Pictures from the 3 Day External Audit Training course 2015

Under the Nigeria Tax Administration Act (NTAA) 2025, the government has introduced Mandatory Disclosure Rules (MDR). That marks a shift from a "reactive" system, where the tax authority finds schemes during audits, to a "proactive" system, where you must tell them about your tax planning upfront.
As of 2026, the Nigeria Revenue Service (NRS) and state authorities like the LIRS have issued specific guidelines on how and when these disclosures must happen.
1. What Must Be Disclosed?
You are required to disclose any Tax Planning Arrangement that has the primary purpose of obtaining a tax advantage. This includes:
Artificial Transactions: This are Schemes that lack "economic substance" (i.e., they only exist on paper to reduce tax).
Exploiting Loopholes: This is a process of Using technical defects in the law to shift profits or avoid liabilities.
Income Shifting: This involves Moving profits to related parties or offshore jurisdictions in a non-arm's-length manner.
Deferrals: This is an Arrangements designed primarily to delay the payment of tax to a much later period.
2. Who is Responsible for Disclosure?
The duty to disclose is "standalone," meaning multiple parties may be held liable:
The Taxpayer: The individual or company benefiting from the scheme.
The Promoters: Consultants, accountants, or lawyers who designed or "sold" the tax planning structure.
3. The 30-Day Rule (Timeline)
Disclosure is not an "end-of-year" activity. You must report on the arrangement within 30 days of the earliest of these events:

1. The date of the arrangement is implemented.
2. The date the taxpayer becomes aware of the arrangement.
3. The date of any legal document related to the transaction is signed.
   4. Safe Harbors (What Doesn’t Need Disclosure)
      The law does not ban all tax planning. You generally do not need to disclose:
      Statutory Reliefs: Claims for capital allowances, pioneer status, or exemptions explicitly written in the law (e.g., the 0% rate for small businesses).
      Genuine Commercial Deals: Routine business transactions that have a real commercial purpose and follow "arm's length" pricing.
      Internal Reorganizations: Changing your business structure for efficiency with no change in who owns the assets.
   5. Penalties for non-disclosure
      The 2026 enforcement regime treats "secrecy" as a serious offense that If the NRS discovers a scheme that was not disclosed:
      Category Penalty / Consequence Administrative Fine Up to ₦1,000,000 for the failure to report.
      Notice Default ₦1,000,000 for the first day of failing to provide info + ₦10,000 per day.
      Criminal Sanction On conviction, imprisonment for up to 3 years or a heavy fine, or both.
      Professional Risk Intermediaries (Accountants/Lawyers) may be reported to their professional bodies (e.g., ICAN, CITN, NBA) for sanctions.
      Assessment The NRS will disregard the scheme, raise an additional tax assessment, and add interest at the CBN rate.
      Summary for Professionals
      If you are managing tax for a company, the era of "hidden" tax efficiency is over. The system is moving toward transparency by design.
      Documentation is key: If you enter a complex structure, you must have a "Tax Position File" ready to explain the commercial (non-tax) reason for the transaction.
      Self-Correction: If you realize a scheme wasn't disclosed, it is better to voluntarily disclose it before the NRS triggers a Tax Investigation, which is much more aggressive than a standard audit.