How Most Private Schools in Lagos Are Registered — And Why It Matters for Tax Compliance

When conversations about tax exemptions arise, they often focus on incorporated companies. 

However, the reality across Nigeria—and particularly in Lagos State—is that most private schools are not registered as limited liability companies.

Current registration trends indicate that approximately:

• 71% of private schools operate as Business Names
• 29% are registered as Limited Liability Companies

This distinction is important. A school’s registration type determines which tax authority oversees it, how income is assessed, and what compliance processes apply.

As compliance expectations increase, many Lagos schools are adopting digital finance platforms like Sproutly Books — a school accounting software in Nigeria — to maintain accurate records and stay audit-ready.

What It Means to Be Registered as a Business Name  

Schools registered as Business Names are governed by a different tax framework from incorporated companies.

Key implications include:

• The school’s income is treated as personal income
• Oversight is handled by the State Internal Revenue Service (SIRS)
• Taxes are administered under Personal Income Tax (PIT) frameworks
• Compliance is monitored at the state level, rather than federally

This structure does not automatically result in higher taxes, but it does require clear documentation and proper engagement with state tax authorities.

 Lagos Tax Rules for Schools: What the Latest Enforcement Means

Lagos State continues to strengthen its tax administration processes to promote consistency and transparency.

In January 2026, the Lagos State Internal Revenue Service (LIRS) issued a public notice announcing the commencement of administrative penalties under the Nigeria Tax Administration Act (NTAA) 2025.

The notice clarifies that:

• Compliance requirements apply to all taxable persons, including schools and business names
• Administrative enforcement begins 1 January 2026
• Penalties relate primarily to processes, such as: Registration, Filing of returns, Record-keeping and Timely response to information requests

The objective, as stated by LIRS, is to encourage voluntary compliance and improve transparency across the tax system.

To reduce exposure to penalties, schools are increasingly turning to structured financial systems like Sproutly Books to ensure filings, records, and documentation remain consistent.

 Why Exemptions Do Not Eliminate Responsibilities 

Many schools benefit from:

• VAT exemptions on education services
• Reduced tax exposure due to size or sector
• Reliefs available to small businesses

However, these benefits operate within a compliance framework.

Schools—whether registered as business names or companies—are still expected to:

• Register correctly
• File accurate returns
• Maintain verifiable financial records
• Respond to official information requests
• Follow required reporting standards

In Lagos State, administrative penalties focus on how obligations are met, not simply whether tax is payable.

 Digital tools like Sproutly Books make this significantly easier by generating secure audit trails and real-time financial reports.

 Tax Compliance Requirements for a Small Private School in Lagos

(A Lagos-Based Scenario: Little Stars Learning Centre)  

Consider Little Stars Learning Centre, a small private school in Ikeja:

• Registered as a Business Name
• Annual revenue of ₦90 million
• Operates fully within the education sector
• Qualifies for several tax reliefs

To remain compliant, the school is expected to:

• Maintain clear and organized income records
• File required returns on time
• Ensure financial information can be verified if requested
• Engage proactively with LIRS where clarification is needed

When these steps are followed, schools can continue to operate confidently while benefiting from available exemptions.

Why School Structure Is Critical for Long-Term Tax Compliance

Lagos State’s tax framework reflects a broader policy direction:
incentives and exemptions work best when supported by clear records and transparent processes.

For schools—particularly those registered as Business Names—understanding registration status and compliance expectations helps:

• Preserve available tax benefits
• Reduce administrative challenges
• Support long-term financial planning

 The Future of Tax Compliance for Private Schools in Lagos

Just as effective education depends on structure and accountability, sustainable school finance depends on clarity and consistency.

For school owners in Lagos State, the key question is no longer simply “Are we exempt?”
It is increasingly “Are our records clear, accurate, and up to date?”

Schools that treat proper documentation, digital records, and transparent reporting as part of good governance—not a burden—will be best positioned to thrive within Nigeria’s evolving tax environment.

RESEARCH CREDITS:

PIERRE NWOKE - CEO, SPROUTLY

EDITOR:

BENITA ALASA - HEAD OF COMMUNITY AND COMMUNICATIONS, SPROUTLY

CONTRIBUTORS:

YINKA ADESANYA AND CO CHARTERED ACCOUNTANTS

OLUKUNLE ORIJIMUPA  (LL.M. B.L, LL.B., M.Sc., B.Sc. FCA, FCTI, ACIS, AAT.)

SOURCES

1. Overview of Nigeria’s 2025 Tax Reform Laws  

https://fiscalreforms.ng/index.php/2026/01/04/gazetted-tax-reform-acts-authorised-by-national-assembly/ 

• The Nigeria Tax Administration Act (NTAA) and related Acts were signed into law on 26 June 2025, modernising Nigeria’s tax system.
   PwC Nigeria: Nigeria - Corporate - Significant developments
  https://pwc.com/ng/en/publications/the-nigerian-tax-reform-acts.html
• Overview including consolidation and harmonisation of major tax laws, including VAT, CIT, PIT, and more.
   Mondaq: The Nigerian Tax Reform Acts 2025
  https://www.mondaq.com/nigeria/tax-authorities/1652230/the-nigerian-tax-reform-acts-2025-an-in-depth-guide-for-businesses-investors-and-taxpayers

2. Mandatory Digital Tax Compliance (E-Invoicing and VAT Fiscalisation)  

• The new tax regime introduces mandatory e-invoicing and VAT fiscalisation to improve digital compliance.
   SeamlessHR: Nigeria’s 2025 Tax Reform Acts — Key Tax Changes
  https://seamlesshr.com/blog/nigerias-2025-tax-reform-acts-key-tax-changes/

3. Small Business / Small Company Tax Relief 
 Kleinfeld LP: Small Companies and Tax Exemption under Nigeria Tax Act 2025
https://kleinfeldlp.com.ng/small-companies-and-tax-exemption-under-the-nigeria-tax-act-2025/

4. Compliance Expectations and Penalties  

Banwo Ighodalo: Nigeria’s New Tax Regime — Compliance, Offences & Penalties
https://www.banwo-ighodalo.com/grey-matter/nigerias-new-tax-regime-a-taxpayers-guide-to-compliance-offences-penalties-enforcement-and-dispute-resolution/

• Administrative penalties may apply for failure to use digital fiscalisation systems under Section 104 of the NTAA.
   LawGlobalHub — Section 104 Nigeria Tax Administration Act 2025
  https://www.lawglobalhub.com/section-104-nigeria-tax-administration-act-2025/

5. Enforcement Direction (e.g., in Lagos State)  .
 BusinessDay Facebook page — LIRS enforcement of NTAA provisions
https://www.facebook.com/businessdayng/posts/the-lagos-state-internal-revenue-service-lirs-has-enforced-specific-provisions-o/1328041032672832/

• Citing activation of Power of Substitution under NTAA Section 60 (used in some enforcement context).
   ThisDayLive — Lagos Revenue Service activates NTAA provisions
  https://www.thisdaylive.com/2026/01/27/lagos-revenue-service-activates-power-of-substitution-to-boost-tax-recovery/