Nigeria's Ministry of Finance has signed the Presumptive Tax Regulations framework into effect, introducing a uniform sub-national tax structure that exempts small businesses with annual turnover below NGN 12 million, imposes a 1% levy on eligible informal sector operators, and bans cash collection and roadblock enforcement — in a bid to formalise the informal economy and broaden the country's tax base without increasing rates.
Nigeria’s Ministry of Finance have introduced the Presumptive Tax Regulations framework on 4 March 2026, marking a significant milestone in Nigeria’s tax reform journey.
The Ministry described the framework as simple, clear and fair, with a focus on economic inclusion, noting that the reforms aim to protect small businesses and broaden the tax base without raising rates.
The Ministry stated that with the signing of these regulations, Nigeria is “transitioning from regular to structured implementation of the tax reforms,” adding that the regulations provide a simple, increased transparent, fairness, clarity, economic inclusion, consistency and prevention of arbitrary taxation and equitable framework for the administration of presumptive tax, particularly within the informal sector.
The Ministry highlighted that the Presumptive Tax Regulations introduced a uniform framework for sub-national implementation are designed to:
- Exempt nano and small businesses with an annual turnover of NGN 12 million and below from tax, ensuring protection for struggling entrepreneurs.
- Introduce a modest 1% tax on turnover for other eligible informal sector businesses.
- Eliminate cash-based tax collection practices by encouraging technology-driven payment systems.
- Prohibit the mounting of roadblocks or any informal means of tax enforcement.
- Facilitate seamless onboarding of informal businesses into the formal economy through structured digital platforms.
The Ministry acknowledged the role of the Joint Tax Board in ensuring coordinated implementation across federal and sub-national tax authorities, assuring stakeholders that enforcement would be monitored closely to guarantee fairness and consistency nationwide. The Ministry also reiterated that the presumptive tax regime framework will protect small businesses and help them to grow, thereby improving the efficiency and fairness of the country’s tax system.
Earlier, the Executive Secretary of the Joint Revenue Board, Mr Olusegun Adesokun, said the new rules are meant to put an end to informal coercion and fragmented tax practices, particularly at the sub-national level. Mr Adesokun further explained that the guidelines ban all forms of cash collection by tax authorities, as well as the mounting of roadblocks for the collection of taxes.
