How Tax Non-Compliance Can Affect Capital Allowance Claims in Nigeria

Buying equipment, vehicles, computers, cameras or qualifying software for your business may reduce taxable income through capital allowances. However, under Nigeria’s tax framework effective from January 2026, an asset must meet specific conditions before it qualifies. The asset must be owned and used for the trade or business. Where VAT was due but not charged, or applicable import duties and levies were not paid, the expenditure may not qualify for capital allowance. A late tax or VAT return does not automatically cancel every capital allowance claim, but it can lead to penalties and make compliance more difficult. Freelancers, agencies and companies should keep invoices, payment records, VAT documents, import documents and evidence that each asset is used for the business. Good records make it easier to support tax returns and capital allowance claims if the tax authority requests clarification. This is a general guide to the 2026 tax framework. The treatment of a specific asset may depend on the taxpayer, transaction and type of expenditure.

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