The Federal Government has introduced a new presumptive tax regime targeting informal businesses, alongside a ban on cash tax collection and roadside enforcement practices, as part of broader reforms to standardise tax administration across the country.
The directive, unveiled on Tuesday in Abuja, forms part of newly signed regulations guiding the implementation of tax laws. It was announced by Olusegun Adesokan, executive secretary of the Joint Revenue Board (JRB), alongside key government officials, outlining how the policy will affect operators within Nigeria’s informal sector.
Speaking at the signing ceremony, Adesokan said the new framework is intended to eliminate irregular and coercive tax practices often associated with subnational collections.
“It bans all forms of cash collection by tax authorities. It also bans the mounting of roadblocks for the collection of taxes,” he said.
He explained that the policy aims to promote fairness and accountability in tax processes, particularly among small and informal businesses. According to him, nano and small enterprises with an annual turnover of N12 million and below will be exempted from the presumptive tax system.
“The framework also introduces a tax rate of one per cent of turnover on all other categories of informal businesses, while encouraging the use of technology-driven payment platforms,” Adesokun said.
The guidelines are also expected to provide a standardised structure for state and local governments, while integrating informal operators into a unified tax identification system.
On his part, Wale Edun, minister of finance and coordinating minister of the economy, described the development as a shift from policy approval to execution of previously enacted tax reforms.
“With the signing of these regulations, we are transitioning from regulation to structured implementation of the tax reforms,” Edun said.
He noted that the reforms are designed to improve inclusion and broaden the tax base rather than increase the burden on taxpayers.
“We will expand the tax base, not raising taxes, but expanding so that each bears his rightful contribution to the common cause,” the minister said.
Edun added that the initiative was developed in collaboration with the Joint Revenue Board to ensure coordination across all levels of government, with monitoring mechanisms and an ombudsman system in place to ensure compliance and fairness.
Also speaking, Joseph Tegbe, chairman of the national tax policy implementation committee, said the move signals a transition from policy formulation to real world application. He added that the reforms seek to address long standing inefficiencies and replace arbitrary tax practices with a transparent system.
Tegbe further highlighted that although the informal sector accounts for over 80 percent of Nigeria’s workforce, its contribution to formal revenue remains low due to structural challenges, adding that efforts are underway to ensure a disciplined rollout of the new tax framework.
Ademide Adebayo
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