Nigeria’s Small and Medium Enterprises (SMEs), the backbone of the economy, are set for a major boost as the government introduces a new tax reform bill aimed at reducing their financial and administrative burdens.
SMEs, which contribute nearly 50% to the country’s GDP and provide over 80% of employment, have long faced challenges under an onerous tax system.
Previously, SMEs grappled with a labyrinth of taxes from multiple government tiers, leading to overlapping demands and double taxation. The low tax exemption threshold of ₦25 million and delays in VAT refunds further hampered cash flow and growth opportunities, pushing many businesses into informal operations.
The new tax reform bill addresses these challenges with far-reaching changes. It eliminates nuisance taxes, such as market levies and kiosk permit fees, which disproportionately affect small businesses. The exemption threshold for company income tax has been raised to ₦50 million, allowing more SMEs to operate tax-free and reinvest their earnings.
Moreover, the bill simplifies tax compliance by consolidating multiple levies into a single framework and introducing technology for seamless filing and faster VAT refunds. Over 97% of SMEs are now exempt from Value Added Tax, reducing costs and administrative complexity. Targeted incentives for high-impact sectors, such as agriculture and technology, are also part of the reform.
These changes promise to ease financial pressures, encourage formalization, and foster innovation. By creating a more supportive tax environment, the government aims to unlock the growth potential of SMEs, positioning them as critical drivers of economic prosperity.
This reform marks a significant step toward a fairer, more efficient tax system, offering hope for sustainable development and a thriving SME sector.
