Economy: Nigeria’s tax reforms laws could criminalise 40m informal businesses, if…. –CPPE CEO

*Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, opines several millions of informal business operators in Nigeria still lack structured ‘record-keeping systems’, have limited understanding of tax concepts, including Company Income Tax, VAT, Personal Income Tax, and Withholding Tax

Gbenga Kayode | ConsumerConnect

As Nigeria commences the actual implementation of the new Tax Laws January 1, 2025, the Centre for the Promotion of Private Enterprise (CPPE) has highlighted reasons the implementation of the initiative could unintentionally criminalise about 40 million informal businesses in Nigeria.

ConsumerConnect gathered Dr. Muda Yusuf, Chief Executive Officer (CEO) of CPPE, who stated this in a policy statement, said if implemented “without careful sequencing and adequate support”, most informal operators would have issues with the tax regulators.

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Dr. Yusuf emphasised that such informal business operators lack structured record-keeping systems and have limited understanding of tax concepts, including Company Income Tax (CIT), Value-Added Tax (VAT), Personal Income Tax (PIT), and Withholding Tax (WHT), among others.

Why authorities should sequence implementation

The expert also stated that most businesses are largely cash-based, operate on thin margins, and often lack the literacy and digital capacity required for compliance with the new tax laws in the economy.

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According to him, the new tax framework introduces mandatory filing requirements, record-keeping standards, penalties, and presumptive taxation by business owners.

Yusuf restated: “Without careful sequencing, these provisions risk criminalising informality rather than encouraging gradual formalisation.”

The implementation of the remaining tax laws President Bola Ahmed Tinubu signed into law June 26, 2025, has commenced January 1, as planned by the Federal Government, despite certain that gazetted copies of the Remax regulations were altered.

Commendation for government, tax authorities

Yusuf described Nigeria’s economic cum tax reforms as among the most ambitious fiscal restructuring efforts in recent decades.

He, however, cautioned that the informal sector of the Nigerian economy could bear the brunt of implementation challenges, if care is not taken.

“Any serious discussion of tax reforms in Nigeria must confront the scale of the informal economy.

“With an estimated 40 million micro, small, and nano enterprises, over 80 percent operating informally, the sector is central to employment, income generation, and economic resilience,” said he.

The CEO of CPPE also stressed that over 90 percent of jobs are in the informal economy, according to the Nigeria Labour Force Survey by the National Bureau of Statistics.

The policy statement further noted: “Most informal operators lack structured record-keeping systems and have limited understanding of tax concepts such as company income tax, VAT, personal income tax, and withholding tax.

“Businesses are largely cash-based, operate on thin margins, and often lack the literacy and digital capacity required for compliance.”

Yusuf explained: “The new framework introduces mandatory filing requirements, record-keeping standards, penalties, and presumptive taxation.

“Without careful sequencing, these provisions risk criminalising informality rather than encouraging gradual formalisation.”

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