By Isqil Najim
As the new tax Act is set to commence in January 2026, engineers have been advised to avoid the ‘Professional Trap,’ as they are not exempt from tax compliance regardless of their annual turnover.
This warning was central to a sensitization public lecture organized by the Nigerian Society of Engineers (NSE) Ikeja Branch, under the leadership of Engr. Nimot Muili, aimed at shielding the profession from looming fiscal shocks. The session clarified that unlike other small businesses, professional firms are legally required to register for, charge, and remit VAT even if their income remains low.
The high-stakes session, held on December 17, 2025, served as a strategic masterclass for professionals to overhaul their business models before the Nigeria Tax Act (NTA) 2025 and its associated administrative acts take full effect.
The lecture, which brought together veteran fellows and emerging engineers, featured a comprehensive analysis by Adelowo Joshua Yinka, a distinguished tax and regulatory expert. He was joined by Mr. Ayinla Matthew Omotola, a seasoned auditor and risk manager, to warn that a “business as usual” approach to project financing could lead to terminal legal and financial consequences under the unified, modernized tax regime signed into law by President Bola Tinubu.
The event was attended by the 34th President of the Nigerian Society of Engineers, Engr. Margaret Aina Oguntala, the first female to lead the 65-year-old body. In her opening remarks, Engr. Oguntala highlighted necessity for the sensitization, noting that the engineering profession must remain at the forefront of policy advocacy.
“The engineering profession must remain responsive to the evolving policy and regulatory environment,” she said. She commended the Ikeja branch for taking the lead in bringing the new tax law to the forefront.
“This is most apt as the law comes into effect in January 2026, with far-reaching implications for engineering practice and project financing. I charge all members to participate actively and ensure a clear understanding of what this new tax law means for engineering practice.” She said.
The most startling revelation from the highly educative session was the clarification of the “Professional Trap.” While the NTA 2025 offers relief to small businesses, Mr. Adelowo Joshua Yinka revealed that engineering firms are explicitly excluded from these compliance safety nets.
“A professional firm cannot rely on low turnover to avoid VAT registration and filing obligations,” Joshua Yinka clarified.
He pointed to Section 23(4) of the Nigeria Tax Administration Act 2025, which expressly excludes providers of professional services—including engineering, architectural, auditing, and legal consulting—from being classified as small businesses for tax compliance exemptions.
“Whether your revenue is 1 million or 100 million, the obligation to register, charge, and remit VAT remains. You are a taxable person in the eyes of the law from day one.” he said.
He further warned that the Nigeria Revenue Service (NRS), which replaces the FIRS, will mandate electronic invoicing. “From 2026, any invoice that does not carry a valid Tax Identification Number (TIN) will result in non-deductible expenses and potential penalties of ₦3 million for the engaging party. We are moving toward a system of total fiscalization.”
The Session also beamed attention to project survival as Mr. Ayinla Matthew Omotola, Head of Internal Audit and Control, challenged engineers to think like financial architects. He stressed that technical precision is worthless if it is eroded by poor financial forecasting in a volatile economy.
“Ignorance of the law is not an excuse,” Mr. Matthew told the engineers. “As professionals, people believe you have it all—that you can recommend the best financial and operational solutions. You must use tools like Net Present Value (NPV) and Internal Rate of Return (IRR). If you don’t factor in Nigeria’s current realities—inflation and currency fluctuation—your project profit will be wiped out before you lay the first brick.”
“Project finance is a structured approach where debt and equity are repaid from project cash flows, not the sponsor’s balance sheet,” Mr. Matthew explained. “Effective investment decision-making ensures capital is allocated efficiently and returns are sustainable.
He emphasized that engineers must embrace a compliance culture and rigorous risk management. “You need an auditor—someone who looks at your back while you are walking forward, drawing your attention to where things might be going wrong financially or operationally.” He also explained the use of Special Purpose Vehicles (SPVs) to isolate financial and legal risks in large-scale projects.
The expert however, highlighted significant opportunities for firms pivoting toward sustainability. The new law introduces zero-rated VAT for renewable energy, a strategic move to solve Nigeria’s energy crisis through fiscal policy.
Responding to inquiries about sustainable building incentives, Mr. Joshua Yinka noted: “If you engage in renewable energy, the rate of VAT is zero. This is an incentive designed to encourage the shift away from fossil fuels, allowing firms to recover input VAT on their equipment.”
Mr. Matthew added that large-scale green projects could unlock global financing. “If you have converted from diesel to solar, you can apply for rebates and lower interest rates from institutions like the World Bank or IMF. You must be proactive and apply for these credits; they won’t just fall into your lap.” He added that these credits require proper understanding of investment principles and ethical requirements.
In her address, the Branch Chairman, Engr. Nimot Muili, emphasized that the session was designed to equip members with “practical insights needed to maximize benefits and minimize risks” in an era of rapid regulatory change.
As the branch prepares to close for the holidays on Monday, December 22, 2025, and reopen on Tuesday, January 6, 2026, the message to Nigeria’s engineers is clear: technical skill is the foundation, but tax and financial literacy are the walls that will protect the profession in the new era.