Abuja, March 4, 2026 – The Federal Government of Nigeria has officially launched the Presumptive Tax Framework (PTF), a new policy initiative designed to integrate millions of small and informal businesses—such as traders, artisans, mechanics, and micro-enterprises—into the formal tax system. The framework, signed into effect by Minister of Finance and Coordinating Minister of the Economy Wale Edun, emphasizes simplicity, fairness, and protection from harassment while aiming to broaden the national tax base without increasing tax rates.
The announcement and formal signing ceremony took place on Tuesday, March 3, 2026, at the Ministry of Finance in Abuja. It forms part of the broader tax reform agenda under President Bola Ahmed Tinubu's administration, following the passage of key tax legislation in 2025 and early 2026, including the Nigeria Tax Act 2025. The reforms shift focus from raising rates to expanding compliance, particularly in the informal sector, which accounts for a significant portion of Nigeria's economic activity.
Executive Secretary of the Joint Revenue Board (JRB), Olusegun Adesokan, who addressed the event, described the framework as a transformative step toward equitable and transparent tax administration. "The framework clearly outlaws the use of force in tax collection. It also bans the mounting of roadblocks for the collection of taxes," Adesokan stated. He emphasized that tax officials will no longer be permitted to halt traders on highways, markets, or other public spaces to demand levies arbitrarily. Instead, collections must adhere to structured, lawful, and coordinated channels involving federal, state, and local authorities.
Key features of the Presumptive Tax Framework include:
Turnover-Based Taxation: Eligible informal businesses will pay a flat 1% presumptive tax on their annual turnover, replacing complex profit-based assessments that require detailed record-keeping, which many small operators lack.
Exemptions for Vulnerable Groups: Nano and small businesses with annual turnover of N12 million or below (with some sources citing thresholds up to N50 million in related guidelines) are fully exempt from the presumptive regime, shielding the most vulnerable entrepreneurs and allowing them to retain more working capital for growth.
Ban on Cash Collections and Roadblocks: The regulations prohibit cash payments to tax officials and the use of roadblocks, checkpoints, or stickers for enforcement—practices long criticized for enabling extortion, corruption, and disruption of commerce.
Promotion of Digital Payments: To enhance transparency and accountability, the framework mandates the use of technology-driven platforms for tax remittances, reducing opportunities for informal or coercive collections.
Minister Wale Edun, in his remarks at the launch, underscored the policy's growth-oriented intent. "The objective of presumptive taxation is not to overburden small businesses, but to provide a fair, simple, and predictable framework for tax compliance. Our fiscal strategy is anchored on expanding the tax base rather than increasing tax rates. Inclusion drives sustainability," Edun said.
He highlighted that small and micro-enterprises constitute the backbone of Nigeria's economy, particularly in the informal sector where traditional tax systems have struggled due to poor record-keeping and fragmented enforcement. By simplifying compliance and eliminating abusive practices, the government aims to encourage voluntary participation, reduce multiple taxation (often imposed by overlapping local agents), and curb illegal levies that have historically intimidated operators.
The JRB, in collaboration with federal and subnational tax authorities, developed the regulations to ensure uniformity and prevent fragmentation. Adesokan noted that the framework addresses long-standing complaints from traders and transport operators about harassment, while aligning with broader goals of improving domestic revenue generation and reducing reliance on oil revenues.
Officials stressed that the initiative is not punitive but supportive. Presumptive taxation estimates tax liability based on visible indicators—such as business type, location, scale, and typical earnings in similar operations—rather than requiring audited financial statements. This approach is common in many developing economies for taxing informal sectors efficiently.
The launch comes amid ongoing implementation of tax reforms, including phased reductions in company income tax for larger firms (from 30% to 25% starting in 2026) and other measures to ease burdens on businesses. Authorities believe that bringing more citizens into a regular, low-burden tax system will foster long-term economic stability, boost public service funding, and promote formalization without stifling entrepreneurship.
Stakeholders, including business associations and informal sector groups, have welcomed the bans on roadblocks and cash collections as immediate relief from extortion. However, some analysts caution that successful rollout will depend on effective monitoring, public sensitization, and collaboration across government tiers to prevent abuse at local levels.
The Presumptive Tax Framework represents a pragmatic response to Nigeria's informal economy challenges, where millions operate outside formal structures. By prioritizing inclusion, protection, and simplicity, the Tinubu administration seeks to harness the potential of small businesses for sustainable revenue growth and national development.
