The Centre for the Promotion of Non-public Enterprise (CPPE) has warned that Nigeria’s ongoing tax reform drive may undermine the casual sector if it isn’t rigorously designed and correctly sequenced.
That is in accordance with a press release issued by the organisation and signed by its Chief Govt Officer, Dr. Muda Yusuf, on Sunday.
The warning comes amid broader efforts by the federal government to develop the tax internet, elevate income, and strengthen compliance throughout the economic system.
Dr. Yusuf stated that though tax reform is required, Nigeria’s largely casual economic system requires a cautious, inclusive strategy to keep away from harming livelihoods and enterprise development.
What CPPE is saying
In line with CPPE, any significant tax reform dialog should recognise the size and function of Nigeria’s casual economic system.
Dr. Yusuf said that Nigeria has an estimated 40 million micro, small, and nano enterprises, with over 80% working informally.
Citing the newest Nationwide Bureau of Statistics (NBS) Labour Power Survey, he stated over 90% of jobs are within the casual economic system, making it central to employment and earnings era.
“Most casual operators lack structured record-keeping programs and have restricted understanding of tax ideas similar to Tax Submitting obligations, Firm Earnings Tax [CIT], Worth Added Tax [VAT], Private Earnings Tax [PIT], Withholding Tax and many others,” he famous.
“Companies are largely cash-based, function on skinny margins, and infrequently lack the literacy and digital capability required for compliance. Additionally they lack the capability to digest the technical and considerably complicated points round taxation,” he added.
CPPE’s considerations are largely pushed by provisions within the new tax framework, which introduce obligatory submitting necessities, outlined record-keeping requirements, penalties for non-compliance, and presumptive taxation the place data are insufficient.
Yusuf warned that with out correct sequencing, these measures may discourage voluntary formalisation and as a substitute push casual companies additional into the shadows.
He additionally highlighted rising anxiousness amongst SMEs over the requirement for obligatory reporting of quarterly bank transactions of N25 million and above to tax authorities.
In line with him, many small companies deal with pass-through or custodial funds that don’t represent earnings, exposing high-turnover, low-margin companies to undue scrutiny and dear compliance disputes.
“The proposed enhance in capital features tax from 10 per cent to 30 per cent—regardless of assurances round thresholds—has unsettled traders within the inventory market and actual property at a time when confidence stays fragile,” CPPE stated.
He additionally argued that the N500,000 annual lease reduction cap doesn’t replicate present city housing prices and will additional erode middle-class disposable earnings.
The organisation additional expressed concern in regards to the extensive enforcement powers granted to tax authorities and the severity of penalties embedded within the new tax legal guidelines, warning that extreme enforcement may stifle enterprise development.
What it is best to know
In December, President Bola Tinubu reaffirmed the Federal Authorities’s dedication to implementing the brand new tax legal guidelines as scheduled, regardless of calls for his or her suspension.
The President stated the reforms, already rolling out from June 26, 2025, and January 1, 2026, are key to rebuilding Nigeria’s fiscal framework and won’t be stopped.
Signed into regulation by President Tinubu on June 26, 2025, the Acts took impact on January 1, 2026, marking a complete overhaul of Nigeria’s tax system.