The Nigerian Tax Reforms – What it means for MSMEs and Individuals

Introduction

As implementation of Nigeria’s Tax Reform Acts 2025 (namely The Nigeria Tax Administration Act 2025, The Nigeria Revenue Service Act 2025 and the Joint Revenue Board of Nigeria Act 2025) took effect from 1^st January 2026, these legislative documents stand out as a landmark reform in Nigeria’s tax framework. Notably, these Acts seek to simplify the tax system and make compliance easier, particularly for small businesses and ordinary Nigerians. It does so by reducing the compliance burden on small enterprises, protecting low-income earners, and encouraging broader participation in the formal economy. As micro, small and medium-sized enterprises (MSMEs), mostly registered as business names or unincorporated entities, form the backbone of the Nigerian economy, as traders, business owners, farmers, creatives, tech founders, and manufacturers, it is important to simplify these reforms and provide clarifications to aid compliance.

In recognition of the role of MSMEs, the new tax regime seeks to provide small businesses and individuals with much-needed breathing space to grow and operate sustainably. Hence, this article aims to highlight in simple terms, some of the core compliance points worth noting for small businesses and individuals in Nigeria.

No Company Income Tax for Small Businesses

One of the biggest reliefs in the new law is that small companies will no longer pay Company Income Tax. If your business earns less than ₦100 million in a year and the total value of your business assets is below ₦250 million, you are considered a small company under the law. If you fall into this category, you are exempt from Company Income Tax and the Development Levy under the law. In simple terms, the government allows you to keep your profits instead of paying corporate tax. This is a major win for startups and growing businesses.

No more minimum tax obligation

One of the biggest changes is the removal of minimum tax obligations. Previously, businesses could be taxed even when they made little or no profit, constituting a significant burden for startups and low margin businesses. However, the NTA has now made provisions deleting the obligation to remit tax where little profit or a loss is declared. Hence, only actual profit is subject to tax thereby giving business much needed savings where they declare a loss. For MSMEs, this means better cash flow and more room to grow without fear of being taxed into loss.

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