Nigeria implements new tax laws for small businesses

Nigeria has implemented significant tax reforms through the Nigeria Tax Act 2025. Under the new legislation, small companies with an annual gross turnover of up to ₦50 million and total fixed assets not exceeding ₦250 million are now exempt from Companies Income Tax. This doubles the previous threshold of ₦25 million. These small businesses also qualify for a 0% tax rate on total profits and are exempt from the Development Levy. Additionally, they are not required to register for or charge VAT, though opting out prevents them from recovering input VAT on expenses.

While the reforms aim to simplify compliance and reduce the burden on small enterprises, new provisions in the Nigeria Tax Administration Act (NTAA) 2025 present challenges for the informal sector. Large corporations face an administrative penalty of ₦5 million if they award contracts to unregistered businesses lacking a valid Tax Identification Number (TIN).

Experts suggest this may lead to a "no TIN, no contract" policy, potentially excluding artisans, freelancers, and farmers from corporate supply chains. While this move could accelerate the formalization of small businesses, its success depends on the efficiency and affordability of the tax registration process.