Consultants have described the ‘Nigeria Tax Administration (NTA) Act 2025,’ as a possible game-changer for Micro, Small and Medium Enterprises (MSMEs), providing broader tax reliefs and recent incentives designed to ease operational pressures and encourage formalisation, tax submitting and documentation for small and medium enterprises (SMEs).
In line with a companion and tax skilled at The New Observe (TNP), Sam Esuga, the brand new framework strikes a steadiness between increasing authorities income and supporting small enterprise progress, a vital step towards constructing a extra inclusive and environment friendly tax system. He defined that the Act considerably will increase the monetary threshold for figuring out small firms.
Esuga clarifies SMEs, agribusiness sector and small holder farmers on tax exemption whereas stating that the fintechs, telecommunications and manufacturing sector will shoulder greater tax obligation within the new tax reforms.
“Underneath the NTA, companies with an annual turnover of as much as N50 million, up from the earlier N25 million restrict, and stuck belongings not exceeding N250 million are actually exempted from Firm Revenue Tax (CIT), Capital Positive aspects Tax (CGT), and the Growth Levy,” he mentioned.
This enlargement, he famous, will allow extra MSMEs to reinvest their earnings into operations, job creation, and market enlargement. Within the agricultural sector, the Act exempts tractors, ploughs, fertilisers, seeds, veterinary drugs, small holder farmers and animal feed from Worth Added Tax (VAT). Esuga mentioned, this transfer will cut back enter prices for small holder farmers and agribusinesses, in the end resulting in extra reasonably priced meals costs for customers.
He added that, registered companies can now declare enter VAT on taxable items, companies, and stuck belongings utilized in manufacturing. “Producers can offset VAT paid on equipment or uncooked supplies towards their output VAT, a significant liquidity profit that may assist them develop sustainably,” he famous, emphasising that, such claims have to be made inside 5 years.
For Nigeria’s casual financial system, the NTA 2025 introduces a progressive private earnings tax construction designed to scale back the burden on low-income earners. “The primary N800,000 of annual earnings is tax-free, whereas subsequent earnings bands are taxed at rising charges, as much as 25 per cent for these incomes above N50 million. This ensures equity by letting lower-income earners preserve extra of their earnings,” he pressured.
He added that, important items and companies, reminiscent of fundamental meals objects, instructional books, and faculty tuition on the nursery, major, and secondary ranges, are actually zero-rated for VAT. Shared public transport companies have additionally been exempted, a transfer he mentioned, may cut back every day residing prices for low-income households.
To deepen compliance, he mentioned, the Act requires each taxable particular person to register with the related authority and acquire a “Tax Identification Quantity (TIN). Even casual merchants, artisans, and gig employees are actually anticipated to register and file taxes. The place earnings data are incomplete, authorities might use a presumptive evaluation to find out a good tax fee.”
Esuga highlighted that, the brand new legislation additionally introduces a “hire reduction provision”, permitting taxpayers to deduct as much as 20 per cent of annual hire, capped at N500,000, when calculating taxable earnings. It is a modest but welcome reduction, significantly for city dwellers and small enterprise house owners working from rented premises, he mentioned.
He additional famous that compensation of as much as N50 million for private harm, wrongful job loss, or defamation is now tax-exempt, aligning with the federal government’s purpose of equitable taxation. Esuga believes that the true beneficiaries of the NTA 2025 will probably be MSMEs and the agricultural sector whilst New agribusinesses will take pleasure in a five-year tax vacation, encouraging funding in meals manufacturing and worth addition,” he defined.
In the meantime, the Nigerian Affiliation of Small and Medium Enterprises (NASMEs) described the 2025 Tax Act as a sign of federal authorities’s dedication to inclusive financial progress and enterprise resilience.
President of NASMEs, Dr. Abdulrashid Yerima described the tax reforms as a welcome growth with cautious optimism, significantly for Micro, Small and Medium Enterprises (MSMEs) throughout Nigeria and West Africa. He hailed the exemption of low earnings earners from tax alongside the upward revision of the turnover threshold for small companies from N25 million to N100 million.
In line with him, “this marks a significant coverage shift in direction of a extra equitable tax system. This aligns with world greatest practices in progressive taxation and demonstrates a aware effort to help earnings redistribution and stimulate enterprise progress.”
He mentioned, the adjustment was well timed, given the prevailing challenges together with excessive change charges and industrial financial institution lending charges that exceeded 37 per cent. This makes it tough for small companies to outlive, he added. Yerima additionally lauded the removing of the earlier 0.5 per cent turnover tax on loss-making companies, saying it was a constructive and corrective transfer.
The Small and Medium Enterprises Growth Company of Nigeria (SMEDAN) supported the brand new tax reforms proposed beneath the Tinubu administration, stating, they may profit Micro, Small and Medium Enterprises (MSMEs) by decreasing their tax burden.
SMEDAN director-general, Charles Odii highlighted methods the reforms will help MSMEs, together with elevated tax exemption threshold as companies with an annual turnover of lower than N100 million will probably be exempted from key tax obligations.
This raises the exemption considerably, which is able to liberate capital for smaller companies to reinvest in progress and operations, he mentioned. He highlighted that, the reforms will deal with the issue of a number of taxation and get rid of nuisance levies, which have traditionally elevated operational prices for small companies.
He famous that,by consolidating taxes and simplifying the method, the reforms will take away regulatory hurdles which have typically stifled MSME progress.
Stressing accountability in tax implementation, he mentioned, the brand new insurance policies goal to extend accountability amongst related authorities, which ought to cut back the potential for arbitrary or unlawful tax assortment.
Additionally talking, nationwide president of Affiliation of Small Enterprise Homeowners of Nigeria (ASBON) Dr. Femi Egbesola expressed concern over the a number of and casual taxation that disproportionately impacts Small and Medium Enterprises (SMEs).
He said that, because the nex tax coverage takes off subsequent yr, SMEs must be shielded from paying unlawful taxes on the native authorities ranges. He alluded that, with the current tax reforms, council taxes must be eradicated for SMEs working at varied LCDAs urging that the transfer will erode the long run advantages of the brand new tax reforms act.
