The Nigerian government has announced significant tax reforms aimed at easing financial pressures on informal workers and small-scale entrepreneurs.
Exemptions for micro and small businesses
Under the new policy, 97% of informal businesses earning ₦25 million or less annually will be exempt from all taxes. These include Value Added Tax (VAT), company income tax, withholding tax, and Pay As You Earn (PAYE). The measure is expected to affect millions of operators in the informal economy.
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The reforms were introduced by the Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC). Committee chair Taiwo Oyedele stated, “Chasing micro businesses to pay tax is wickedness,” highlighting the need to allow smaller ventures to grow without tax burdens.
Relief for individuals and SMEs
Individuals earning below ₦800,000 yearly will no longer be required to pay personal income tax. Small and medium-sized enterprises (SMEs) with annual revenue under ₦100 million will also benefit from simplified tax compliance rules.
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Withholding tax adjustments
The government will overhaul the withholding tax system, removing obligations for farmers, traders, and small manufacturers to reduce duplication and encourage voluntary compliance.
Experts have welcomed the policy but warn that its success will depend on effective implementation.
