Nigeria's Joint Revenue Board sets a 1% turnover tax and 2% capital gains levy for informal businesses under rules effective 1 January 2026, exempting nano businesses earning NGN 12 million or less.

RF Report

Nigeria’s Joint Revenue Board published the Presumptive Tax Regulations, 2026, which were originally issued in the Official Gazette on 13 May 2026 and took effect from 1 January 2026.

The Nigeria Presumptive Tax Regulations, 2026, serve as a formal legal framework designed to standardise tax collection for individuals and businesses within the informal sector. The framework targets taxpayers who lack standard financial records, allowing authorities to estimate their tax liability based on turnover or deemed income. These rules mandate a 1% income tax rate for qualified entities and a 2% levy on specific capital gains, while explicitly prohibiting the use of roadblocks or cash for collection purposes.

The 1% tax rate and estimating income 

Taxable persons under this regime are assessed an income tax at a rate of 1% of their actual or estimated turnover. When adequate information is unavailable, the Relevant Tax Authority will estimate turnover based on its “best judgment.” This estimation takes into account several factors, including:

  • The nature of the business and the lifestyle of the taxpayer.
  • The taxpayer’s assets, location, and association or community intelligence.
  • The volume of their electronic and cash transactions.
  • If only a daily turnover can be estimated, the annual turnover is derived by multiplying the daily amount by the estimated number of working days (capped at 300 days a year to account for weekends and holidays).

Other key measures of the regulations

Exemption for “nano businesses”

The presumptive tax does not apply to businesses whose actual or estimated annual turnover is NGN 12 million or less. These “nano businesses” (defined as sole proprietorships or household-run businesses with no fixed premises and no formal employees) are effectively subject to a 0% tax rate.

Exempted trades

Specific informal and artisan trades are explicitly exempt from the presumptive tax. This includes roadside barbers, local cobblers, wheelbarrow pushers, hawkers of sachet water and biscuits, akara sellers, and newspaper vendors, among others.

Presumptive tax on capital gains

If a transaction gives rise to a chargeable gain (such as from land, buildings, or movable assets), a presumptive tax of 2% of the consideration must be remitted within 30 days.

Strictly electronic payments

The regulations mandate that presumptive tax must be paid electronically through approved channels like USSD codes, POS, bank transfers, mobile apps, or fintech platforms. The collection of taxes in cash or through roadblocks is strictly prohibited.

Pathway to standard taxation

The presumptive tax regime is not meant to be permanent for growing businesses. Taxpayers can elect to exit the regime and file self-assessment returns. Furthermore, if the tax authority determines a business has met minimum record-keeping requirements, the business is no longer eligible for the presumptive regime and will be notified to commence standard self-assessment.