Many business owners are preparing for possible tax changes, but the bigger threat isn’t a new tax law.
It’s poor tax management.
In my experience, many businesses are unknowingly paying more tax than they should simply because they fail to take advantage of legitimate tax positions and maintain proper records.
Here are some reasons why many businesses will pay more taxes in 2026:
1) Poor Record Keeping
If your records are incomplete, disorganized, or inaccurate, you may struggle to substantiate deductible expenses during a tax audit.
And when an expense cannot be supported, it may be disallowed.
The result?
Higher taxable profits and higher tax liabilities.
2) Failure to Claim Input VAT
Many businesses incur VAT on purchases every month but fail to properly document and claim eligible input VAT credits.
When this happens, they end up bearing VAT as a cost instead of utilizing the credit to reduce their VAT payable.
Over time, this can amount to millions of naira.
3) Neglecting Withholding Tax (WHT) Credits
This is one of the most common leakages I see.
Customers deduct WHT from payments and issue credit notes or certificates, but many businesses fail to track, reconcile, and utilize these credits.
The consequence is painful:
You pay Company Income Tax while valuable WHT credits remain unused.
That’s money sitting on the table.
4) Inconsistent Tax Filings
A company reports one figure in its VAT returns, another in its PAYE records, and a different figure in its annual financial statements.
These inconsistencies create red flags.
With increasing data analytics and digital tax administration, such discrepancies are becoming easier to detect.
5) Unusual Transaction Patterns
Large cash deposits, unexplained revenue fluctuations, related-party transactions without proper
documentation, and transactions that do not align with declared business activities may attract tax scrutiny.
The more questions a transaction raises, the more attention it may receive.
6) Weak Internal Controls
Many businesses focus on making sales but neglect processes around documentation, approvals, reconciliations, and tax compliance.
Weak controls often lead to missed tax credits, filing errors, penalties, and avoidable assessments.
7) The Rise of Digital Tax Administration
With e-Invoicing, improved data matching, and enhanced monitoring capabilities, tax authorities have more visibility into business transactions than ever before.
The era of relying on poor documentation and hoping no one notices is rapidly disappearing.
The businesses that will save the most tax in 2026 may not be those with the smartest tax avoidance strategies.
They will be the businesses that:
– Keep accurate records
– Reconcile their taxes regularly
– Track and utilize WHT credits
– Properly claim input VAT
– Maintain consistency across all tax filings
– Invest in tax compliance before tax authorities come knocking
Sometimes the biggest tax saving opportunity is not finding a loophole.
It’s fixing the leakages already happening inside the business.
What other tax leakages have you observed businesses commonly overlook?
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