Nigeria to offer tax relief to 95% of small businesses

May 18, 2024 7 mins read

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, stated that the federal government is developing a system to provide tax relief to 95 percent of Nigeria's informal sector.

Nigeria to offer tax relief to 95% of small businesses 

 

naira-notes

  • Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, stated that the federal government is developing a system to provide tax relief to 95 percent of Nigeria's informal sector.
  • According to him, 95% of businesses earning ₦25 million or less yearly will be exempt from the various taxes. 
  • This development comes as the federal government reintroduces the telecom tax to secure a $750 million loan from the World Bank, nearly ten months after suspending the 5% excise duty on telecommunications and the Import Tax Adjustment levy on specific vehicles.

“We think that the informal sector are people who are trying to earn legitimate living. We should allow them to be and support them to grow to a point where they can then have the ability to pay taxes”. 

Oyedele confirmed that new tax reforms will target 5% of that sector, the middle class and the elite, and that the committee was drafting legislation to implement the necessary changes to the country's tax system.

While he stated that the new laws will ensure that reviews are upheld by future governments. “We don’t want this whole effort to go down the drain, after one or two years,” he clarified. 

He also emphasised the need to raise the exemption threshold for small businesses and low-income earners, as it will be difficult to pay taxes while struggling to make ends meet. 

Recently, the Nigerian government has intensified taxation efforts to generate revenue. In 2020, it increased the VAT rate from 5% to 7.5%. 

Meanwhile, the rising cost of living in Nigeria has an impact on citizens' well-being. It has steadily increased over time, with notable increases in food and service prices. Inflation, exchange rates, government policies, and production costs all contribute to this.  

In April 2024, the federal government, through the Nigerian Electricity Regulatory Commission (NERC), announced a significant increase in electricity tariffs for customers under the Band A category to ₦225 per kilowatt-hour (kWh), a 240% surge from the initial ₦68 per kilowatt-hour (kWh).

Image NewsLetter
Icon primary
Newsletter

Subscribe To The Tek Digest!

By clicking the button, you are agreeing with our Term & Conditions