New Tax Reforms Aim to Support Small Businesses and Promote Fairness
At the 24th Annual Conference of the Women in Management, Business and Public Service (WIMBIZ) held in Lagos, Oyedele highlighted the introduction of a new tax regime that is set to transform how businesses operate in Nigeria. One of the key components of this reform is the establishment of the Tax Ombudsman, an independent body tasked with mediating disputes and safeguarding the rights of taxpayers.
“If anyone shows up to harass you, to collect tax, or to seal up your premises, you can call the Tax Ombudsman. They have the legal authority and obligation to protect your rights,” he stated. This initiative aims to ensure that taxpayers are treated fairly and that their concerns are addressed effectively.
Oyedele emphasized that the new tax regime will favor compliant and formalized enterprises while protecting small and informal businesses from undue pressure and harassment by tax officials. He described the ongoing reforms as people-centred, designed to reward compliance, promote fairness, and support economic growth rather than overburden citizens or businesses.
During a panel session themed “The New Tax Law and You,” Oyedele urged entrepreneurs, especially small business owners, to formalize their operations to benefit from a range of incentives embedded in the new tax framework, which will take effect from January 2026.
“We started the tax and fiscal reform by looking at how people do business, how those businesses grow, and how finance is placed,” he explained. “You can’t knock on the door and say, ‘Tax me.’ Let’s have a conversation on how to create a business that can pay corporate tax. So, the reforms are people-centric.”
Benefits for Small Businesses
According to Oyedele, small companies with an annual turnover of ₦100m or less will enjoy a zero per cent corporate tax rate, in line with the government’s goal of allowing small businesses to expand before being taxed.
“If you run a small company where your annual turnover is ₦100m or less, your corporate tax rate will be zero per cent. What is even more interesting is that the Corporate Affairs Commission (CAC) will register 250,000 small companies free of charge,” he disclosed.
He also revealed that the reforms would ensure fairness in value-added tax (VAT) administration, adding that critical sectors such as food, water, education, pharmaceuticals, and medical services will be fully exempted from VAT from next year.
“From next year, January 1, this bottle of water will be zero-rated for VAT. The same explanation applies to food, education, pharmaceutical, and medical services,” he said.
Addressing Economic Challenges
Oyedele explained that the government’s decision to exempt essential goods and services from VAT was informed by data showing that low-income Nigerian households spend nearly 80 per cent of their income on food, health, rent, education, and transportation.
“If people spend their entire income on five basic items, food, education, health, rent, and transport, then we must remove the taxes on those,” he noted.
This approach reflects a broader effort to reduce the financial burden on the most vulnerable segments of society and to make the tax system more equitable.
Key Features of the New Tax Framework
- Zero per cent corporate taxfor small businesses with an annual turnover of ₦100m or less.
- Free registrationof 250,000 small companies by the Corporate Affairs Commission (CAC).
- Exemption from VATfor essential goods and services such as food, water, education, pharmaceuticals, and medical services.
- Introduction of the Tax Ombudsman, an independent body to mediate disputes and protect taxpayer rights.
- People-centred reformsaimed at promoting fairness, rewarding compliance, and supporting economic growth.
These changes are expected to foster a more inclusive and supportive environment for businesses, particularly small and informal enterprises, while ensuring that the tax system remains fair and responsive to the needs of all citizens.