EY urges Nigerian firms to prepare for new tax, reporting rules

Ernst & Young. Credit: The Economist.

Nigerian companies face growing pressure to overhaul their tax management, financial reporting and internal control systems as regulatory changes, including new tax laws, IFRS 18 and mandatory sustainability disclosures, raise the demands on corporate boards.

Executives at Ernst & Young said companies that fail to prepare for the changes risk regulatory exposure, weak financial reporting and reduced investor confidence, urging audit committees to take a more active role in monitoring management.

The warning came at the 2026 Audit Committee Transformation Summit organised by EY in Lagos on Wednesday.

EY West Africa’s Partner, International Tax and Regulations, Adesope Okoh, said tax management must become a strategic board-level issue rather than remain a routine compliance responsibility.

She urged audit committees to regularly assess their companies’ tax exposure, demand proper documentation of transactions and identify potential liabilities before tax authorities conduct audits.

Okoh said businesses should also consider tax implications before making investment decisions or changing their business models, warning against waiting for tax authorities to identify compliance weaknesses.

She noted that Nigeria’s new tax framework would require companies to continuously review their internal processes as supplementary regulations and further changes emerge.

On financial reporting, EY Ghana Country Manager, Emmanuel Adekahlor, urged companies to begin preparations for IFRS 18, which takes effect in 2027.

He said businesses needed to assess the differences between their existing accounting practices and the new requirements, including changes to their chart of accounts, systems, internal controls and reporting processes.

Adekahlor said audit committees should demand regular updates from management on implementation plans and ensure that external auditors were involved early in the transition.

He also warned that companies must consider the effect of the new standard on comparative financial statements, particularly for businesses preparing interim reports.

On sustainability reporting, EY executives said companies needed to strengthen their capacity to provide credible and verifiable information on climate-related risks and other sustainability issues.

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They urged audit committees to ensure that organisations had appropriate data management systems, skilled personnel and governance structures to support disclosures and prevent greenwashing.

Also speaking at the summit, the Registrar-General and Chief Executive Officer of the Corporate Affairs Commission, Hussaini Magaji, warned that companies could undermine their credibility and investment prospects through poor corporate records and weak regulatory compliance.

He said directors must take responsibility for ensuring accurate corporate records, timely statutory filings and proper disclosure of persons with significant control.

Magaji said outdated ownership information and failure to file annual returns could expose businesses to regulatory sanctions, reputational damage and declining investor confidence.

He urged directors to move beyond treating annual returns as an annual regulatory ritual and embrace continuous accountability and transparent ownership structures.

According to him, companies with credible governance systems would be better positioned to attract investment, secure credit and participate in public procurement.

Meanwhile, EY Associate Partner, Strategy and Transactions, Olayinka Oyetunji, said Nigeria’s economic growth outlook faced downside risks from rising debt-servicing costs, insecurity and election-related uncertainty.

She projected that approximately 43 per cent of government revenue would go into debt servicing in 2026, limiting resources available for infrastructure and economic development.

Oyetunji also said about 88 per cent of Nigeria’s capital importation represented foreign portfolio investment, highlighting the need to attract more sustainable foreign direct investment.

She urged corporate boards to strengthen supply-chain resilience, diversify energy sources and improve liquidity management amid economic uncertainty.

The summit, themed ‘Shaping High-Performing Audit Committees,’ brought together regulators, board members, audit committee executives and business leaders to examine emerging challenges in corporate governance and financial oversight.