FG rolls out 1% presumptive tax on informal sector, bans roadblocks

The Federal Government has unveiled a one per cent presumptive tax regime for the informal sector of the economy.

It, however, banned the use of roadblocks for collecting taxes and levies nationwide.

Under the new tax regulation, which was signed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in Abuja,yesterday, the government imposed a flat one per cent turnover levy on eligible operators, while exempting micro, smallest and most vulnerable businesses.

This, the government insisted, is a structural reform intended to broaden the boat’s base without raising tax payments.

Edun argued that the regulation signals a transition from legislation to structured implementation following the passage of tax reform laws that took effect between mid-2025 and January 2026.

He maintained that the sole objective of the fresh regulation was to formalise millions of micro and small enterprises that operate outside the tax net.

While acknowledging Nigeria’s Gross Domestic Product (GDP) growth of about four per cent in Q4 2025, Edun said the target is seven per cent in the near term, which is a stepping stone to President Bola Tinubu’s ambition to build a $1 trillion economy by 2030.

According to him, the key features of the regulation include a one per cent turnover tax for qualifying informal businesses; exemptions for micro and subsistence-level operators, shielding low-income entrepreneurs from liability; prohibition of arbitrary “best of judgment” assessments; ban on roadblocks and cash-based collections by tax officials and mandatory use of digital tax identification platforms to enhance traceability and reduce leakages.

Providing deeper insights into the regulation, Edun added that another objective was to eliminate discretionary assessments, improve predictability and protect small enterprises while ensuring every economically active segment contributes fairly.

He said: “Our goal is consistency, clarity, equity and structured entry into the formal economy,” he said.

The minister hinted at a presumptive tax framework as the first of many regulations that will be unveiled to guide the implementation of the country’s tax laws.

On his part, the Executive Secretary of the Joint Revenue Board (JTB), Olusegun Adesokan, emphasised the importance of coordinated tax administration

He disclosed that the regulations were jointly developed to align federal, state and local tax authorities, addressing long-standing fragmentation in tax administration across the federation.

Adesokan insisted that “the regulators’ role is coordination and not fragmentation”, noting that implementation would be monitored to curb abuse and eliminate unofficial collections.

Studies show that Nigeria’s informal sector accounts for a dominant share of employment and a significant portion of economic activity, yet contributes marginally to tax revenue.

Meanwhile, Nigeria’s Value Added Tax (VAT) revenuesurged to N2.28 trillion in the third quarter of 2025, marking a 10.66 per cent increase from N2.06 trillion in the previous quarter, according to the latest report from the National Bureau of Statistics (NBS).