FG Issues New Presumptive Tax Rules for MSMEs Across Nigeria

FG Issues New Presumptive Tax Rules for MSMEs Across Nigeria

The Federal Government has introduced new presumptive tax rules aimed at simplifying tax compliance for Micro, Small and Medium Enterprises (MSMEs) across Nigeria.

The new framework, announced by the Federal Ministry of Finance in collaboration with the Federal Inland Revenue Service (FIRS), is designed to ease the tax burden on small businesses while improving revenue generation and expanding the nation’s tax net.

Under the presumptive tax system, eligible MSMEs will now be assessed based on estimated turnover or business category rather than detailed financial records. The move is expected to benefit small-scale traders, artisans, market operators, transporters and other informal sector participants who often lack structured accounting systems.

Government officials say the reform seeks to promote fairness, transparency and inclusiveness in tax administration. By introducing fixed or simplified rates for certain categories of businesses, authorities believe compliance will increase, particularly among operators in the informal economy.

According to the government, the initiative aligns with ongoing economic reforms targeted at supporting entrepreneurship and boosting small business growth. MSMEs account for a significant portion of employment and economic activity in Nigeria, making them a critical component of national development.

Officials further explained that the new rules would reduce disputes between tax authorities and small business owners, as assessments will be clearer and more predictable. It is also expected to curb arbitrary taxation at sub-national levels by providing a structured national guideline.

The government assured that the framework would be implemented in collaboration with state tax authorities to ensure uniformity and prevent multiple taxation. Sensitisation campaigns are expected to begin soon to educate business owners on how the new system will work and who qualifies.

Economic analysts have described the move as a step toward formalising Nigeria’s vast informal sector. However, they emphasised the need for effective implementation and stakeholder engagement to ensure that small businesses are not overburdened.

The Federal Government reiterated its commitment to creating a business-friendly environment, noting that the presumptive tax regime is part of broader efforts to widen the tax base without stifling small enterprises.

With the new rules set to take effect nationwide, MSMEs are being encouraged to register their businesses properly and familiarise themselves with the updated tax structure to avoid penalties and ensure smooth compliance.