Nigeria to phase out long standing self-assessment tax regime

The long-standing self-assessment tax regime in favour of an automated compliance system that enables authorities to validate company returns using independently sourced electronic data is to be phased out in Nigeria.

This followed a structural overhaul of tax administration, significantly reducing reliance on voluntary declarations and strengthening the government’s capacity to verify income at source.

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The transition was highlighted by Tania Davids, Africa tax and transformation lead at KPMG, during a webinar titled “Strengthening the tax function to respond to regulatory changes.”

“In a future world, five to ten years from now, we’re looking at our returns in an automated fashion,” Davids said, outlining a model in which tax filings are digitally cross-checked against real-time transaction data.

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According to him, under the emerging framework, revenue authorities may already have access to a company’s revenue and expense profile before annual filings are submitted. This pre-validation capability is expected to narrow opportunities for underreporting and margin manipulation, while improving transparency across the tax ecosystem.

Electronic invoicing forms, he said, the backbone of the reform, stating that the system captures revenue at the transaction level and links supplier invoices directly to buyers’ expense records, and backed by third-party reporting from banks and financial institutions, discrepancies between declared income and recorded transactions can be flagged automatically.

Tax experts said the integration of independent financial data marks a decisive move toward data-driven enforcement, aligning Nigeria’s compliance architecture with global best practices.

They said large taxpayers have completed pilot phases and will face enforcement beginning in April 2026. Medium taxpayers are scheduled to go live in July 2026, with enforcement set for January 2027. Emerging taxpayers will be integrated into the framework in 2027.

The phased rollout signals a deliberate but firm transition toward a digitised tax environment, where compliance monitoring becomes continuous rather than periodic.

Analysts noted that the reform will require companies to strengthen internal tax governance, upgrade accounting systems, and ensure transaction-level accuracy, as inconsistencies will increasingly be identified in real time.

With automation poised to redefine compliance administration, Nigeria’s tax landscape is entering a new era—one driven less by declaration and more by data verification.

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