from the beneficiary organization.

For individual taxpayers, deductions for charitable donations are less formalized but may still be recognized under PITA if the contributions meet similar criteria—specifically, if they are directed toward approved charitable or educational causes.

To claim these deductions, donors must keep documentary evidence, including payment receipts, bank transfer confirmations, and acknowledgment letters.

These documents should state the name and registration number of the organization, the amount donated, and the date of payment. Without proper documentation, the claim for deduction may be disallowed.

In summary, while Nigeria’s tax system encourages charitable giving, only donations to approved and recognized institutions qualify for deductions. Taxpayers are advised to verify the status of the beneficiary organization before making contributions and to keep detailed records for tax purposes.

How Can Small Businesses Reduce Their Tax Burden Legally in Nigeria?

Small businesses in Nigeria can legally reduce their tax burden by taking advantage of the reliefs, incentives, and exemptions provided under Nigerian tax laws. The goal is not to evade taxes but to minimize liability through strategic and lawful means.

One effective approach is to keep accurate financial records. Proper bookkeeping helps business owners identify deductible expenses such as rent, utilities, salaries, business travel, and professional services.

These expenses, when properly documented, reduce taxable income. The law allows deductions for costs that are “wholly, reasonably, exclusively, and necessarily” incurred in the process of earning income.

Another strategy is to take advantage of tax incentives for small and medium enterprises (SMEs). Under the Finance Act, businesses with an annual turnover below ₦25 million are completely exempt from Company Income Tax (CIT).

Those with turnover between ₦25 million and ₦100 million pay only 20% CIT instead of the standard 30%. This tiered system ensures that smaller enterprises are not overburdened.

Additionally, small businesses can benefit from capital allowances, which allow deductions for depreciation on fixed assets like machinery and vehicles. They can also register under pioneer status if they operate in sectors deemed important to national development, enjoying up to five years of tax holidays.

Participating in approved pension schemes, National Housing Fund (NHF) contributions, and health insurance also provides tax relief. These contributions are deductible, reducing the company’s taxable income while improving employee welfare.

Finally, businesses should ensure timely filing of tax returns and avoid penalties. Engaging professional tax consultants or accountants can help identify potential reliefs and maintain compliance.

In conclusion, small businesses can reduce their tax burden legally by planning wisely, keeping proper records, and leveraging available incentives. Doing so enhances profitability, promotes sustainability, and supports compliance with Nigeria’s evolving tax system.

How Do You Claim Deductions on Your Taxes?

Claiming tax deductions in Nigeria involves a structured process of identifying allowable expenses, gathering supporting documentation, and accurately reporting them in your tax return.

The purpose of deductions is to reduce your total taxable income so that you only pay tax on your actual net income, not on your gross earnings.

To claim deductions, the first step is understanding what qualifies as a deductible expense under Nigerian tax law. The Personal Income Tax Act (PITA) and the Companies Income Tax Act (CITA) specify the allowable deductions.

For individuals, these include pension contributions, National Housing Fund (NHF) payments, National Health Insurance Scheme (NHIS) contributions, life assurance premiums, and donations to approved charities.

For self-employed persons or business owners, deductible expenses may include business rent, transportation costs, professional fees, salaries, and utilities directly related to income generation.

Next, it’s important to gather proper documentation. This includes receipts, invoices, payslips, and contribution statements. For example, an employee can use payslips showing pension and NHF deductions, while a freelancer might provide bank statements and business expense receipts.

These documents serve as proof when filing with the Federal Inland Revenue Service (FIRS) or State Internal Revenue Service (SIRS).

When it’s time to file your tax return, you’ll report your income and itemize all applicable deductions on your self-assessment form (for individuals) or your company income tax return (for businesses).

Most taxpayers now file online using platforms such as the FIRS TaxPro Max portal, which allows deductions to be entered digitally and supported by uploaded evidence.

Once deductions are properly entered and verified, they are subtracted from your total income to determine your taxable income. This process ensures that you are not overpaying taxes. In some cases, excess deductions may lead to a tax refund, especially when withholding tax or PAYE deductions exceed the final tax liability.

In summary, claiming deductions in Nigeria is a matter of being organized and compliant. Keep detailed records, understand allowable expenses, and submit them accurately during filing. This approach helps reduce your tax burden while maintaining transparency and legal compliance.

How Is Tax Deducted from Salary in Nigeria?

Tax deduction from salary in Nigeria follows the Pay-As-You-Earn (PAYE) system, which is a mandatory tax collection method under the Personal Income Tax Act (PITA).

This system ensures that income tax is deducted directly from employees’ monthly salaries by their employers before payment is made. The deducted tax is then remitted to the relevant State Internal Revenue Service (SIRS), depending on the employee’s place of residence.

Under PAYE, every employer acts as a tax collection agent for the government. Each month, employers calculate the gross income of employees, which includes basic salary, housing allowance, transport allowance, and other benefits.

From this gross income, certain statutory deductions are made before calculating the taxable amount. These include pension contributions (8% of salary), NHF contributions (2.5%), life assurance premiums, and National Health Insurance Scheme payments.

After allowable deductions are subtracted, the taxable income is determined. The applicable tax rate is then calculated using Nigeria’s graduated tax bands, which range from 7% to 24% depending on income level.

For example, lower earners pay 7%, while higher-income individuals may pay up to 24%. The employer withholds this amount and remits it monthly to the tax authorities using official payment channels.

Employees are required to obtain an annual tax deduction card or statement from their employer. This document shows all income earned and tax withheld for the year.

At the end of the fiscal year (usually by March 31st), the employee or employer submits an annual return confirming that all PAYE taxes have been deducted and remitted appropriately.

In essence, PAYE simplifies the tax process by automating deductions at the source. Employees don’t have to worry about manual payments, and it helps ensure steady revenue for the government.

However, employees with multiple income sources—like rental or freelance income—must still file additional self-assessment tax returns to declare those earnings.

How to Claim Tax Relief on a Tax Return?

Claiming tax relief on a tax return in Nigeria involves identifying the reliefs you qualify for, documenting them, and accurately declaring them when filing your returns with the FIRS or SIRS. Tax reliefs are legal allowances provided by law to reduce an individual’s taxable income and promote fairness in taxation.

The main types of relief available under the Personal Income Tax Act (PITA) include Consolidated Relief Allowance (CRA), child allowance, dependent relative allowance, life assurance premium relief, and pension contributions.

The Consolidated Relief Allowance is the most significant, providing either ₦200,000 or 1% of gross income (whichever is higher), plus 20% of gross income as a standard deduction.

To claim these reliefs, the taxpayer must have proof of eligibility and supporting documents. For example, proof of life assurance comes in the form of premium payment receipts; dependent allowances may require evidence of family relationships or school fees for dependents.

Employers typically help employees apply these reliefs automatically when calculating PAYE deductions.

However, individuals who earn income outside of employment—such as consultants, traders, or freelancers—must manually apply these reliefs when filing their self-assessment returns. The process involves filling out the appropriate sections of the tax return form and attaching necessary documentation.

The FIRS TaxPro Max and state tax portals have simplified this process digitally. Taxpayers can input their relief details, upload documents, and have the system automatically calculate the reduced tax liability.

It’s important to note that reliefs must be claimed within the same assessment year in which the income was earned. Any unclaimed reliefs do not roll over to future years.

In short, to claim tax relief effectively, keep proper records, understand the reliefs you qualify for, and ensure they are reflected accurately in your return. Doing so will lower your tax burden while maintaining full compliance with Nigerian tax regulations.

How Do I Claim My Standard Deduction?

In Nigeria, the standard deduction for individuals is primarily covered under the Consolidated Relief Allowance (CRA), which simplifies the process of reducing taxable income without itemizing every expense.

This allowance ensures fairness by automatically granting a base level of tax relief to all taxpayers, regardless of their income source.

To claim your standard deduction, the first step is to ensure you are a registered taxpayer with a valid Tax Identification Number (TIN). Employees are usually covered under the PAYE system, where employers automatically apply this deduction.

For self-employed individuals or freelancers, the standard deduction must be claimed manually during self-assessment filing.

The CRA formula is straightforward: every taxpayer is entitled to ₦200,000 or 1% of gross income (whichever is higher) plus 20% of gross income. This amount is deducted from the total earnings before applying tax rates.

For example, if a taxpayer earns ₦3,000,000 annually, their CRA would be ₦200,000 (since it’s higher than 1%) plus 20% of ₦3,000,000 (₦600,000), totaling ₦800,000 as the standard deduction. The remaining ₦2,200,000 becomes the taxable income.

The standard deduction is automatically factored into most payroll systems for employees. However, individuals with other sources of income must declare it themselves during their annual filing. They must fill in the CRA section of the self-assessment form or online portal.

Maintaining documentation such as payslips, pension statements, and NHF records helps verify the accuracy of deductions during audits or reviews. The CRA system ensures equitable taxation, reducing the burden on lower-income earners while maintaining compliance with Nigerian law.

How Do I Claim Tax Deductions?

Claiming tax deductions in Nigeria requires identifying eligible expenses, maintaining accurate documentation, and filing them correctly in your tax return. The goal is to ensure that the taxable amount reflects only actual profits or income after legitimate business or personal expenses are accounted for.

For employees, deductions are usually handled by employers through the PAYE system. Deductions such as pension contributions, NHF, and NHIS payments are made before tax is calculated.

These deductions reduce taxable income automatically, so employees rarely need to take further action unless they have additional income sources.

For self-employed individuals and business owners, claiming deductions involves more hands-on filing. They must identify all allowable business expenses such as rent, utilities, professional services, fuel, internet costs, and office supplies.

Each expense must meet the legal standard of being “wholly, reasonably, exclusively, and necessarily incurred” in earning income.

During annual filing, these deductions are entered in the appropriate section of the self-assessment form. Receipts, invoices, and proof of payment must be attached or retained for verification.

Digital filing platforms like TaxPro Max allow taxpayers to upload supporting documents and automatically compute taxable income after deductions.

Proper documentation cannot be overemphasized. The FIRS requires evidence to validate all deduction claims. Without proof, deductions may be disallowed, leading to higher tax liability or penalties.

In conclusion, claiming deductions is about compliance and organization. By keeping detailed records, understanding what qualifies, and filing accurately, taxpayers in Nigeria can legally minimize their tax obligations and stay in good standing with the authorities.

Where Do I Enter My Deductions?

When filing your taxes in Nigeria, the place where you enter your deductions depends on how you are filing—whether through your employer under the PAYE system or through self-assessment as a self-employed individual or business owner.

If you are an employee, your deductions are typically handled automatically by your employer.

Deductions such as pension contributions, National Housing Fund (NHF), life insurance premiums, and National Health Insurance Scheme (NHIS) payments are subtracted from your gross salary before your income tax is calculated.

These are reflected in your monthly payslips and summarized in your annual PAYE statement or Form H1 return submitted by your employer to the State Internal Revenue Service (SIRS). In this case, you do not need to manually enter deductions because your employer does that on your behalf.

However, if you are self-employed, a freelancer, or a business owner, you must personally declare your deductions when filing your annual returns. The Federal Inland Revenue Service (FIRS) provides online and physical filing options, with the TaxPro Max portal being the most commonly used digital platform.

When using the TaxPro Max platform, you’ll find sections specifically designed for entering allowable deductions and reliefs. These sections are labeled clearly—such as “Pension Contribution,” “NHF,” “Life Assurance,” “Consolidated Relief Allowance (CRA),” and “Business Expenses.”

You should enter the total amount of each deduction in the corresponding field and upload supporting documents such as receipts, statements, or contribution slips.

For companies filing under the Companies Income Tax Act (CITA), deductions are entered in the company income tax return form, typically under the schedule of “allowable deductions” or “deductible expenses.” These include salaries, rent, utilities, depreciation, and other business-related expenses.

If filing manually, deductions are usually entered in the Self-Assessment Return Form (Form A) for individuals or Form CAC 2.1/2.2 for businesses. It’s important to ensure accuracy because errors or omissions can trigger audits or penalties.

In summary, deductions are entered in the designated section of your tax return form or online filing portal, supported by valid documentation. Whether through employer systems or self-assessment filings, correctly entering your deductions ensures fair taxation and prevents overpayment.

How Do I File My Tax Return?

Filing your tax return in Nigeria is a straightforward but essential process that ensures compliance with tax laws and accurate reporting of your income and deductions. The procedure varies slightly depending on whether you are an employee, a self-employed individual, or a corporate entity.

For employees under the Pay-As-You-Earn (PAYE) system, the employer is responsible for deducting tax at source and remitting it to the State Internal Revenue Service (SIRS).

However, employees who earn additional income—such as from rental properties, freelancing, or investments—must file a personal income tax return annually. The deadline for individuals is March 31st of the following year.

To file your return, the first step is to register for a Tax Identification Number (TIN) if you don’t already have one. Then, gather all necessary documents, including payslips, income statements, receipts for deductible expenses, and evidence of pension or insurance contributions.

Next, log into the FIRS TaxPro Max portal (for federal taxes) or your state’s online tax platform (for personal income tax). Once logged in, select the option for annual returns or self-assessment filing.

You’ll need to input your income details, claim allowable reliefs (such as the Consolidated Relief Allowance), and declare deductible expenses. The system will automatically compute your tax liability.

After completing the form, upload relevant supporting documents—such as proof of payment, receipts, or pension contribution statements—and submit the return. You can then generate a payment reference number and pay your tax electronically through approved banks or payment gateways.

For businesses and companies, tax returns are filed under the Companies Income Tax Act (CITA). Businesses must file within six months after the end of their financial year.

For instance, a company with a fiscal year ending on December 31 must file by June 30 of the following year. Filing includes submitting audited financial statements, tax computations, and other supporting documents.

In summary, filing a tax return in Nigeria involves registration, documentation, declaration of income and expenses, and payment (if applicable). It is an annual civic duty that ensures transparency, avoids penalties, and helps maintain a clean financial record for both individuals and businesses.

What Is a Tax Refund?

A tax refund is the reimbursement of excess tax payments made by a taxpayer to the government. In Nigeria, this occurs when an individual or company pays more tax than they are legally required to, either through withholding taxes, PAYE over-deductions, or self-assessment errors.

The refund mechanism is governed by the Federal Inland Revenue Service (Establishment) Act, 2007, and related tax laws.

For individuals, a refund often happens when their employer deducts too much PAYE tax or when they have qualifying reliefs that were not initially applied.

For instance, if an employee changes jobs mid-year and both employers deduct PAYE for the same income period, they may be entitled to a refund after submitting an annual return showing the overpayment.

For companies, refunds may arise when advance tax payments, withholding tax credits, or excess provisional assessments exceed the final tax liability. Businesses can also claim refunds for input VAT (Value Added Tax) that exceeds output VAT, especially in export-oriented industries where most transactions are zero-rated.

To claim a tax refund, the taxpayer must file an official refund application with the Federal Inland Revenue Service (FIRS) or the State Internal Revenue Service (SIRS), depending on the type of tax.

The application must include supporting documents such as payment receipts, tax clearance certificates, and computation showing the overpaid amount.

Once submitted, the FIRS reviews the claim and conducts a verification audit. If approved, the refund is either credited to the taxpayer’s account or offset against future tax liabilities. Refunds are not immediate—they undergo a thorough verification process to prevent fraudulent claims.

Importantly, taxpayers must make their refund claim within six years from the date of overpayment, as stipulated under Nigerian tax law. Claims made after this period are considered time-barred.

In summary, a tax refund is the government’s way of correcting overpayments and ensuring fairness in taxation. While the process may take time, proper documentation and accurate filing increase the likelihood of approval and help maintain a trustworthy tax record.

What Is the Minimum Income to File Taxes in 2025?

In Nigeria, the minimum income threshold for filing personal income tax is guided by the Personal Income Tax Act (PITA) and subsequent amendments.

As of 2025, individuals whose annual income does not exceed ₦300,000 are generally considered below the taxable threshold and may not be required to pay income tax. However, they are still encouraged to file returns for record purposes.

This threshold aligns with Nigeria’s National Minimum Wage, ensuring that low-income earners are not overburdened by taxation.

Anyone earning above ₦300,000 per year (approximately ₦25,000 monthly) is expected to register with their respective State Internal Revenue Service (SIRS) and file annual tax returns.

Employees earning above this amount typically pay through the PAYE system, where employers deduct and remit taxes monthly. However, self-employed persons, freelancers, artisans, and traders must file self-assessment returns by March 31st each year, even if their income is irregular.

It’s also important to understand that even individuals earning below the taxable threshold may still be liable for other taxes, such as Value Added Tax (VAT) on purchases or Withholding Tax (WHT) on certain transactions.

Filing a return, even with no tax liability, helps establish your tax history and makes it easier to obtain a Tax Clearance Certificate (TCC) in the future. This certificate is required for business registration, visa applications, and public sector contracts.

In conclusion, while the minimum taxable income in Nigeria remains ₦300,000 annually, filing a return is a good financial habit for all adults. It fosters transparency, demonstrates compliance, and prepares individuals for potential business or investment opportunities.

What Expenses Can I Claim on My Taxes?

Tax-deductible expenses in Nigeria are costs that are wholly, reasonably, exclusively, and necessarily incurred in the process of earning income.

These expenses reduce taxable income, thereby lowering the total tax payable. The types of expenses you can claim depend on whether you are an employee, self-employed, or operating a registered company.

For employees, deductible expenses are primarily statutory contributions such as pension (8% of salary), National Housing Fund (2.5%), National Health Insurance Scheme payments, and life assurance premiums.

These deductions are made before the PAYE tax is calculated. In some cases, employees can also claim relief for dependents or charitable donations to approved organizations.

For self-employed individuals and freelancers, a broader range of expenses is deductible. These include:

• Office rent and utilities (electricity, internet, and telephone bills).

• Transportation and logistics costs for business purposes.

• Professional services such as legal, accounting, or consultancy fees.

• Stationery, printing, and office supplies.

• Advertising and marketing expenses.

• Training and professional development costs.

• Maintenance and repairs of business equipment.

For companies, allowable deductions under the Companies Income Tax Act (CITA) include salaries and wages, rent, repairs, insurance premiums, depreciation (capital allowance), and bad debts written off. However, personal or capital expenses unrelated to business operations cannot be claimed.

To claim these expenses, taxpayers must keep accurate records and retain original receipts or invoices as evidence. Expenses must be directly connected to income generation; otherwise, they will be disallowed during a tax audit.

In conclusion, understanding which expenses qualify as deductions helps individuals and businesses reduce their taxable income legitimately. Accurate recordkeeping, transparency, and compliance with FIRS or SIRS guidelines are essential to successfully claiming tax deductions in Nigeria.

Where Can I Claim My Tax Back?

In Nigeria, you can claim your tax back through the Federal Inland Revenue Service (FIRS) or the relevant State Internal Revenue Service (SIRS), depending on the type of tax and where it was paid.

A tax refund is available to individuals or businesses that have overpaid taxes, whether through excessive PAYE deductions, double payments, withholding tax credits, or input VAT exceeding output VAT.

For employees, tax refunds are usually claimed through the State Internal Revenue Service (SIRS) in the state where the tax was deducted. This is because personal income tax (PIT) for individuals, including PAYE, is administered by the state governments.

For instance, if you work in Lagos, you would claim your refund from the Lagos State Internal Revenue Service (LIRS).

The first step in claiming your tax back is to gather documentation proving that you overpaid. This typically includes:

• Payslips showing excess deductions.

• Employer’s PAYE remittance receipts.

• Tax clearance certificates.

• Bank payment receipts or statements.

• Evidence of previous filings.

Once you have these, you must write a formal refund application addressed to the Executive Chairman of your state tax authority or the Executive Chairman of the FIRS.

The application should clearly state the reason for the refund, the tax periods affected, and the total amount overpaid. Attach supporting evidence to back up your claim.

The tax authority will review your application and may conduct an audit or verification to confirm the authenticity of your documents and computations. This process ensures that only genuine refund claims are honored.

If the verification confirms an overpayment, the refund will either be credited directly to your bank account or used as a tax credit to offset future tax liabilities.

For businesses and companies, tax refunds are typically handled by the Federal Inland Revenue Service (FIRS) since companies pay federal taxes such as the Companies Income Tax (CIT), Value Added Tax (VAT), and Petroleum Profits Tax (PPT).

Refund claims can be submitted through the FIRS TaxPro Max platform. The FIRS may require an independent audit or tax reconciliation report to substantiate the claim.

It’s also important to note that tax refund applications must be made within six years of the overpayment date, according to Nigerian tax laws. After this period, the claim becomes invalid (time-barred).

In summary, to claim your tax back in Nigeria, you must identify the tax authority that collected it (FIRS or SIRS), gather supporting documentation, and submit a formal, evidence-backed refund request.

The process may take time, but with proper documentation and compliance, it ensures that taxpayers are treated fairly and not overburdened by excess deductions.

What Qualifies as a Tax Deduction?

A tax deduction is an expense or allowance that can be subtracted from your total income before calculating your taxable income. In Nigeria, tax deductions are governed by the Personal Income Tax Act (PITA) for individuals and the Companies Income Tax Act (CITA) for businesses.

These laws outline what qualifies as legitimate deductions to ensure fair taxation and prevent excessive tax burdens.

For individuals, tax deductions are generally linked to contributions, reliefs, and expenses that are essential to earning an income. The most common deductions allowed include:

1. Pension Contributions: Employees contributing to an approved pension fund can deduct up to 8% of their salary from taxable income.

2. National Housing Fund (NHF): 2.5% of basic salary contributed to the NHF is tax-deductible.

3. National Health Insurance Scheme (NHIS): Payments made under approved health insurance schemes can be deducted.

4. Life Assurance Premiums: Premiums paid on life insurance policies for oneself, a spouse, or dependents are deductible.

5. Consolidated Relief Allowance (CRA): This is a broad relief that grants 20% of gross income plus ₦200,000 (whichever is higher) as a deduction.

6. Donations to Approved Charities: Contributions to recognized charitable or religious organizations are tax-deductible, provided they are approved under the Fifth Schedule of the PITA.

For self-employed individuals, tax deductions also include business-related expenses that are “wholly, exclusively, reasonably, and necessarily” incurred for income generation. Examples include:

• Rent for business premises.

• Office supplies and stationery.

• Professional fees (legal, accounting, or consulting).

• Transportation and logistics expenses.

• Training and professional development.

• Depreciation or capital allowances on business assets.

For companies, deductible expenses under the CITA include:

• Employee salaries and benefits.

• Repairs and maintenance of business property.

• Interest on loans used for business.

• Rent and utility bills.

• Advertising and marketing expenses.

• Bad debts written off (if previously recognized as income).

• Research and development expenses.

However, not all expenses qualify. Personal, private, or capital expenses—such as personal travel, entertainment unrelated to business, or the purchase of fixed assets—are not deductible. Similarly, fines, penalties, and illegal payments are disallowed deductions.

Taxpayers must keep accurate and verifiable records—such as invoices, receipts, and bank statements—to support any claimed deductions. The FIRS or SIRS can disallow any deduction that lacks proper documentation during an audit.

In conclusion, a tax deduction in Nigeria refers to allowable contributions and legitimate business expenses that reduce taxable income. Understanding what qualifies ensures compliance, minimizes tax liability, and promotes transparent financial management for individuals and organizations alike.

Can I Claim Deductions in the New Tax Regime?

Yes, you can claim deductions under the new tax regime in Nigeria, but the process and types of allowable deductions depend on your employment type and the updated policies of the Federal Inland Revenue Service (FIRS) and State Internal Revenue Services (SIRS).

The “new tax regime” refers to recent updates to the Personal Income Tax Act (PITA) and digital filing systems such as the FIRS TaxPro Max platform, which aim to simplify tax compliance and improve transparency.

Under this system, individuals and businesses are encouraged to claim tax deductions for approved expenses and contributions that directly impact their taxable income. These deductions are essential because they reduce your overall tax liability and prevent overpayment.

For employees under the Pay-As-You-Earn (PAYE) system, deductions like pension contributions, National Housing Fund (NHF) payments, life assurance premiums, and National Health Insurance Scheme (NHIS) payments are still valid under the new regime.

Employers automatically deduct these from your gross income before calculating your tax. Additionally, every taxpayer is entitled to the Consolidated Relief Allowance (CRA) — 20% of gross income plus ₦200,000 or whichever is higher.

For self-employed individuals and business owners, deductions include business-related expenses such as rent, utilities, vehicle maintenance, advertising, and professional fees, as long as they are “wholly, reasonably, exclusively, and necessarily” incurred for income generation. These remain fully deductible in the new system.

However, the government has also emphasized stricter verification of claims. Tax authorities now cross-check deductions through electronic records and require valid documentation, such as receipts, pension statements, or bank proofs of payment. Without proper evidence, deductions may be disallowed during audits.

The new regime also encourages taxpayers to file electronically through the TaxPro Max system, which allows you to input deductions digitally, upload proof, and instantly calculate your tax liability.

In summary, you can still claim deductions under the new tax regime in Nigeria, provided they are legitimate, verifiable, and related to income generation. The system’s modernization makes it easier to claim accurately and ensures more fairness and compliance across all taxpayer categories.

How Do I Know If I Qualify for Standard Deductions?

To know if you qualify for standard deductions in Nigeria, you must first understand what the term means and how it applies within the Personal Income Tax Act (PITA).

A “standard deduction” refers to a fixed relief granted to all taxpayers to reduce their taxable income, regardless of their actual expenses. It serves as a baseline deduction recognizing essential living costs and income-earning expenses.

In Nigeria, the Consolidated Relief Allowance (CRA) serves as the equivalent of the standard deduction. Every taxpayer is automatically entitled to this allowance as long as they earn income subject to taxation. You qualify for it if you:

1. Earn income through employment, self-employment, or business ownership.

2. Are registered with your State Internal Revenue Service (SIRS) and have a valid Tax Identification Number (TIN).

3. File your annual tax returns accurately.

The CRA is calculated as 20% of gross income plus ₦200,000, whichever is higher. This means that even if you have minimal income, you are guaranteed a minimum ₦200,000 deduction from your taxable income.

Beyond this, you may qualify for other deductions if you make contributions to pension funds, NHF, NHIS, or approved life insurance schemes.

To determine if you qualify, review your monthly payslips or business income statements. If tax is deducted from your earnings, you are eligible to claim the standard deduction.

Also, when filing through the FIRS TaxPro Max portal or your state’s online system, the CRA is automatically calculated and applied based on your declared income.

For those who are self-employed, you can still claim the CRA once you register with the tax authority and submit a self-assessment return showing your annual income and allowable deductions.

In conclusion, anyone who earns taxable income in Nigeria automatically qualifies for the standard deduction through the CRA. The key is to maintain proper records, register with the tax authority, and file your tax returns annually to ensure your entitlement is recognized and applied correctly.

What Is ₦75,000 Standard Deduction?

The ₦75,000 standard deduction often refers to the minimum fixed relief granted to taxpayers before calculating personal income tax in certain tax updates or state-level relief schemes.

While the federal standard deduction (CRA) remains ₦200,000 plus 20% of gross income, some states may adopt simplified versions for low-income earners, sometimes referred to informally as the “₦75,000 deduction.”

However, it’s important to clarify that as of 2025, the Federal Government of Nigeria has not officially changed the national standard deduction to ₦75,000.

The Consolidated Relief Allowance (CRA) still applies nationwide, but certain states or local tax authorities use ₦75,000 as a threshold for non-taxable income — meaning individuals earning ₦75,000 or less monthly are often exempt from paying income tax.

In practice, this figure represents a practical relief floor rather than a formal deduction.

For example, an employee earning ₦900,000 per year (₦75,000 monthly) may fall within the minimum taxable threshold, effectively paying little or no personal income tax after applying the CRA and other mandatory deductions like pension and NHF.

For self-employed individuals, the ₦75,000 reference point can also be used to determine eligibility for simplified assessment, where small-scale earners or micro-entrepreneurs are taxed under a presumptive system with reduced documentation requirements.

Therefore, while the ₦75,000 standard deduction is not an official term under PITA, it symbolizes the government’s effort to protect low-income earners from excessive taxation. The real standardized deduction remains the CRA, which provides a higher level of relief and applies automatically to all taxpayers.

How Can I Claim Income Tax?

Claiming income tax in Nigeria means either filing your returns to report your income and deductions or requesting a refund if you have overpaid.

The process is governed by the Federal Inland Revenue Service (FIRS) for federal taxes and the State Internal Revenue Service (SIRS) for personal income taxes.

To claim your income tax, start by ensuring you have a Tax Identification Number (TIN), which is mandatory for all taxpayers. If you are an employee, your employer handles your monthly PAYE deductions.

However, if you are self-employed or have multiple income sources, you must file your self-assessment return by March 31st each year.

Here’s how to claim your income tax:

1. Register with FIRS or your SIRS using your TIN.

2. Gather documents such as payslips, business records, receipts for deductible expenses, and evidence of pension or insurance contributions.

3. Log into the TaxPro Max portal (for federal filings) or your state’s online filing system.

4. Declare your income and claim allowable deductions such as pension, NHF, NHIS, CRA, and business expenses.

5. Submit your return and make any outstanding payments electronically.

6. If you discover an overpayment, apply for a tax refund by submitting a written request with proof of excess deductions.

Filing your income tax correctly ensures compliance, access to tax clearance certificates (TCC), and eligibility for refunds or future deductions. It also prevents penalties for non-compliance, which can include fines or restrictions on government-related transactions.

In essence, claiming income tax in Nigeria is both a legal requirement and a financial responsibility that ensures fairness and transparency within the taxation system.

How Much Can I Claim on Tax Without Receipts?

In Nigeria, claiming tax deductions without receipts or documentation is very limited. The Federal Inland Revenue Service (FIRS) and State Internal Revenue Services (SIRS) require proof for all deductions to prevent abuse of the system and ensure only legitimate claims are approved.

However, there are certain automatic deductions or standard reliefs you can still claim without receipts. The Consolidated Relief Allowance (CRA)—20% of your gross income plus ₦200,000—is automatically granted to every taxpayer, regardless of receipts.

Similarly, statutory deductions like pension contributions, National Housing Fund (NHF), and National Health Insurance Scheme (NHIS) payments are recognized automatically if they are deducted by your employer or appear on official payroll records.

For self-employed individuals, it is much harder to claim deductions without proof. Expenses like rent, fuel, or business supplies require receipts, invoices, or bank statements to validate their legitimacy.

The tax authorities may allow small miscellaneous claims, but only under discretionary review during audit assessments.

In general, it’s best to maintain receipts and records for at least six years, as required by Nigerian tax law. Doing so not only supports your deductions but also protects you from penalties during a tax audit.

So, while you can still benefit from the CRA and statutory contributions without receipts, all other deductions—especially business or personal expenses—must be backed by evidence. Proper documentation remains the key to maximizing your tax benefits while staying compliant.

Conclusion

Claiming tax deductions in Nigeria is one of the smartest ways to manage your finances legally and efficiently.

By understanding what qualifies as a deductible expense, keeping accurate records, and filing your taxes correctly, you can significantly reduce your tax burden while staying fully compliant with the Federal Inland Revenue Service (FIRS) and State tax laws.

Remember the key steps: gather all necessary receipts, identify eligible deductions based on your income type, complete your tax return accurately, and submit through the appropriate portal such as the FIRS eTax portal.

Avoid common mistakes like late submissions or unsupported claims, and always declare all sources of income to maintain transparency.

Tax deductions aren’t loopholes—they’re legitimate benefits meant to encourage savings, investment, and financial responsibility. So, don’t leave money on the table. Start reviewing your expenses today and claim your legal deductions to save more.