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One of the most expensive mistakes a Nigerian business can make in 2026 is remitting tax to the wrong authority. Under the Nigeria Tax Administration Act 2025, the distinction between the Federal Nigeria Revenue Service (NRS) and the State Internal Revenue Services (SIRS) like LIRS or OGIRS has been sharpened through digital synchronization. Paying the State when you owe the Federal government can lead to ‘Double Liability’ and frozen accounts.
The Federal Domain: Nigeria Revenue Service (NRS)
The NRS handles taxes related to corporate entities and national consumption. If your business is a Limited Liability Company (Ltd), your primary relationship is here. Key federal taxes include:
- Company Income Tax (CIT): Tax on corporate profits. See The Ultimate CIT Guide.
- Value Added Tax (VAT): The 7.5% sales tax collected at every stage of production.
- WHT (Corporate): Withholding tax deducted from payments to other companies.
- Education Tax & Development Levy: The new 4% levy for companies above ₦100M turnover.
The State Domain: State Internal Revenue Service (SIRS)
States collect taxes from individuals and non-incorporated businesses (Enterprises/Sole Proprietors). Key state taxes include:
- PAYE (Pay-As-You-Earn): Income tax deducted from your employees’ salaries.
- Personal Income Tax (PIT): For freelancers and business name owners. Read about 2026 PIT Reforms.
- WHT (Individuals): Tax deducted from payments to individual contractors/freelancers.
- Land Use Charge & Business Premises Levy: Asset-based taxes for physical offices.
The 2026 Rule of Thumb: If the payee is a ‘Company,’ pay Federal. If the payee is a ‘Human Being,’ pay State. For a breakdown of local council fees, see Local Government Taxes. For official lists, visit the Joint Tax Board (JTB) or NRS.gov.ng.”