How Nigeria’s new tax reforms offer assistance to small businesses

Over the years, Aisha Sulaiman hopes and pray to get the opportunity to expand cloth cloth and clothing costumes. When the State Government of Oyo released a statement in 2024 which announced support for women with small scale businesses, Aisha believed that her long-awaited opportunities finally arrived.

But a little he knew that the opportunity was only open to the business listed under the Corporate Affairs Commission (CAC). “I lost the opportunity because my business was not registered,” he said, remembering with regret and imagining how support could improve its business.

The reason not to register reflects a broader crisis faced by many business owners in Nigeria: Multiple taxation. “I know that once I registered, my business will be subject to several taxes. That prevented me from registering it for four years now.”

With the signing of a new tax reform bill into a law by the Federal Government, Aisha now expressed her readiness to register her business.

“Over 90 Percent of Small, Micro, and Nano-Scale Enterprises will no Longer have to worry about tax compliance burdens,” Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Said After President. Law on June 29. “These businesses are now exempt from paying corporate income tax, charging vat, deducting withholding tax, or remitting pay for their staff.”

As part of a broader effort to overhaul the Nigerian tax regime, the presidential fiscal policy committee and tax reform introduced a series of changes. This reform triggers considerations, reviews, and policy work for months before finally becoming law.

Scheduled to take effect in January 2026, tax reform bills consolidate four parts of the law into simplified and accessible frameworks, making compliance easier for individuals and businesses. Among these are the Nigerian Tax Administration Bill, which introduces standard procedures and is more efficient for tax collection at all levels of government, with an emphasis on digital systems and transparency. Also includes the Nigerian Revenue Service Bill (Establishment), which replaces the former Inland Federal Revenue Service (FIRS) with a stronger and more autonomous body, is now called the Nigeria Revenue Service and is assigned to handle tax and non-tax revenues.

Another key element is the Bill on the Joint Revenue Council (Establishment), which introduces protection mechanisms such as the Tax Appeals Court and the Tax Ombudsman to resolve complaints and disputes. And the last is the Nigerian tax bill.

While reforms introduce substantial changes – such as the Redistribution of Value Added Tax (VAT) – Small and Medium Enterprises (SMEs), the backbone of the Nigerian economy, is positioned the most benefits.

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Another big shift is the release of small companies with turnover under the N50 million from the company’s income tax. This change allows smaller businesses to channel more resources into growth and sustainability. Previously, exemption only applies to businesses earning under the N25 million per year.

“This can allow small-spale industries to probably increase in their profitability and scale up where possible and be able to employee more nigerians and grow into competitiveness, as the tax law clearly stats and expects,” Dr. Farouk Aunt-Farouk, An Economic Expert and Lecturer at the Department of Political Economy, University of Abuja, Said “There have been exemption for a lot of consumer goods, essential goods, for Examples, and even the refunds on vat are promoted more quickly and so on.

By freeing SMEs from VAT, new policies further reduce the tax burden on this sector. Stransact, independent audit, tax, and consulting company, have long warned about excessive and multiple taxation hazards, which can prevent investment, hamper growth, and cause business closure. UKM is very vulnerable, often bearing the burden of high operating costs caused by overlapping taxes worn by different levels of government.

“Some taxation leads to reduced competitiveness,” recorded the Stransact report. “When a business is subject to some taxes and levies, it reduces their ability to compete with businesses that operate in other countries.”

With this reform, small -scale industrialists now feel more confident in registering their business. Hameedah Ahmad, a small business owner, is one of the entrepreneurs. “One of my fear is some of the taxes that I have to pay, but with new reforms, I feel confident to register,” he said.

Farouk Aunt-Farouk highlights that many developed countries, including China, the United States, and France, are very dependent on small-scale industries, sometimes up to 90 percent, for productivity, economic transformation, and technological advances.

“So, it is important that this economic sector is given many things,” he added, noting, “Many of the reforms that we bring to the industry are only reforms that bring back a little life that has been taken from them intentionally by other government policies.”

However, he warned that certain persistent challenges can damage the impact of reform. Such as the devaluation of naira, corruption, and infrastructure deficits. He stressed that while small -scale industries can now enjoy greater turnover assistance, their dependence on weakening currencies causes new problems.

“At the same time it is the fact that there is no policy to ensure that these companies do not depend on imports. There is no encouragement or investment in infrastructure, in technological advances, in education where you can find alternative items or alternative discoveries and innovations that can make small-scale industries cheaper, more available at home, and more easily implemented.”

By Sherefdeen Ahmad, a free trade partner at the Ominira Initiative and a journalist with a liberalist.