Nigeria has introduced a revised tax policy framework aimed at easing the fiscal burden on businesses and strengthening the operating environment for small and emerging enterprises.
Under the new structure, corporate income tax has been reduced to 25 percent, while micro firms with annual turnover below ₦100 million are exempted from paying corporate income tax.
The policy adjustment represents a shift in the government’s approach to taxation, with a stronger focus on supporting enterprise growth, improving compliance, and widening the formal tax base.
By lowering statutory tax rates and expanding exemptions for smaller businesses, authorities are seeking to balance revenue mobilisation with economic sustainability.
Corporate income tax has long been cited by businesses as a significant cost pressure, particularly in an environment marked by high inflation, rising operating expenses, and limited access to affordable credit.
The reduction in the headline tax rate is expected to improve cash flow for companies, enhance profitability, and create room for reinvestment, especially among firms operating in capital-intensive sectors.
For micro enterprises, the zero corporate income tax threshold marks a significant relief. Small businesses account for a substantial share of employment and economic activity in Nigeria, yet many operate on thin margins and face challenges meeting tax obligations alongside other regulatory costs.
The exemption is expected to lower entry barriers into the formal economy and encourage voluntary compliance among informal operators.
Policy analysts note that the revised framework aligns with broader efforts to stimulate private sector-led growth and improve Nigeria’s competitiveness as an investment destination.
By reducing the effective tax burden, the government aims to attract new investments, retain existing businesses, and support the expansion of domestic enterprises.
The reform also reflects a growing emphasis on targeted taxation, where firms are taxed according to scale and capacity rather than through a uniform approach.
Larger companies continue to contribute to government revenues, while smaller firms are given space to stabilise and grow before entering the tax net.
This graduated structure is intended to promote fairness and economic inclusion.
In addition to easing business costs, the policy is expected to improve tax administration efficiency. Authorities believe that lower rates and clearer thresholds will reduce resistance to compliance and improve overall tax collection over time.
As more small firms formalise operations, the broader tax base could expand, offsetting the short-term revenue impact of lower rates.