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Category: Accounting

  • Everything You Need to Know About the Nigeria Tax Law 2026

    Everything You Need to Know About the Nigeria Tax Law 2026

    Nigeria Tax Law 2026

    Nigeria’s new tax laws came into effect on January 1, 2026. These laws are among the biggest changes to Nigeria’s tax system in years. They were passed to make taxes easier to understand, fairer, and more consistent across the country.

    This article explains the key aspects of the law in simple language, so you can understand how it affects you, your job, your business, and your finances.

    What Has Changed

    The new tax laws combine many old tax rules into a single set of laws. Instead of many different laws for different taxes, there is now one system that handles personal income tax, business tax, value-added tax (VAT), capital gains tax, and others.

    The goal is to reduce confusion, avoid overlapping taxes, and make it easier for people and companies to follow the rules.

    Personal Income Tax (Tax on What You Earn)

    Under the new rules:

    • If you earn ₦800,000 or less per year, you pay no personal income tax. This means most low-income workers don’t pay taxes.
    • Above ₦800,000, your income is taxed in bands: the more you earn, the higher the rate of tax you pay.
    • Items like salaries, rent, interest, and digital asset gains (e.g., crypto profits) are now part of taxable income.
    • The old “consolidated relief allowance” has been replaced with a new system where you may deduct a portion of rent if you can prove it.

    This means tax is now clearer and more progressive: people with lower incomes pay nothing or less, while higher earners pay more.

    Business Taxes

    Small Businesses

    Small companies with low turnover and small assets may now be completely exempt from company tax, capital gains tax, and other charges. This gives relief to small business owners.

    Larger Businesses

    For bigger companies:

    • The company income tax rate has been reduced for many firms, making business cheaper.
    • A new 4% Development Levy replaces many smaller levies that existed before.
    • Big multinational companies may also face a minimum effective tax rate to make sure they pay a fair share.

    Value‑Added Tax (VAT)

    • VAT remains at 7.5%.
    • Many essential goods and services are now zero‑rated (meaning no VAT), such as food items, education supplies, medical care, and public transport. This is meant to reduce the cost burden on everyday Nigerians.
    • Businesses can now claim back input VAT (the VAT they pay on services and assets), which was hard to do before.

    Filing and Penalties

    • Everyone who is expected to pay tax must now file a yearly tax return, even if they do not owe tax.
    • Companies and individuals have deadlines for filing returns, and there are fines for late filing.
    • The new laws also allow authorities to share information across government systems to make sure people comply.

    This means that keeping good records of your income and expenses is more important than ever.

    Digital Income and New Sources of Tax

    Under the new rules:

    • Digital income, such as earnings from online work, streaming services, and digital assets like cryptocurrencies, may now be taxable.
    • Even if you work for a foreign company but live in Nigeria, your income may be subject to Nigerian tax if it is considered sourced in Nigeria.

    What This Means for You

    If You Are a Worker

    • Most workers earning below ₦800,000 a year pay no tax.
    • If you earn more than that, you will pay tax based on a progressive scale.
    • You must file a tax return every year.

    If You Run a Small Business

    • You may be fully exempt from company tax if your business is small enough.
    • Good recordkeeping will help you prove your income and expenses when you file tax returns.

    If You Are a Freelancer or Earn Online

    • You may need to report income from online platforms and digital services.
    • Keeping records like invoices and receipts will make it easier to comply with the law.

    Why Good Records Matter

    Under the new law, tax authorities require proper documentation to evaluate tax returns. This means:

    • Keeping all your invoices and receipts
    • Recording your expenses clearly
    • Being able to show evidence of your income streams

    Good recordkeeping helps you pay only what you owe and protect yourself if your tax return is ever reviewed.

    Simple Summary

    Good news

    • Most low-income earners don’t pay income tax.
    • Small businesses get big tax breaks.
    • VAT exemptions on essentials make basics cheaper.

    What you must do

    • File tax returns every year.
    • Keep good records of money in and money out.
    • Understand how your income type is taxed.

    Final Thought

    Nigeria’s 2026 tax law is designed to be fairer and simpler. It protects low earners while making sure higher earners and larger businesses contribute to development. The key as an individual or business is to understand your obligations and stay organised with your documents.

    Sources

  • Habit Building for Expenses and Invoices: The Key to Long-Term Financial Clarity

    Habit Building for Expenses and Invoices: The Key to Long-Term Financial Clarity

    Habit building for expenses and invoices is one of the most underrated skills in small business management. Yet, it can make the difference between growing sustainably and constantly struggling with cash flow problems.

    If you’re serious about staying financially organized, avoiding debt traps, and building trust with lenders or investors, this guide will walk you through simple steps to build strong financial habits—without stress or complexity.

    Habit Building for Expenses and Invoices

    Why Habit Building Matters in Finance

    Most small business owners understand the importance of tracking income and expenses—but few do it consistently. The problem isn’t always procrastination or lack of motivation. More often, it’s the absence of a reliable system that supports daily and weekly routines.

    That’s why habit-building for expenses and invoices is essential. With the right habits, financial tracking becomes second nature—not another overwhelming task on your to-do list.

    When you develop strong financial habits, you’ll:

    • Track business expenses in real-time

    • Improve your invoice organization and clarity

    • Reduce the risk of missed or delayed payments

    • Make better financial decisions using current data

    • Feel more confident when applying for loans or grants

    These aren’t just “nice-to-haves.” They’re foundational for long-term business health.

    Start Simple and Stay Consistent

    You don’t need a complex accounting system to get started. The key is to choose a tool or process that’s simple and easy to stick with.

    Look for something that lets you:

    • Enter daily or weekly expenses

    • Create and send invoices quickly

    • Log paid and unpaid amounts in one place

    The goal here is to remove as much friction as possible. The more effortless the process feels, the more likely it is to become a habit. Consistency beats complexity.

    Block Out Weekly Finance Time

    Set aside 15–30 minutes each week to stay on top of your finances. Treat this as non-negotiable time, just like a client meeting.

    During this session, you can:

    • Update your expenses and categorize them

    • Send or schedule new invoices

    • Follow up on any overdue payments

    This practice builds financial discipline and ensures you’re not scrambling when it’s time to file taxes, seek funding, or analyze your profits.

    Use Visual Triggers and Digital Reminders

    Don’t rely solely on memory. Our brains are overloaded with tasks already. Use visual triggers like sticky notes on your monitor or recurring phone reminders to nudge you into action.

    These small cues reinforce your behavior and support habit formation over time.

    You can even set email alerts or calendar events for invoicing days or expense reviews.

    Automate What You Can

    Automation is your ally in habit formation. It removes repetitive tasks and gives you more mental space to focus on decision-making.

    Here’s what you can automate:

    • Recurring invoices for long-term clients

    • Auto-categorization of frequent expenses

    • Email reminders for unpaid invoices

    Automation doesn’t replace discipline—but it ensures your system works, even when you’re busy or distracted.

    Reflect Monthly for Improvement

    At the end of each month, take time to reflect:

    • Did I record all expenses?

    • Were all invoices issued and followed up?

    • Is there a trend I should pay attention to?

    Monthly reviews help you catch problems early, spot inefficiencies, and fine-tune your process. This is where habit meets insight.

    You might discover, for example, that certain expenses keep recurring without clear ROI—or that your clients take longer than average to pay. These insights are only visible when you review regularly.

    Conclusion

    Habit building for expenses and invoices isn’t just about staying organized—it’s about laying the foundation for smarter financial decisions, easier tax seasons, and a business that’s ready to scale.

    No matter how small your business is today, your financial habits will shape the opportunities you’re ready to seize tomorrow.

    Start small. Build momentum. Be consistent. Your future self—and your business—will thank you for it.