The implementation of Nigeria’s 2025 Tax Act, efficient from January, has sparked a shift within the nation’s enterprise software program market, creating a brand new sense of urgency round constructing preventive infrastructure slightly than fixing issues after they come up.
The tax overhaul, which was signed into regulation on June 26, 2025, contains 4 key items of laws: the Nigeria Tax Act (NTA) 2025, Nigeria Tax Administration Act (NTAA) 2025, Nigeria Income Service (Institution) Act (NRSEA) 2025, and Joint Income Board (Institution) Act (JRBEA) 2025.
In November 2025, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Coverage and Tax Reforms, introduced that Nigeria had entered agreements with over 100 international locations to gather knowledge on distant employees for tax enforcement functions.
Oyedele emphasised that each one distant employees in Nigeria, no matter their firm or nation, are required to declare their earnings.
However how possible is that this bold purpose?
In an unique interview with BusinessTimes, Cossi Achille Arouko, CEO of Bujeti – a platform that automates the applying of native taxes, together with withholding tax (WHT) and value-added tax (VAT) – together with COO Samy Chiba, focus on the challenges and dangers of tax compliance in cross-border funds.
BusinessTimes: What gaps or challenges did the 2025 Tax Act reveal for Nigerian companies, particularly SMEs?
Cossi Achille Arouko: The Act didn’t create new issues, it uncovered structural ones that companies had been patching over with handbook workarounds.
The largest hole is procedural, not conceptual. Most SMEs perceive they should pay tax, what they battle with is the mechanics, figuring out which charge applies to which transaction, monitoring what they’ve collected versus what they’ve withheld, and maintaining tax funds separate from working capital.
The Act compressed the timeline for all of those. What was once reconciled at year-end now must occur transaction by transaction. And it launched uneven penalties.
Companies with turnover under N50 million pay zero CIT, but when they miss a submitting deadline, they lose that exemption totally. So you’ve gotten this paradox – decrease burden, greater procedural stakes.
The businesses that profit most from the reforms are additionally essentially the most uncovered to compliance failure as a result of they lack infrastructure.
BusinessTimes: Which varieties of companies are most affected by the brand new tax guidelines, and why?
Samy Chiba: Service companies like consultancies. Additionally, companies, software program corporations, logistics suppliers—are notably uncovered as a result of their transactions typically contain withholding tax.
Each time they pay a vendor or contractor, they’re required to confirm the counterparty’s TIN standing and apply the proper WHT charge. If the seller doesn’t have a sound TIN, the speed is greater. That verification step was once casual. Now it’s obligatory, and non-compliance triggers penalties.
Retail and e-commerce companies face complexity on the VAT facet. They’re accumulating VAT from clients, however additionally they want to trace enter VAT on their purchases and reconcile the distinction. When you’re processing a whole bunch of transactions month-to-month, spreadsheets break down shortly. Then there are companies working throughout a number of states or international locations, they’re managing completely different tax jurisdictions concurrently, which multiplies the danger of misclassification.
The Act doesn’t care in the event you made an trustworthy mistake. The penalty construction treats errors as intentional.
BusinessTimes: How do cross-border operations or a number of jurisdictions complicate tax compliance for African SMEs?
Samy Chiba: Cross-border provides layers of ambiguity that handbook programs can’t deal with. Let’s say a Nigerian enterprise has shoppers in Kenya and Ghana. Every nation has completely different VAT charges, completely different thresholds for registration, completely different submitting calendars. If they’re utilizing spreadsheets, somebody has to manually bear in mind which charge applies to which consumer, which forex the transaction was in, and what the trade charge was on the day of cost.
Then there’s the everlasting institution query. If a Nigerian firm does sufficient enterprise in Kenya, it’d set off PE standing and owe Kenyan taxes. Most SMEs don’t know when that threshold is crossed as a result of they’re not monitoring transaction quantity by jurisdiction in actual time. They discover out throughout an audit, which implies penalties and again taxes.
Switch pricing is one other one. If a Nigerian firm invoices its Kenyan subsidiary, tax authorities in each international locations need to make sure the pricing is arm’s size. Proving that requires documentation on the transaction degree. In case your data are fragmented—some in QuickBooks, some in spreadsheets, some in e-mail—you can’t reconstruct the justification six months later.
The irony is that cross-border is the place SMEs have essentially the most progress alternative, however it’s additionally the place compliance danger is highest. So companies both keep away from enlargement, or they develop and hope they don’t get audited.
BusinessTimes: Are you able to share actual examples of compliance errors that companies generally make?
Cossi Achille Arouko: The commonest mistake we see isn’t dramatic, it’s making use of the mistaken charge. A enterprise pays a contractor N100,000 and withholds 5% WHT when the proper charge is 10% as a result of the seller doesn’t have a TIN. That’s a N5,000 underpayment. Multiply that throughout dozens of transactions month-to-month, and by the point FIRS audits them, they owe penalties on high of the shortfall.
One other factor is, companies acquire VAT from clients and deposit it into their essential working account. Two weeks later, they should cowl payroll or restock stock, so that they spend it. When remittance is due, the cash’s gone. They both scramble to search out money elsewhere—which creates a liquidity disaster—or they miss the deadline and pay penalties.
We’ve seen corporations lose extra in fines than they’d have spent on correct infrastructure.
Then there’s the submitting exemption misunderstanding. A enterprise qualifies for zero-rate CIT as a result of their turnover is under N50 million, so that they assume they don’t must file something.
Fallacious, submitting is obligatory. Six months later, they’ve misplaced their exemption standing and owe again taxes they weren’t ready for.
BusinessTimes: How do penalties and shortened reporting home windows have an effect on day-to-day operations and money stream?
Samy Chiba: Penalties don’t simply damage financially; they create operational drag. When a enterprise will get hit with a N200,000 penalty for late submitting, that’s cash that might have gone to hiring, advertising and marketing, or stock. However the greater situation is the time value. Finance groups spend hours reconstructing transaction histories, chasing receipts, and making an attempt to show what occurred three months in the past.
The shortened home windows make this worse. Underneath the previous system, companies may wait till quarter-end or year-end to wash issues up. Now, remittance home windows are month-to-month, and the margin for error is tight. In case your accountant is gradual to reply, or in case your data are fragmented throughout a number of instruments, you’re behind earlier than you begin. We’ve seen companies delay vendor funds simply to protect money in case they miscalculated their tax legal responsibility. That creates belief points with suppliers and slows down operations.
Money stream turns into unpredictable. You suppose you’ve gotten N500,000 obtainable, however N150,000 of that’s truly tax funds you’ve collected. In case you spend it, you’re borrowing from FIRS with out realizing it. When remittance is due, you both raid your working capital or default.
BusinessTimes: How do SMEs sometimes observe and handle taxes internally, and why do these strategies typically fail?
Cossi Achille Arouko: Most SMEs use a mix of Excel, bank statements, and reminiscence. Somebody manually logs transactions, applies tax calculations based mostly on what they suppose the speed is, and hopes the numbers match when submitting time comes. The failure modes are predictable: formulation break once you add new columns, transactions get logged to the mistaken class, and there’s no model management, so if two folks edit the sheet, knowledge will get overwritten.
The larger situation is that spreadsheets don’t implement guidelines. If somebody by accident applies 7.5% VAT to a transaction that must be exempt, the spreadsheet doesn’t cease them. In the event that they overlook to withhold tax on a vendor cost, there’s no alert. Compliance relies upon totally on the particular person remembering to do the fitting factor, in the fitting order, each single time. That works till the workforce grows, somebody goes on go away, or the enterprise scales previous a number of dozen transactions month-to-month.
Then there’s the reconciliation drawback. At month-end, they’re making an attempt to match bank statements to spreadsheet entries to bodily receipts. If something’s lacking, they both guess or omit it from the report. Each choices expose them to penalties.
BusinessTimes: What function do accountants, advisors, or banks play in tax compliance, and the place do they fall brief?
Samy Chiba: Accountants are important for interpretation, understanding how the regulation applies to edge instances, advising on deductions, dealing with audits. However they’re costly and reactive. A small enterprise may pay N50,000–N150,000 month-to-month for an exterior accountant who opinions transactions after they’ve occurred.
By that time, errors have already been made. If the enterprise withheld the mistaken tax charge three weeks in the past, the accountant can flag it, however fixing it’s difficult and generally unattainable.
Banks play virtually no function in compliance. They’re transaction facilitators. They’ll allow you to ship N100,000 to a vendor with out asking in the event you withheld tax. They’ll allow you to spend tax funds as a result of, to them, it’s simply cash in your account. There’s no logic layer between your intent and the cost execution.
Advisors are usually inconsistent. A enterprise may seek the advice of somebody throughout tax season, get recommendation, then not hear from them for six months. When the foundations change, like they did with the 2025 Act, there’s a niche between when the regulation takes impact and when the advisor updates the enterprise. That hole is the place compliance failures occur.
BusinessTimes: Have you ever noticed companies by accident mismanaging tax funds? What often causes this?
Cossi Achille Arouko: On a regular basis. Right here’s the standard sample: a enterprise collects N500,000 in VAT over two weeks. That cash sits of their essential account alongside income, bills, and every part else.
The founder sees a N2 million stability and feels snug. Then, payroll is due, or a provider must be paid urgently, so that they switch N800,000. They didn’t notice N500,000 of their stability was tax funds. When remittance is due three weeks later, they’re N300,000 brief.
What causes it? Lack of separation. Commingling tax funds with working capital makes it invisible. The account stability appears to be like wholesome, however it consists of liabilities. It’s like considering you’ve gotten N1 million in financial savings when N400,000 of it’s truly lease you haven’t paid but.
The second trigger is timing mismatch. Companies acquire VAT from clients instantly, however they pay their very own suppliers on credit score phrases—possibly 30 or 60 days later. So the money is within the account, obtainable to spend, regardless that it’s earmarked for remittance.
With no forcing operate to separate it, the temptation is to make use of it. By the point FIRS expects cost, the cash’s been absorbed into operations.
BusinessTimes: What sensible mechanisms or options in Bujeti’s resolution are designed to stop errors or handle danger for customers?
Samy Chiba: Three core mechanisms: automation, separation, and immutability.
Automation means taxes are calculated on the level of transaction. You’re not doing math manually or trying up charges in a reference doc. The system is aware of {that a} skilled service bill requires 5% WHT, or {that a} VAT-exempt product ought to have 0% VAT utilized.
You choose the transaction kind, and the calculation occurs robotically.
Separation is the Tax Vault. Each time tax is collected or withheld, the funds transfer right into a devoted account that’s ring-fenced from working capital. Your workforce can see the stability, however they can’t by accident spend it on payroll or stock. When remittance is due, the cash is already there. No liquidity scramble. No borrowing from future money stream to cowl previous liabilities.
Immutability means transaction data can’t be altered retroactively. As soon as a cost is made or an bill is issued, the file is locked. That creates a clear audit path, which issues throughout NRS opinions or when you’re fundraising and buyers need to see your monetary hygiene. It additionally prevents the ‘we’ll repair it later’ mindset that causes compliance drift.
We additionally constructed country-based tax tagging for companies working throughout jurisdictions. If you’re invoicing a Kenyan consumer, the system solely exhibits Kenyan taxes. You can’t apply Nigerian VAT accidentally. And we observe each collected and withheld taxes individually, as a result of NRS cares in regards to the distinction—one is cash you owe from clients, the opposite is cash you’ve deducted from distributors. Each must be remitted, however they’re reported in a different way.
The final piece is human assist. Tax compliance isn’t one-size-fits-all. Each enterprise has edge instances: industry-specific exemptions, uncommon transaction sorts, regulatory grey areas. So alongside the software program, customers get entry to tax specialists who can present context when choices must be made. The platform handles the mechanics. The specialists deal with the judgment calls.
