FG rolls out 1% presumptive tax on informal businesses, bans cash tax collection

The federal government has banned cash collection of taxesand the mounting of roadblocks for tax collection in the informal sector. The directive is contained in the newly signed presumptivetax regulations and guidelines on the implementation of the tax laws, unveiledon Tuesday in Abuja. Speaking at the signing ceremony, Olusegun Adesokan,executive secretary of the Joint Revenue Board (JRB), said the framework isdesigned to eliminate informal, coercive and fragmented tax practices,particularly at the subnational level. “It bans all forms of cash collection by tax authorities. Italso bans the mounting of roadblocks for the collection of taxes,” he said. Adesokan said the regulations are aimed at entrenchingtransparency and equity in tax administration, especially within the commerceand informal sectors. Under the framework, nano and small businesses with anannual turnover of N12 million and below are exempted from tax under thepresumptive regime. “The framework also introduces a tax rate of one per cent ofturnover on all other categories of informal businesses, while encouraging theuse of technology-driven payment platforms,” Adesokun said. According to the executive secretary, the guidelines providea uniform structure for subnational governments to tax the commerce sector andintegrate operators into the formal system through a tax identificationplatform. ‘SYSTEM MARKS TRANSITION FROM LEGISLATIVE APPROVAL TOIMPLEMENTATION’On his part, Wale Edun, minister of finance and coordinatingminister of the economy, said the signing marks the transition from legislativeapproval to implementation of tax reforms enacted in 2025 and early 2026. “With the signing of these regulations, we are transitioningfrom regulation to structured implementation of the tax reforms,” Edun said. He said the reforms are anchored on transparency, fairnessand economic inclusion, noting that the goal is to expand the tax base ratherthan increase tax rates. “We will expand the tax base, not raising taxes, butexpanding so that each bears his rightful contribution to the common cause,”the minister said. Edun added that the regulations were developed incollaboration with the JRB to ensure alignment across federal, state and localgovernments, and that implementation would be closely monitored, with anombudsman mechanism introduced to safeguard fairness. Joseph Tegbe, chairman of the national tax policyimplementation committee, described the signing as a shift from policyintention to practical execution. He said the reforms are aimed at correcting distortions inthe tax system and replacing arbitrariness with transparency. The chairman noted that although the informal sectoraccounts for more than 80 percent of Nigeria’s workforce, its contribution tostructured public revenue has remained low due to systemic weaknesses. Tegbe added that the committee would work with taxauthorities to ensure a disciplined and transparent rollout of the newframework.

Read More