22/12/2025
IMPORTANT TAX NOTICE (EFFECTIVE FROM NEXT MONTH)
Kindly take note of the following guidelines and adhere strictly to them.
Understanding Tax in Nigeria
Tax is not simply about money entering your bank account.
Under Nigerian tax principles (as enforced by FIRS), tax is determined by the nature and purpose of the money, not just the receipt.
When funds are incorrectly described, they may be treated as taxable income, leading to unnecessary tax liabilities, penalties, or audit issues.
When funds are correctly described and supported, tax is applied only when legally required — and nothing more.
This approach is fully legal, compliant, and consistent with Nigeria’s tax reforms focused on transparency and substance over form.
SIMPLE & LEGAL TRANSACTION DESCRIPTIONS TO USE
A. MONEY THAT IS NOT TAXABLE INCOME
Use these descriptions only when the funds are not payment for goods, services, or business profits.
1. Family Support / Gift
Situation: A family member sends you money
Description to use:
“Gift” or “Family Support”
📌 Note: Gifts from close family members are generally not taxable, provided they are not tied to services or business activity.
2. Refund / Reimbursement
Situation: Someone is paying back money you previously spent or lent
Description to use:
“Refund” or “Reimbursement”
📌 Note: Refunds are not income because they return your original money.
3. Personal Transfer / Savings
Situation: You move your own money between your personal accounts
Description to use:
“Personal Transfer” or “Savings Transfer”
📌 Note: This avoids transactions being misclassified as new income during audits.
4. Loan Received
Situation: Someone lends you money (individual or institution)
Description to use:
“Loan Received”
📌 Important: Keep simple evidence of the loan (message, agreement, or acknowledgment), as loans are not taxable income but must be identifiable.
5. Capital Contribution
Situation: You put your personal money into your business
Description to use:
“Capital Contribution”
📌 Note: Owner’s capital injections are not business income and should not attract income tax.
VERY IMPORTANT COMPLIANCE NOTES (NIGERIA TAX REFORM READY)
✔ Descriptions must reflect the true nature of the transaction
✔ Do not mislabel income as gifts or refunds — this can attract penalties
✔ Maintain basic records (texts, receipts, agreements)
✔ Business income must still be described correctly (e.g. Sales, Service Fee)
✔ Separate personal and business accounts where possible
✔ Be consistent — FIRS looks for patterns, not one-off entries
FINAL REMINDER
Correct transaction descriptions:
Reduce unnecessary tax exposure
Prevent audit complications
Support legal tax planning
Align with Nigeria’s move toward data-driven tax enforcement
This is tax compliance, not tax evasion.
