The federal government of Nigeria has introduced new presumptive tax rules aimed at Micro, Small, and Medium Enterprises (MSMEs) nationwide. Announced by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the move seeks to simplify tax compliance and provide a clear path for small businesses to enter the formal economy.
The new framework, part of the Nigeria Tax Act 2025 which came into effect on January 1, does not increase tax rates. Instead, it is designed to shield millions of MSMEs across the 36 states and the Federal Capital Territory (FCT) from unfair or arbitrary tax assessments, according to Minister Edun. “Micro and small businesses are the backbone of Nigeria’s economy. This framework reduces compliance costs and provides a structured pathway into the formal sector,” he said.
Under the updated rules, small businesses will no longer need to maintain complex records. The government will now assess taxes based on turnover bands, eliminating discretionary enforcement and providing clear, uniform guidelines across the country. The reforms are expected to open access to credit, insurance, and growth opportunities for previously informal enterprises.
Minister Edun emphasized that the initiative aligns with the government’s broader fiscal strategy, which prioritizes expanding the tax base rather than raising tax rates. By streamlining tax compliance and aligning federal and state administrations through the Joint Revenue Board, the government aims to demonstrate reform effectiveness to investors, credit rating agencies, and international partners.
Ultimately, the new presumptive tax rules aim to strengthen Nigeria’s economy by building a more diversified revenue base. Minister Edun noted that this approach will enhance the government’s capacity to fund infrastructure projects, social programs, security, and overall economic growth, while promoting formalization and long-term sustainability for small businesses.
source: premiumtime