If you deduct PAYE from your staff but do not pay it to the tax authority by the 10th day of the following month, your company owes the unpaid tax, a 10% penalty and interest at commercial rates. That money was never the company's to spend. It belongs to the state, and the authority treats it that way. The case below is an anonymised composite of situations we see often, and the numbers are illustrative.
What does the law say about remitting PAYE?
An employer who pays salaries must deduct PAYE and remit it by the 10th day of the following month. BusinessDay set out the position in a September 2025 opinion piece on employers who deduct but do not remit: the deadline is the 10th, and the default carries a 10% penalty plus commercial interest on the amount not paid. Which authority receives the money depends on the employee. Staff in a state are generally taxed by the State Internal Revenue Service, while certain categories fall to the Nigeria Revenue Service (NRS). Confirm the right recipient for each group before you pay.
What happened to the Abuja logistics company?
The company has 140 staff and deducts about ₦9.6 million in PAYE every month. In a tight cash year, its finance team began paying suppliers first. PAYE was meant to follow "when cash allowed." For four consecutive months it did not. Salaries were paid net of tax, payslips showed the deduction, and nothing reached the authority.
The unremitted tax came to ₦38.4 million. Nobody in management saw it as debt, because it sat inside the cash balance and was spent on operations.
How did the problem surface?
It surfaced during a bank facility review. The bank asked for tax clearance and recent remittance evidence, and the figures did not match payroll. The company's own year-end audit prep also flagged a payroll liability that the ledger had quietly netted against cash. If this sounds like the lender scrutiny in our earlier late audited accounts case, it should. Lenders now ask for tax paperwork early.
How did VOG Global fix it?
We worked in four steps over three weeks.
- Reconcile. We matched 12 months of payroll registers to deductions in the ledger and to payment evidence. This fixed the exposure at ₦38.4 million, with no guesswork.
- Pay the principal first. The company raised the cash by delaying a capital purchase and remitted the full ₦38.4 million. Interest runs on the unpaid balance, so every week of delay costs money.
- Disclose before the authority asks. We wrote to the relevant tax office with the reconciliation, the payment proof and a candid explanation. Voluntary disclosure gives you a stronger case for relief than a default found on audit.
- Change the process. PAYE now sits in a separate bank account. A transfer is made on the day salaries are paid, and a named officer signs off on the remittance by the 5th of each month.
The company still paid interest and part of the penalty. Relief on the rest was a matter for the authority's discretion, which is why early disclosure and clean records matter.
What does late payment cost in 2026?
From 1 October 2026, a new federal order links interest on late tax payments to the CBN's Monetary Policy Rate (MPR) plus 1%, as Nairametrics reported on 24 September. We explain how that works in our myth vs fact piece on the new late payment interest rate. Check whether the order applies to the tax type and authority in your case before you budget for interest.
What this means for your business
PAYE is trust money. Treat it as a liability from the day payroll is run, not as spare cash. Three habits protect you: a dedicated PAYE account, a monthly check of payroll against remittance receipts, and a finance policy that names remittance as a priority above suppliers. Ask your auditor to test PAYE accruals at year end. A balance that grows month after month is the early warning.
FAQ
What is the deadline to remit PAYE in Nigeria? PAYE deducted in one month is due by the 10th day of the following month. Confirm the correct authority for your staff before paying.
What is the penalty for not remitting PAYE? The unpaid tax attracts a 10% penalty plus interest at commercial rates, as BusinessDay's 2025 analysis sets out. The exact charge depends on the authority and on any relief you secure.
Can I disclose a PAYE default voluntarily? Yes, and it usually helps. Pay the principal, document the reconciliation and write to the tax office before an audit finds it. Relief on penalties remains at the authority's discretion.
Unsure whether your payroll taxes are fully remitted? Contact VOG Global at vog.global for a confidential PAYE reconciliation and a clear plan before the authority or your lender asks the question.