Tax Record Keeping Requirements for Nigeria: Complete Guide

Proper record keeping is the foundation of tax compliance. Whether you're self-employed, running a company, or managing employees, maintaining accurate and organized tax records protects you during audits, supports deductions, and ensures penalty-free compliance.

This comprehensive guide covers everything you need to know about tax record keeping requirements in Nigeria under the Tax Act 2025.

Table of Contents

1. Why Tax Records Matter
2. Legal Requirements
3. What Records to Keep
4. How Long to Keep Records
5. Storage Methods: Digital vs. Physical
6. Organizing Your Tax Records
7. Records for Different Tax Types
8. Preparing for Tax Audits
9. Common Record-Keeping Mistakes
10. Tools and Software

Why Tax Records Matter {#why-records-matter}

Legal Compliance

Tax Act 2025 Requirements:

• Mandatory record keeping for all taxpayers
• Must be available for FIRS inspection
• Failure to maintain records = penalties

Penalty for Poor Records:

• ₦50,000 - ₦500,000 fine
• Estimated tax assessments (usually higher than actual)
• Disallowance of claimed deductions

Practical Benefits:

✓ Audit Protection - Defend your returns with evidence
✓ Deduction Support - Prove expenses are legitimate
✓ Dispute Resolution - Challenge incorrect FIRS assessments
✓ Business Insights - Track profitability and cash flow
✓ Loan Applications - Banks require tax records
✓ Contract Bids - Government tenders require tax clearance
✓ Peace of Mind - Sleep well knowing you're compliant

Real-Life Example:

Scenario: FIRS audits a consultant claiming ₦2M in business expenses.

Poor Records:

• Consultant has only 40% of receipts
• FIRS disallows ₦1.2M in expenses
• Additional tax: ~₦270,000
• Penalty: ₦50,000 + interest

Good Records:

• Consultant provides all receipts, bank statements, invoices
• FIRS accepts all ₦2M in expenses
• Result: No additional tax or penalties

Lesson: Good records save money and stress.

Legal Requirements {#legal-requirements}

Tax Act 2025 Provisions:

Section 92: Record-Keeping Obligations

Every taxpayer MUST keep:

• Books of account
• Supporting documents
• Bank statements
• Tax returns and receipts
• For at least 6 years

Section 93: Access to Records

FIRS officials have the right to:

• Inspect records at any time (with notice)
• Enter business premises
• Request specific documents
• Take copies of records

Your Obligation: Provide access and cooperate fully.

Refusal Penalty: ₦50,000 - ₦5,000,000 + possible criminal charges.

Who Must Keep Records?

Everyone!

• Individuals: Self-employed, landlords, investors
• Companies: All limited liability companies
• Employers: Anyone paying salaries (PAYE records)
• VAT-registered businesses: Sales and purchase records

Even if:

• You're a small business
• You made a loss
• You're exempt from certain taxes

Rule: If you have a TIN, keep records.

What Records to Keep {#what-to-keep}

1. Income Records

Purpose: Prove all income sources.

Documents:

• Sales invoices (issued to customers)
• Contracts and agreements
• Payment receipts (cash, bank transfers, cheques)
• Bank statements (showing deposits)
• E-commerce platform reports (if selling online)
• Rental income records (tenancy agreements, rent receipts)
• Dividend statements
• Interest statements

Best Practice: Match income records to bank deposits monthly.

2. Expense Records

Purpose: Support claimed deductions.

Documents:

• Purchase invoices (from suppliers)
• Receipts for business expenses
• VAT invoices (if VAT-registered)
• Rent receipts (office/business premises)
• Utility bills (electricity, water, internet)
• Transport/fuel receipts
• Advertising and marketing costs
• Professional fees (accountants, lawyers)
• Bank charges and loan interest

Key Rule: Expense must be:

• Business-related (not personal)
• Wholly and exclusively for business
• Supported by receipt/invoice (name, date, amount, description)

3. Payroll Records (For Employers)

Purpose: Support PAYE deductions and remittances.

Documents:

• Employee contracts/offer letters
• Monthly payslips
• PAYE calculation sheets
• Pension contribution records (8% employee + 10% employer)
• NHF contribution records (2.5%)
• PAYE remittance receipts
• Annual tax summary for each employee

Retention: At least 6 years after employee leaves.

4. Asset Records

Purpose: Support capital allowance claims.

Documents:

• Purchase invoices for assets (machinery, vehicles, equipment, buildings)
• Receipts and payment proof
• Asset register (list of all business assets)
• Depreciation schedules
• Capital allowances computations
• Disposal records (if sold/scrapped)

Example Asset Register:

| Asset | Purchase Date | Cost | Initial Allowance | Annual Allowance | Written Down Value | |-------|--------------|------|------------------|-----------------|-------------------| | Vehicle | 2023-05-10 | ₦5,000,000 | ₦2,500,000 (50%) | ₦625,000 (25%) | ₦1,875,000 | | Laptop | 2024-01-15 | ₦800,000 | ₦400,000 (50%) | ₦120,000 (30%) | ₦280,000 |

5. Tax Filing Records

Purpose: Prove compliance and payment.

Documents:

• Filed tax returns (all types: PAYE, VAT, CIT, Personal)
• Tax computation schedules
• TaxPro-Max acknowledgment slips
• Payment receipts (RRR confirmations, bank tellers)
• Tax Clearance Certificates
• Assessment notices from FIRS
• Correspondence with FIRS

Storage: Permanent (never discard).

6. Banking Records

Purpose: Cross-verify income and expenses.

Documents:

• Monthly bank statements (business account)
• Cheque stubs
• Credit/debit card statements (business expenses)
• Transfer confirmations
• Loan agreements and repayment schedules

Reconciliation: Match bank transactions to accounting records monthly.

7. VAT Records (If Registered)

Purpose: Support VAT returns.

Documents:

• Sales invoices (showing VAT charged - "output VAT")
• Purchase invoices (showing VAT paid - "input VAT")
• VAT returns filed (monthly)
• VAT payment receipts
• VAT registration certificate

VAT Invoice Requirements:

• Seller's name, address, TIN, VAT number
• Invoice number and date
• Buyer's name and address
• Description of goods/services
• Amount (excluding VAT)
• VAT amount (7.5%)
• Total amount (including VAT)

8. Supporting Documents

Purpose: Provide additional context.

Documents:

• Business registration certificate (CAC or business name)
• TIN certificate
• Business permits and licenses
• Insurance policies
• Lease/tenancy agreements
• Loan documents
• Partnership agreements
• Directors' resolutions

How Long to Keep Records {#how-long}

Minimum Retention Period: 6 Years

Tax Act 2025 Requirement: All tax records must be kept for at least 6 years from the end of the tax year.

Example:

• Tax Year: 2025
• Records must be kept until: December 31, 2031

Why 6 Years?

FIRS Audit Period:

• FIRS can audit tax returns up to 6 years back
• If fraud suspected: no time limit

Statute of Limitations:

• Tax disputes must be raised within 6 years
• After 6 years, tax year is generally closed

Recommended Retention:

| Document Type | Minimum | Recommended | |--------------|---------|-------------| | Income/Expense Records | 6 years | 7 years | | Tax Returns & Payments | 6 years | Permanent | | Asset Records | 6 years after disposal | Permanent | | Payroll Records | 6 years | 7 years | | VAT Records | 6 years | 7 years | | TIN Certificate | NA | Permanent | | Business Registration | NA | Permanent |

Pro Tip: Digital storage is cheap - keep everything permanently.

Storage Methods: Digital vs. Physical {#storage-methods}

Physical Storage

Advantages: ✓ Original documents (legal weight in disputes)
✓ No technology required
✓ Familiar for non-tech users

Disadvantages: ✗ Space-consuming
✗ Risk of fire, water damage, theft
✗ Difficult to search
✗ Degrades over time

Digital Storage (Recommended)

Advantages: ✓ Space-efficient - Unlimited cloud storage
✓ Searchable - Find documents in seconds
✓ Secure backups - Multiple copies in cloud
✓ Accessible anywhere - Mobile/computer access
✓ Audit-ready - Easy to provide to FIRS

Disadvantages: ✗ Requires technology/internet
✗ Security risks (if not encrypted)

Best Practice: Hybrid Approach

Recommendation:

• Scan all physical documents to PDF
• Store digitally in cloud (Google Drive, Dropbox, OneDrive)
• Keep originals of critical documents (contracts, certificates)
• Dispose of non-critical physical records after scanning

Critical Physical Documents to Keep:

• TIN certificate (original)
• CAC certificate (original)
• Property deeds
• Signed contracts

Digital Storage Tools:

Cloud Storage (Free Options):

1. Google Drive - 15GB free
2. Microsoft OneDrive - 5GB free
3. Dropbox - 2GB free

For Business (Paid Plans):

• Google Workspace - ₦3,000/month (100GB+)
• Microsoft 365 - ₦2,500/month (1TB+)

Accounting Software (Auto-Storage):

1. QuickBooks Online - Stores receipts, invoices, bank records
2. Xero - Cloud-based accounting with document attachment
3. Zoho Books - Free for small businesses
4. Wave Accounting - Free accounting + invoicing

Benefit: Automatically organizes and stores financial records.

Scanning Best Practices:

Equipment:

• Smartphone (use scanning apps)
• Flatbed scanner
• Multi-function printer with scan feature

File Format:

• PDF (preferred for receipts, invoices)
• JPEG (for photos of documents)

Naming Convention:

YYYY-MM-DD_DocumentType_Description.pdf

Examples:

• 2025-10-15_Invoice_Client-ABC-Software-Development.pdf
• 2025-11-03_Receipt_Office-Rent-November.pdf
• 2025-12-31_Tax-Return_CIT-2025.pdf

Organization:

📁 Tax Records/
  📁 2025/
    📁 Income/
      - 2025-01-10_Invoice_001.pdf
    📁 Expenses/
      - 2025-01-12_Receipt_Rent.pdf
    📁 Tax Filings/
      - 2025-06-30_CIT-Return.pdf

Organizing Your Tax Records {#organizing}

Folder Structure (Digital):

📁 Business Name - Tax Records/
  📁 Permanent Documents/
    - TIN Certificate.pdf
    - CAC Certificate.pdf
    - Business License.pdf
  
  📁 2025/
    📁 Income/
      📁 Invoices Issued/
      📁 Payment Receipts/
    📁 Expenses/
      📁 Rent/
      📁 Utilities/
      📁 Supplies/
      📁 Transport/
    📁 Payroll/
      📁 Payslips/
      📁 PAYE Returns/
    📁 VAT/
      📁 Sales (Output VAT)/
      📁 Purchases (Input VAT)/
      📁 VAT Returns/
    📁 Tax Filings/
      - CIT Return 2025.pdf
      - Tax Payment Receipts/
  
  📁 2024/
    [Same structure]

Physical Filing (If Used):

Supplies Needed:

• Lever arch files or ring binders
• Dividers with tabs
• Labels
• Filing cabinet (lockable)

Organization:

• One binder per tax year
• Dividers for each category (Income, Expenses, Tax Filings)
• Receipts in chronological order
• Store in secure, dry location

Monthly Routine:

First Week of Every Month:

1. Collect documents from last month
2. Scan physical receipts to PDF
3. Upload to cloud storage
4. Name files using convention
5. Reconcile bank statements
6. Update accounting software
7. File physical docs (if keeping)

Time Required: 1-2 hours/month

Benefit: Never scramble during tax season or audits.

Records for Different Tax Types {#by-tax-type}

1. Personal Income Tax (Self-Employed)

Must Keep:

• All income sources (invoices, contracts, bank deposits)
• Business expenses (receipts, invoices)
• Bank statements
• Previous tax returns and receipts
• TIN certificate

Example Scenario: Freelance graphic designer must keep:

• Client invoices (showing income)
• Software subscriptions (Adobe, Canva)
• Internet bills
• Co-working space rent
• Equipment purchases (laptop, tablet)
• Marketing expenses (ads, website)

2. Company Income Tax (CIT)

Must Keep:

• Audited financial statements (annual)
• General ledger
• Sales and purchase invoices
• Asset register and capital allowances
• Bank statements and reconciliations
• Director/shareholder details
• Previous CIT returns and assessments

3. PAYE (Employers)

Must Keep:

• Employee personal files (contracts, TINs)
• Monthly payroll records
• PAYE calculation sheets
• Pension and NHF contributions
• PAYE remittance receipts
• Annual employee tax summaries
• PAYE returns filed with FIRS

4. VAT

Must Keep:

• Sales invoices (issued) - showing VAT charged
• Purchase invoices (received) - showing VAT paid
• VAT registration certificate
• Monthly VAT returns
• VAT payment receipts
• Sales and purchase day books

Preparing for Tax Audits {#audit-preparation}

FIRS Audit Triggers:

Random Selection:

• FIRS randomly audits a percentage of returns annually

Risk-Based Selection:

• Large refund claims
• Significant year-on-year income decrease
• High expense-to-income ratio
• Industry benchmarking (your figures differ from similar businesses)
• Tips from whistleblowers

Audit Notice:

FIRS Will:

• Send written notice (30-90 days before audit)
• Specify documents required
• State audit date and location (office or your premises)

Your Response:

1. Don't panic - Audits are routine
2. Review notice carefully - Note deadlines
3. Gather requested documents
4. Consult tax professional (recommended)
5. Organize records logically
6. Prepare summary explanations

During the Audit:

Do: ✓ Be cooperative and professional
✓ Provide requested documents promptly
✓ Answer questions honestly
✓ Ask for clarification if unsure
✓ Keep copies of everything provided
✓ Request audit findings in writing

Don't: ✗ Volunteer unnecessary information
✗ Alter or fabricate documents
✗ Obstruct auditors
✗ Sign documents you don't understand
✗ Make verbal admissions of wrongdoing

After the Audit:

Possible Outcomes:

1. No adjustment - Return accepted as filed
2. Additional tax owed - FIRS issues assessment
3. Refund due - Overpayment returned
4. Penalty - For errors or non-compliance

If Additional Tax Assessed:

• Review assessment carefully
• Object if incorrect (30-day window)
• Pay if correct (to avoid interest)
• Request payment plan if needed

Common Record-Keeping Mistakes {#mistakes}

1. No Separation of Personal and Business

Mistake: Using one bank account/credit card for personal and business.

Fix:

• Open separate business bank account
• Use business card only for business expenses
• Never mix personal receipts with business records

2. Missing Receipts

Mistake: "I lost the receipt, but I definitely paid for it."

Fix:

• Photograph receipts immediately (phone camera)
• Upload to cloud same day
• Request duplicate receipt if lost
• Use credit card (creates automatic record)

3. Poor Documentation

Mistake: Receipt says "miscellaneous" or "payment received" with no details.

Fix:

• Request detailed receipts (itemized)
• Write notes on receipts (what, why, who)
• Keep supporting documents (contracts, agreements)

4. Discarding Records Too Soon

Mistake: "It's been 3 years, I can throw it away."

Fix:

• Keep for 6 years minimum (Tax Act requirement)
• Better: Keep digitally forever (storage is cheap)

5. No Backup

Mistake: All records on one computer (crashes/gets stolen).

Fix:

• 3-2-1 Rule:
  • 3 copies of data (original + 2 backups)
  • 2 different storage types (computer + cloud)
  • 1 offsite backup (cloud storage)

6. Unorganized Storage

Mistake: "I have all receipts, just in a shoe box!"

Fix:

• Organize by year → category → date
• Use consistent naming convention
• Index important documents
• Monthly filing routine

Tools and Software {#tools}

Free Tools:

1. Google Drive + Google Sheets

• Store scanned documents (15GB free)
• Track income/expenses in spreadsheets
• Free mobile app for scanning

2. Wave Accounting

• Free accounting software
• Invoicing and expense tracking
• Receipt scanning via mobile app
• Automatic bank sync

3. Zoho Books (Free Plan)

• Up to ₦500K annual revenue
• Invoicing + expense tracking
• Basic reports

Paid Tools (Worth It for Businesses):

1. QuickBooks Online

• Cost: ~₦5,000/month
• Features: Full accounting, payroll, VAT tracking, receipt capture
• Best For: Small to medium businesses

2. Xero

• Cost: ~₦4,000/month
• Features: Cloud accounting, bank feeds, multi-currency
• Best For: Growing businesses with multiple revenue streams

3. Zoho Books (Paid)

• Cost: ~₦3,000/month
• Features: Full accounting, invoicing, inventory
• Best For: Budget-conscious businesses

Receipt Scanning Apps:

1. Adobe Scan (Free)

• High-quality PDF scans
• Auto-crop and enhance
• Save to cloud

2. Microsoft Lens (Free)

• Scan documents, receipts, whiteboards
• Export to OneNote, OneDrive
• Built-in OCR (text recognition)

3. Expensify

• Scan receipts via mobile
• Auto-categorize expenses
• Integrates with accounting software

Key Takeaways

✅ Keep all records for 6+ years - Tax Act requirement
✅ Go digital - Scan and store in cloud (secure, accessible)
✅ Organize monthly - Don't wait until tax season
✅ Separate business and personal - Different accounts, records
✅ Back up everything - 3-2-1 rule (3 copies, 2 types, 1 offsite)
✅ Use accounting software - Automates organization
✅ Audit-ready mindset - Assume FIRS will review any year

Record-Keeping Checklist

• [ ] TIN certificate (permanent storage)
• [ ] Business registration docs (permanent)
• [ ] Separate business bank account
• [ ] Cloud storage account set up
• [ ] Folder structure created (by year/category)
• [ ] Scanning app installed on phone
• [ ] Monthly filing routine scheduled (calendar reminder)
• [ ] Accounting software chosen (if applicable)
• [ ] Backup system in place (3-2-1 rule)
• [ ] Receipts uploaded within 7 days

Tools & Resources

• Tax Filing Guide - What to file, when
• Avoiding Penalties - Stay compliant
• Tax Calculators - Verify your tax liability
• AI Tax Assistant - Get instant record-keeping advice

Need Help?

• Use our AI Tax Assistant for personalized record-keeping strategies
• Consult an accountant or tax professional for complex situations
• Contact FIRS: +234 700 CALL FIRS (2255 3477)

Disclaimer: Record-keeping requirements may be updated. Always verify current requirements with FIRS. This guide is for educational purposes and does not constitute professional advice.

Related Articles:

• Filing Tax Returns Guide
• Avoiding Tax Penalties
• Tax Registration Guide
• Understanding VAT