At Faturoti Taiwo and Co., we’ve helped hundreds of Lagos businesses avoid costly tax penalties through proper compliance. Nigerian tax authorities (FIRS and LIRS) are becoming increasingly strict – this guide reveals the most common penalties and how to steer clear of them.
Why Nigerian Businesses Pay Millions in Avoidable Penalties
Late filing fees (Up to ₦50,000 per month) Underpayment charges (10% of tax due + interest) Audit penalties (For improper records) Prosecution risks (For severe non-compliance)
“Last year, we saved clients over ₦28 million in potential penalties through proactive tax planning.”
— Faturoti Taiwo, Lead Consultant
Top 5 Tax Penalties & How to Avoid Them
1. Late Tax Return Filing
Penalty:
- ₦25,000 (FIRS)
- ₦10,000 (LIRS) + ₦5,000 daily after 30 days
Solution:
Mark all deadlines in your calendar Use our free tax calendar reminder service Prepare documents at least 1 month early
2. Incorrect VAT Remittance
Penalty: 5% of tax due + interest
Avoid By: Using FIRS-approved accounting software Triple-checking calculations before payment Keeping all VAT receipts for 6 years
3. PAYE Non-Compliance
Penalty: 10% of unpaid tax + possible prosecution
Prevention Tips: Automate payroll with Paystack or BambooHR Remit before the 10th of each month File annual returns by January 31st
4. Wrong Tax Calculations
Penalty: 10% of underpaid amount
Our Safeguards: Dual-review system for all client returns Tax liability health checks every quarter Continuous staff training on new tax laws
5. Poor Record Keeping
Penalty: ₦25,000 + possible audit
Best Practices: Use QuickBooks or Zoho Books Digitize receipts with SmartReceipt Conduct monthly reconciliations
Industry-Specific Penalty Hotspots
| Industry | Common Penalty | Our Solution |
|---|---|---|
| Import/Export | Customs duty errors | Customs advisory service |
| Retail | Unremitted VAT | POS integration setup |
| Professional Services | PAYE defaults | Payroll outsourcing |
| Construction | Unfiled WHT returns | CIS compliance package |
5-Step Penalty Protection Plan
- Register Properly (Get correct TINs for all taxes)
- Implement Accounting Software (We recommend Xero)
- Create Tax Calendar (With 3 reminder levels)
- Conduct Quarterly Reviews (Catch errors early)
- Partner with Experts (Our penalty protection service)
Why Choose Faturoti Taiwo & Co.?
Our Tax Compliance Package includes: Monthly filing service Deadline monitoring Penalty dispute resolution Tax authority correspondence Quarterly compliance training
Case Study:
A Lagos restaurant avoided ₦1.8 million in penalties after we discovered and corrected their VAT calculation errors before FIRS detected them.
Tax Penalty FAQs
Q: Can penalties be waived?
A: Sometimes – we’ve successfully negotiated 68% of penalty waivers for clients.
Q: How far back can FIRS penalize?
A: Typically 6 years for companies, 4 years for individuals.
Q: Do small businesses get penalties?
A: Yes – we see many ₦500k+ penalties for SMEs.
Q: What’s the most overlooked penalty?
A: Business premises renewal (₦100k+ fines common).
Get Penalty-Proof Today
Call (+234) 701-272-5021
thomas@faturotitaiwoandco.com