…Slams 1% turnover levy for informal sector; Exempts businesses below ₦2m
The Federal Government has outlawed roadside tax collections and cash-based enforcement nationwide, unveiling a new presumptive tax regime that imposes a flat 1% turnover levy on eligible informal businesses, as part of sweeping tax reforms.
The new regulations, signed in Abuja by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, mark what officials described as the full transition from legislation to implementation under the administration of Bola Ahmed Tinubu.
According to Edun, the framework, issued under powers vested in his office on the advice of the Joint Revenue Board (JRB), signals a decisive shift toward transparency, fairness, and uniform tax administration across federal, state, and local governments. “With the signing of these regulations, we are transiting from legislation to structural implementation of the tax reforms”, the Minister stated.
Under the guidelines, informal businesses earning up to ₦2 million annually are exempted from tax, a move authorities say is designed to shield micro and subsistence operators. Businesses above that threshold will pay a flat 1% levy on annual turnover, replacing discretionary “best-of-judgment” assessments that often led to disputes and allegations of harassment. However, the JRB noted that nano and small businesses with turnover of ₦12 million and below remain protected under the broader framework, underscoring government efforts to cushion vulnerable operators while widening the tax net.
In a major crackdown on informal and often controversial tax enforcement practices, the regulations prohibit: ‘Mounting of roadblocks for tax collection’; ‘Cash payments to tax officials’ and ‘Arbitrary assessments by sub-national authorities’. All payments must now be processed through technology-driven platforms to improve transparency, plug revenue leakages, and curb multiple taxation.
Executive Secretary of the JRB, Olusegun Philip Adesokan, described the regulations as a coordinated effort by all tiers of government to end fragmentation in tax administration. “He doesn’t seek to tax poverty; his government will not tax seeds, but fruits,” Adesokan said, characterising the reforms as pro-growth rather than punitive.
Chairman of the National Tax Policy Implementation Committee, Joseph Tegbe, said the signing bridges the gap between statutory provisions and real-world execution.
Nigeria’s informal sector accounts for more than 80% of employment but contributes only a small share of structured public revenue due to weak enforcement frameworks and poor coordination.
Authorities believe the simplified one percent turnover model will encourage compliance by making entry into the formal tax system predictable and less burdensome. The reforms come amid efforts to boost economic performance after Nigeria recorded approximately 4% GDP growth in the fourth quarter of 2025. The Government is targeting 7% annual growth in the near term as part of its long-term ambition to build a $1 trillion economy by 2030.
Edun stressed that the policy is not about raising tax rates but expanding the tax base, ensuring that every eligible business makes what he described as its “rightful contribution”. An ombudsman mechanism will also be introduced to address complaints and guard against abuse during implementation.
While the one percent levy appears modest, analysts note that its success will hinge on strict enforcement of the ban on roadside collections and the government’s ability to build trust among millions of small traders and artisans long wary of multiple taxation.
