What is the New Tax Reform Bill in Nigeria All About?

On June 26, 2025, President Bola Ahmed Tinubu signed four groundbreaking tax reform bills into law: the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and the National Fiscal Responsibility and Debt Management Act (NFRDMA).

These laws represent the most significant overhaul of Nigeria’s tax system in decades, with a primary focus on simplification, digitization, and support for small businesses.

The core objectives include:

• Simplifying the tax code and eliminating duplicate taxes

• Expanding the tax net without stifling business growth

• Digitalizing tax administration processes

• Providing specific relief and incentives for MSMEs

• Harmonizing tax collection across different government levels

Given that MSMEs contribute over 48% to Nigeria’s GDP and employ over 80% of the workforce, these reforms recognize the critical role small businesses play in Nigeria’s economic development.

Nigerian Tax Reform Bills Harmonization: The End of Multiple Taxation Nightmare

One of the most significant wins in these tax reforms in Nigeria is the introduction of a unified tax framework that consolidates federal taxes and removes the confusion of multiple taxation.

What this means for your business:

• No more paying similar taxes to different agencies

• Clear guidelines on which taxes apply to your business

• Streamlined processes across all states

• Reduced compliance costs and administrative burden

The government has essentially acknowledged what SME owners have complained about for years: the system was too complex, too fragmented, and too burdensome for small businesses to navigate effectively.

Tax Reform Bill 2025 Summary: Key Changes That Impact Your SME

Higher Exemption Thresholds

The reforms significantly increase the turnover threshold for simplified tax filing from ₦25 million to ₦50 million. If a business earns less than ₦100 million per year and has assets under ₦250 million, it qualifies as a small company with special exemptions.

What this means: More businesses will be exempt from complex tax obligations and audits, saving time and professional fees.

Digital-First Tax Administration

A unified e-tax portal now serves as the single platform for tax registration, filing, payment, and communication. Your taxpayer ID will be linked to your NIN or BVN, making the process more streamlined and secure.

Elimination of Nuisance Taxes

The reform eliminates nuisance taxes that yield minimal revenue but disproportionately affect small businesses. This includes suspending certain local government charges for businesses earning below ₦10 million.

Enhanced Capital Allowances

MSMEs investing in productive equipment can benefit from enhanced capital allowances that reduce their taxable income, encouraging reinvestment and growth.

What is the Effect of Taxation on Small Businesses? Understanding the Impact

Historically, Nigeria’s complex tax environment has created significant challenges for small businesses:

Previous challenges included:

• Multiple agencies collecting similar taxes

• Unclear documentation requirements

• Inconsistent enforcement across states

• High compliance costs relative to business size

• Limited support for informal businesses seeking formalization

How the reforms address these issues: The new framework specifically tackles these pain points by providing clearer guidelines, reducing compliance costs, and offering dedicated support for SMEs through educational programs and simplified processes.

Benefits of Tax Reform Bill in Nigeria for Your SME

1. Formalization Incentives

Businesses newly registered with the Corporate Affairs Commission (CAC) are now eligible for a one-year startup tax credit. There’s also a two-year tax holiday for MSMEs operating in priority sectors like agriculture, manufacturing, and technology.

2. Simplified Compliance

Digital tax platforms enable you to file and pay taxes from anywhere, significantly reducing the cost and time burden of tax compliance.

3. Dedicated SME Support

A dedicated MSME tax support program offers educational clinics, simplified audit processes, and fast-track dispute resolution through the Tax Appeal Tribunal.

4. Protection from Harassment

The introduction of a national taxpayer charter guarantees your rights to fair treatment, transparency, and timely resolution of complaints.

5. Clear Digital Business Framework

With the rise of digital businesses in fintech and e-commerce, the reforms introduce clear tax frameworks for online vendors and service providers, bringing structure to previously unclear areas.

Nigerian Tax Reform Act 2025 Summary: What Your Business Must Do Now

To fully benefit from these changes, your SME needs to take specific actions:

Immediate Actions (Next 3 Months)

Formalize your business if you’re currently operating informally. The new incentives make this the perfect time to come under the formal tax net.

Register for a Business Taxpayer ID and migrate to the new digital tax portal when it becomes available.

Review your annual turnover and determine your eligibility for reduced tax rates or exemptions under the new thresholds.

Medium-term Preparations (3-6 Months)

Improve your record-keeping systems to align with digital requirements. The new system will require better documentation and digital readiness.

Leverage new incentives such as tax holidays, startup credits, and VAT exemptions on essential inputs if you qualify.

Attend tax clinics or partner with business support organizations to stay compliant and understand the nuances of the new system.

Tax Reform Bill 2025 Summary: Industry-Specific Implications

Technology and Digital Services

The reforms provide specific frameworks for digital businesses, clarifying compliance requirements for fintech, e-commerce, and online service providers.

Agriculture and Manufacturing

Priority sector businesses can benefit from extended tax holidays and enhanced capital allowances for equipment investments.

Informal Sector Businesses

Special incentives encourage formalization, including startup tax credits and simplified compliance processes.

Challenges and Considerations

While the reforms offer significant benefits, they also come with requirements:

Digital Literacy Requirements: The new system demands better digital capabilities from business owners.

Improved Record-Keeping: Formal tax compliance requires maintaining proper books and records.

Initial Transition Costs: Moving to the new system may require some upfront investment in training and system updates.

However, the long-term benefits—greater clarity, fairness, and access to incentives—far outweigh these initial adjustments.

How The SME Mall Can Help You Navigate These Changes

At The SME Mall, we understand that navigating tax reforms can feel overwhelming, especially when you’re focused on running your business. Our comprehensive business support services include:

Tax Compliance Support: We handle tax registration, filing, and ongoing compliance, allowing you to focus on growing your business.

Business Registration: Whether you’re formalizing an existing business or starting fresh, we manage the entire CAC registration process.

Digital Transformation: We help you establish the systems and processes required for the new digital tax environment.

Strategic Planning: Our advisors help you understand which incentives apply to your business and how to maximize your benefits under the new reforms.

Preparing for Implementation: “You Can Still Relax, But No Loose Guard!”

Here’s the thing, since all these changes will be implemented next year, you might think you can just sit back and wait. Well, you can relax a bit, but no loose guard o! 😄

Why early preparation matters:

• The best incentives go to businesses that are ready when implementation begins

• Digital systems and processes take time to set up properly

• Early adopters often face fewer technical challenges

• You’ll have competitive advantages over businesses that wait until the last minute

Think of it like preparing for JAMB, you wouldn’t wait until the day before the exam to start studying, right? Same energy applies here!

Your Action Plan for the Tax Reform Transition

This Month:

• Assess your current business structure and turnover

• Identify which new benefits your business might qualify for

• Start improving your record-keeping systems

Next 3 Months:

• Complete business formalization if needed

• Set up digital systems for better compliance

• Connect with professional support for guidance

Before Implementation:

• Register for new taxpayer ID when available

• Complete any necessary staff training

• Ensure all documentation is ready for the new system

The Bottom Line: A New Era for Nigerian SMEs

The Nigerian Tax Reform Act 2025 represents a rare opportunity for SMEs to operate in a clearer, fairer, and more supportive tax environment. While change can feel daunting, these reforms address long-standing complaints from the business community and provide genuine opportunities for growth.

The key is to approach these changes proactively rather than reactively. By understanding the reforms, preparing your business, and leveraging available support, you can turn these changes into competitive advantages.

Remember, every successful business adapts to regulatory changes and finds ways to benefit from them. The SMEs that thrive in 2025 and beyond will be those that embrace these reforms and position themselves to maximize the available opportunities.

Your business deserves to operate in a system that supports growth rather than hindering it. These tax reforms bring us significantly closer to that reality.