Nigeria
New tax laws take effect
Impact date: 1 January 2026 On 1 January 2026, a new tax regime commenced in Nigeria with the coming into force of the Nigeria Tax Act 2025 and the redesignation of the Federal Inland Revenue Service (the erstwhile national tax authority) as the Nigeria Revenue Service (NRS).
Three other statutes were also enacted as part of the overhaul of the reform of the tax regime: the Nigeria Tax Administration Act, the Nigeria Revenue Service Act and the Joint Revenue Board of Nigeria Act, which aim to unify over 60 disparate taxes into a single, transparent framework. These statutes are designed to modernize compliance, support businesses, and eliminate the double taxation that previously hindered national economic growth.
Employer implications/action needed The Nigeria Tax Act, 2025, introduces a progressive personal income tax regime with rates ranging from 0% to 25%. Notably, individuals earning ₦800,000 or less annually are exempt from personal income tax. Additional reforms include enhanced deductions, such as a 20% rent deduction (capped at ₦500,000), designed to ease housing costs for employees and low-income earners. Employers will need to adjust payroll systems to reflect the new rates and ensure compliance with updated withholding tax obligations.
Employer risk Non-compliance with the new regime may result in penalties, interest on unpaid taxes, reputational risks, law suits at the instance of the authorities and potential audits by the restructured Nigeria Revenue Service. Employers who fail to correctly implement the revised personal income tax framework could face employee disputes and regulatory sanctions.
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Global remote work and residency rules
Impact date: 1 January 2026 Under the Nigeria Tax Act 2025, effective 1 January 2026, any individual physically present in Nigeria for more than 183 days annually is deemed a tax resident. Such individuals are now subject to personal income tax on their worldwide income, regardless of the employer's location or the currency/jurisdiction of payment.
Employer implications/action needed To mitigate these risks, employers must immediately conduct a Residency and Status Audit to track the physical location of all Nigerian talent and identify those crossing the 183-day threshold. Employers should implement a mandatory Tax Identification Number (TIN) verification process for all workers.
Employer risk Global companies face significant financial and operational exposure under the Nigeria Tax Act 2025, as any remote worker present in Nigeria for 183 days or more in a period of 12 consecutive months is now strictly taxed on their worldwide income. This triggers a high-risk "deemed employment" scenario, where the Nigeria Revenue Service (NRS) can hold the global employer liable for unremitted PAYE taxes and statutory social contributions.
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Employment contracts (case law)
Impact date: 22 January 2026 In Bolaji Ojeyemi v Trennco Power LTD, the court ruled against the defendant employer for failure to remit pension contributions as due. The court held that it is the statutory duty of the employer to contribute its share and remit both employer and employee pension contributions not later than 7 working days from the day the employee is paid their salary. Failure to comply is unlawful. The Pension Reform Act in section 11 prescribes a penalty to be stipulated by the pension regulator for the employer’s failure to deduct or remit the employee's pension.
Employer implications/action needed Employers must immediately synchronize payroll workflows to ensure compliance with the seven-working-day remittance window, accounting for potential processing delays between global treasury centers and local Pension Fund Custodians. This requires a high-priority retrospective audit of all Nigerian-based staff to identify and rectify any historical contribution gaps, in order to cap the accumulation of the 2% monthly interest penalty.
Employer risk Non-compliance exposes employers to mandatory financial restitution and statutory penalties enforced by the National Pension Commission (PenCom). Beyond the liability for unpaid arrears, the primary risk is a punitive interest penalty—currently set at a minimum of 2% of the total unremitted amount for every month the default continues. For global companies, this creates a compounding, unbudgeted debt that cannot be waived. In addition, evidence of non-remittance is a primary trigger for PenCom audits, which may uncover broader employment misclassifications and result in the revocation of the company's "Certificate of Compliance," effectively barring it from providing services to any Nigerian government agency or regulated entity.
Failure of an employer to query an employee (case law)
Impact date: 18 February 2026 The case of Adekoyeni Oladejo v United Bank For Africa, concerned the termination of the employee's employment for fraud and absconding from work over a period of time without query or prior disciplinary actions.
Employer implications/action needed This judgment clarifies that if an employer fails to query or discipline an employee for workplace misconduct, the law deems the misconduct as "condoned" once the employee eventually resigns or is terminated. Consequently, any delayed attempt to use past, unaddressed issues as grounds for dismissal may be legally invalid. To protect their interests, employers must initiate disciplinary issues immediately as they arise to prevent an implied waiver of their right to take action.
Employer risk The primary risk for employers under this judgment is the legal "stripping" of their right to discipline an employee for past misconduct once it has been impliedly forgiven through employer inaction. By failing to issue a query or take disciplinary steps at the time of an offence, an employer creates a presumption of condonation, which effectively bars the employer’s right to use that specific incident as a ground for future termination or summary dismissal. If a dispute reaches a court, any attempt to justify a firing based on "accumulated" old issues will likely be viewed as an afterthought or a breach of fair hearing, potentially leading to costly payouts for wrongful dismissal.
General Application and Implementation Directive
Impact date: 31 March 2026 (deadline for filing CAR) The Nigeria Data Protection Commission (NDPC) issued the General Application and Implementation Directive (GAID) in March 2025, which provides detailed guidance on the application and interpretation of the Nigeria Data Protection Act. Data Controllers and Processors of Major Importance (DCPMI) must file their Corrective Action Report (CAR) through a licensed Data Protection Compliance Organisation (DPCO) by 31 March 2026.
Employer implications/action needed To ensure compliance, organizations must immediately engage a licensed Data Protection Compliance Organisation (DPCO), as the CAR cannot be self-filed and must be submitted through an authorized third party. Management should direct the Data Protection Officer (DPO) to finalize the mandatory semi-annual data protection reports and conduct a Data Privacy Impact Assessment (DPIA) for all high-risk processing activities, such as remote employee monitoring or cross-border data transfers. Finally, the organisation must verify that its DPO has completed the Annual Credential Assessment (ACA) and attained the required Continuing Professional Development (CPD) credits, as evidence of DPO proficiency is now a prerequisite for a successful audit filing.
Employer risk Failure to file the CAR by the 31 March 2026, deadline triggers an immediate administrative penalty of 50% of the applicable filing fee (which ranges from ₦100,000 to ₦1,000,000 depending on tier). For global companies, the broader risk is "Serious Breach" classification under the NDPA, which carries a maximum fine of 2% of global annual gross revenue or ₦10,000,000, whichever is higher. Beyond financial penalties, non-compliant employers are subject to public blacklisting on the NDPC's "Non-Compliant Entities List," which can disrupt cross-border data flows and damage the reputation of global brands operating within Nigeria.
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