Opinion … Beyond Big Business: What is the meaning of Nigerian new tax law for UKM

In June 2025, President of the Tinubu Soccer Approve four new tax bills Following a broad consultation and a variety of national debates that kicked into the policy of the process, amid the challenges that limit the nation since the current government in office.

Bill: Nigerian Tax Bill, Nigerian Tax Administration Bill, Nigerian Revenue Service Bill (Establishment), and the Joint Revenue Council Bill (Establishment), was implemented after being passed by the National Assembly, the country’s legislative arm. Described as ‘historical’, the presidency notes that the billing “is expected to significantly change the tax administration in the country, which leads to increased income, increasing the business environment, and encouragement in domestic and foreign investment.”

In broader terms, bills are also believed to strengthen the Fragmented Tax Law Nigeria into an Integrated Law and establish a uniform legal and operational framework for tax administration throughout the federal, state and local governments.

Taxation in Nigeria, just like any country throughout the world, plays an important role in economic development and is a major source of income for the government. However, before the reforms introduced by the administration led by Tinubu, the tax process and revenue generation were always marked by overlapping levies, duplicated regulations, low accountability, and inefficiency.

Even worse, FIRS (now NRS), the Apex Nigerian Tax Administration Agency, is disturbed by administrative inefficiencies, thereby damaging taxpayer confidence. The taxation system, such as company income tax (CIT), capital gain tax (CGT), and new development levies, as a result pose a threat to SMEs. And because new startups usually do not have the capacity to navigate this labyrinth, these small companies, especially those who have an annual turnover of less than ₦ 100 million and fixed assets below ₦ 250 million, have disproportionate burdens, with a tax ratio to Nigerian GDP that continues to linger between the lowest around the world. This reality hinders growth and does not recommend formalization of small companies in Nigeria, but does this new law become a game-changer?

Supervision of the only purpose of the new Nigerian Tax Reform Law consisting of the Nigerian Tax Law (NTA), the Nigerian Tax Administration Law (NTAA), the Nigerian Revenue Services Law (NRSA), and the Joint Revenue Council (JRBA) shows that it is promising.

This shift, if successfully effective cross -level, has the potential to enable the initial stage of the company to survive the growth cycle and contribute to the country’s economy.

Globally, SMEs are generally considered as a driver of change: Economic Growth Machine and fair development in developing countries such as Nigeria. They are labor -intensive, save capital and be able to help create new jobs and reduce poverty incidents. However, most small businesses in Nigeria collapsed in the first five years of their existence, while smaller percentages disappeared into extinction between the sixth and tenth years. Unfortunately, only about five to ten percent survived and developed to adulthood.

Apart from the lack of funds, infrastructure and poor coordination, complex registration and license, multiple taxation is a big challenge that is rigid in UKM from developing. This small business owner must pay various levels of taxation, including federal, state and local government levies, then reduce the hearts of continuation and finally death.

As this tax Reforms free business With turnover under ₦ 100 million and fixed assets below ₦ 250 million from company income tax (CIT), capital gain tax (CGT), and development levies, SMEs can re -invest their cash flow back to regions -regions such as talent recruitment; Product marketing, thereby strengthening the sustainability of instead of giving most of their income for taxes.

Recently, Taiwo Oyedele, Chair of the Presidential Fiscal Policy Committee and Tax Reform, revealed that the defeat that 97% of informal sector operators will no longer pay taxes in Nigeria with a new shift. Speaking at the PWC Executive Summit on Nigerian Tax Reform, with the theme “New Tax Era: What is the meaning of Nigerian tax reform for individuals and businesses.”

According to him, the Committee “has legally released the lower 97 percent of paying taxes “after this realization so that they will be able to grow.

From the point of view of common sense, this is good news because most small companies are categorized in the informal sector due to lack of funding, overregulation, business registration congestion, among other obstacles. In addition, most of them do not have formal contracts, workers’ benefits, and social protection. So, it is hoped that in the future, there will be more entrepreneurial expansion because more new companies need to be worried.

Likewise, this tax relief will encourage SMEs to consider formalization, open access to financial services and critical support that is often excluded by informal businesses. Many small businesses avoid registration due to related tax obligations. Most grants sponsored by government agencies usually require registration with the Corporate Affairs Commission (CAC), tax compliance and audited financial records, but tax obligations force many SMEs to turn away from this support program.

In addition, SMEs that are in accordance with fast taxes get a positive credit history with FIR and banks making it easier to get a better credit ranking and gather confidence with venture investors, Angel Investors and Development Financial Institutions (DFI).

The new tax law, although controversial and not without defects, is a praiseworthy policy change from what has become a status quo that hinders growth, threatening the survival of small and medium businesses in Nigeria. Immediately handling a number of major obstacles that rotate around government control, such as registration, formalization and fear of taxes, the government not only looks beyond large businesses, but also provides a new foundation for business opportunities and ideas to develop – it solves unemployment problems and stimulates big things that have not yet come.

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RAHAMA ABIOLA is an editorial leader Legit.ng and 2025 Fellow of Ominira Economic Advancement Initiative.