FG Rolls Out Digital Tax Reform for Informal Sector
Nigeria is embarking on one of its most ambitious fiscal restructurings in recent years, as the Federal Government rolls out a sweeping tax reform aimed squarely at the country’s vast informal economy.
In Abuja, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, formally signed the Presumptive Tax Regulations and Implementation Guidelines, activating the next phase of reforms first introduced in 2025.
The initiative is designed to pull millions of informal operators into a structured and transparent tax system, replacing the patchwork of levies and cash collections that have long defined revenue enforcement at state and local levels. Under the new rules, cash tax collection is prohibited nationwide, and roadside enforcement — often associated with multiple taxation and harassment — has been scrapped. In its place, the government is introducing a simplified, technology-driven framework that prioritises digital payments and traceable transactions.
Central to the reform is a one per cent presumptive tax on turnover for eligible informal businesses, including traders, artisans and transport operators. To cushion the smallest enterprises, firms with annual turnover of ₦12 million or below are exempted. Officials argue that the measure strikes a balance between widening the tax net and safeguarding vulnerable micro and nano businesses.
The reform is closely tied to the economic vision of President Bola Ahmed Tinubu, whose administration is targeting stronger GDP growth and a $1 trillion economy by 2030. According to Edun, the new framework aims to deliver fairness, predictability and clarity, while easing compliance burdens and encouraging voluntary participation.
Technology forms the backbone of the overhaul. Digital tax identification systems and electronic payment platforms are expected to improve coordination across federal, state and local tax authorities, reduce leakages and strengthen accountability. An ombudsman mechanism has also been embedded to address disputes and reinforce taxpayer confidence.
With the informal sector accounting for over 80 per cent of employment nationwide, analysts see the reform as a potential game changer for public revenue. Historically, complex procedures and inconsistent enforcement limited contributions from this segment. By creating a unified and transparent regime, the government hopes to unlock new funding streams for infrastructure and social services, while reducing reliance on borrowing.
Yet, observers caution that execution will be critical. Poorly managed enforcement could strain small enterprises already navigating economic headwinds. Policymakers have therefore stressed stakeholder engagement and phased implementation to ensure the reform supports growth rather than stifles it.
If effectively implemented, the overhaul could redefine Nigeria’s revenue architecture — integrating millions of small businesses into the formal economy and laying the groundwork for more inclusive and sustainable fiscal stability.
