January 04, (THEWILL) — Nigeria’s newly implemented tax laws, effective from January 1, 2026, provide considerable relief to low-income earners and small businesses, which is their primary feature. This new framework reorganises personal income tax brackets to align with current income realities and expand the taxable base.
According to the new legislation, the initial portion of annual income up to N800,000 remains tax-exempt, thereby safeguarding lower-income earners. In contrast, under the previous system, this amount would have been subject to a minimum tax rate of 15 percent. The subsequent income brackets are subject to graduated tax rates that increase with higher earnings.
The revised structure includes moderate upward adjustments in rates for the upper tiers. Income ranging from N800,000 to N3 million is taxed at 15 percent, while the segment between N3 million and N12 million incurs an 18 percent tax rate. For entrepreneurs, small and medium-sized enterprises (SMEs), and corporate entities, the Nigerian Tax Act (NTA) offers complete exemption for “new small companies.”
These “new small companies” are defined as businesses with an annual turnover not exceeding N50 million and total assets not surpassing N250 million, qualifying them for full exemption from company income tax (CIT), capital gains tax (CGT), VAT, and development levy. For businesses exceeding the small company threshold, the standard corporate income tax rate of 30 percent is applicable.
To determine these amounts, business owners must engage the services of an accountant or tax consultant who will provide guidance to the entrepreneur and manage the necessary filings. This process occurs annually and incurs additional costs for the business.
However, it does not protect the business owner from the persistent and burdensome multiple taxes imposed by local government authorities.
Data indicates that Nigeria is home to over 40 million micro, small, and medium enterprises (MSMEs) across various sectors in the states. These enterprises account for 97 percent of all businesses and represent the informal sector, which acts as the backbone of the economy. Notably, 67 percent of these enterprises are owned by youth, contributing approximately 47 percent to the nation’s economic output.
Findings by THEWILL indicate that numerous accountants have registered their consulting businesses to capitalise on the new legislation, providing professional services to small business owners whose transactions, unlike in the past, are now subject to fiscal oversight as the informal sector transitions into the formal one.
The fees vary, starting from N50,000, depending on the business size and the owner’s financial capacity.
Government employees and private sector workers are establishing consulting firms as “side hustles” to enhance their earnings. Some individuals have turned to social media to promote their services and online train-the-trainer programs.
A firm based in Port Harcourt, Rivers State, circulated a WhatsApp message titled ‘Get Ready for 2026: New Tax Rules Are Coming,’ which included a link to their website and a contact number.
“This is a windfall for service providers. They will explore every corner to attract clients, potentially numbering in the hundreds and thousands. The opportunities are enormous,” stated Anthony Ukah, the owner of a private auditing firm in Lagos.
Data shows that the Chartered Institute of Taxation of Nigeria (CITN) had a total membership of 31,767 as of June 5, 2025. The Association of National Accountants of Nigeria (ANAN) boasts over 58 nominal members, while the Institute of Chartered Accountants of Nigeria (ICAN) has an estimated total of nearly 70,000 registered members as of mid-2025. These professional bodies will supply the consultants.
Despite the widely praised tax reform laws, it is unlikely that state and local governments will reap the benefits that the new system is purported to provide. Residents who do not belong to the categories of citizens intended to benefit from the new tax laws are facing troubling circumstances.
Small businesses continue to struggle under the burden of multiple taxes, excessive levies, and the overreaching enforcement of laws imposed by these levels of (state and local) government. The laws are applied in an exceedingly harsh manner, a practice that has persisted over the years. Daily, these individuals confront the harsh realities of an abnormal system that has become the norm.
The situation in Niger state recently: There has been significant outrage in the state as the government allegedly requested over N100,000 from individual shop owners, labeling it as an ‘Environmental Protection Agency Levy.’ The latest circular, released by the Niger State Environmental Protection Agency (NISEPA), was titled “2025 Harmonised Levies,” and instructed traders to remit payments as part of the state’s new revenue initiative.
“Officials visited and, despite observing that my shop was nearly empty, insisted that I pay over N100,000 as an environmental levy. Even if I sold everything in this shop, I would still be unable to afford that amount,” lamented one affected trader.
Another business owner remarked that government officials had presented the same environmental levy document to traders just five months prior, in May, and had forcibly collected funds from shop owners at that time.
“Previously, they issued a bill of N24,000 under the pretense of the same harmonised environmental protection fee. When we inquired whether we would be required to pay another environmental levy, we were assured that we would not have to pay again until 2026. Nevertheless, they have now introduced a new levy of N100,800,” the business owner expressed in frustration.
“The government is making it exceedingly difficult to conduct business; we have already paid no less than five different taxes within a span of four to five months. The most distressing aspect is that they come and impose a short ultimatum to gather the funds and pay; failure to comply results in continuous embarrassment. We were informed that some businesses were even required to pay a tax of N200,000, effectively draining people dry,” another trader stated.
Additionally, another concealed cost in the NTA is the Stamp Duty Act, which has also replaced the Electronic Money Transfer Levy (EMTL). Stamp Duty is a tax imposed by the government on specific legal documents and transactions, most frequently associated with the purchase or transfer of property, land, and certain financial securities.
The EMTL, which is applied to electronic money transfer transactions of N10,000 and above, is intended to be borne by the recipient; the fee is N50 per transaction.
Despite the fact that the receiver was later exempted from the levy, confusion arose as both the sender and the receiver were charged N50 for each transaction by certain financial institutions.
When the EMTL was established through the Finance Act of 2019/2020, transactions conducted via financial technology (fintech) channels were exempted. However, this exemption was reversed in August 2024 to encompass mobile money, internet banking, and other electronic payment methods.
Previously, both the Stamp Duty and the EMTL operated as independent regulations. The new tax framework has merged these two fiscal regulations, resulting in the EMTL being effectively incorporated into the Stamp Duty Act, thereby broadening its scope.
As a result of this change, the NTA 2025 has repealed the earlier independent Stamp Duty Act and consolidated all provisions into a single, cohesive statute, with the objective of simplifying the overall tax structure. It also incorporates the provisions of the former EMTL.
The N50 charge on electronic transfers of N10,000 and above is now officially designated as stamp duty. A notable alteration is that the sender of an electronic transfer of N10,000 or more is now liable for the N50 fee, in contrast to the previous practice where the recipient bore this responsibility under the EMTL.
The stamp duty rate for agreements and contracts has been set at N1,000, moving away from a potentially complicated ad-valorem (percentage-based) system for these specific instruments. Certain transactions are exempt from the N50 stamp duty on electronic transfers. These exemptions include:
•Transfers or deposits of less than N10,000.
• Salary payments.
• Transfers between a person’s own accounts within the same bank (provided the account names and identification details match).
Unstamped documents, whether in physical or electronic form, are not admissible as evidence in civil court proceedings in Nigeria.
Given the high volume of electronic payment transactions facilitated by the widely spreading services of the ubiquitous fintechs, small businesses are set to grapple with increased costs amid receding margins.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
