Business
Revolutionizing Taxation: Transforming Opportunities for SMEs in Nigeria
Revolutionizing Taxation: Transforming Opportunities for SMEs in Nigeria
Introduction
Small and Medium Enterprises (SMEs) serve as the backbone of Nigeria’s economy, driving innovation, creating employment, and contributing to economic growth. With over 80% of employment and nearly 50% of the nation’s GDP attributed to these enterprises, their role in Nigeria’s socio-economic development is undeniable (SMEDAN, 2021). However, an overly complex and burdensome tax system has historically hindered their growth, limiting their potential to scale and compete.
Nigeria’s tax regime has long been characterized by inefficiencies, overlapping levies from federal, state, and local governments, and high compliance costs. These issues discourage many businesses from formalizing their operations, impeding their ability to expand and innovate (Oyedele, 2024). In response to these challenges, the new tax reform bill aims to create a more conducive fiscal environment for SMEs. By reducing financial burdens, streamlining tax administration, and introducing targeted incentives, the reform paves the way for sustainable development and economic prosperity.
Challenges Facing SMEs in Nigeria’s Tax System
The current tax system in Nigeria presents significant obstacles to SME growth and sustainability:
- Overlapping Tax Obligations
SMEs face numerous taxes, including corporate income tax, value-added tax (VAT), and various local levies. These overlapping demands lead to double taxation and drain resources, leaving businesses with little capital to reinvest in operations (Presidential Fiscal Policy and Tax Reforms Committee, 2024). - Low Exemption Thresholds
The previous exemption threshold for company income tax—set at ₦25 million in annual turnover—excluded many SMEs from tax relief. This left many modestly-sized businesses burdened by taxes, stifling their growth potential (Oyedele, 2024). - Administrative Inefficiencies
VAT administration is fraught with delays and complexities. Businesses often face liquidity issues due to prolonged refund processing times, discouraging compliance and pushing many SMEs into the informal sector. - High Compliance Costs
Limited resources and expertise make it difficult for SMEs to navigate the tax system. Expenses related to bookkeeping, audits, and interactions with multiple tax agencies divert resources from business operations (Oyedele, 2024).
Key Provisions of the Tax Reform Bill
The new tax reform bill addresses these challenges through innovative measures:
- Elimination of Nuisance Taxes
Low-yield levies such as market taxes and signage fees have been removed, reducing financial strain on SMEs. For example, businesses no longer need to pay for displaying their branding or face exorbitant fees on rural lands. - Increased Tax Exemption Thresholds
The company income tax exemption threshold has been raised from ₦25 million to ₦50 million in annual turnover. This adjustment allows more SMEs to operate tax-free, enabling them to reinvest in growth and innovation. - Simplified VAT Regulations
Over 97% of SMEs are now exempt from charging VAT. Additionally, businesses can claim input VAT credits on assets and services, reducing production costs and enhancing profitability. - Harmonization of Taxes
The consolidation of multiple levies into a single-digit framework simplifies compliance, ensuring fewer disruptions and greater predictability in financial planning for SMEs. - Technological Innovations
Electronic invoicing and fiscalization systems streamline VAT administration, enabling real-time filing and reconciliation. These systems reduce errors, delays, and compliance costs. - Faster VAT Refunds
SMEs will benefit from expedited VAT refunds without the need for extensive audits, improving cash flow and operational efficiency. - Targeted Tax Incentives
Incentives for research and development (R&D) and support for high-impact sectors like agriculture and technology encourage innovation and sector-wide growth. - Transparent Revenue Sharing
A new revenue-sharing model ensures that states with active SME ecosystems receive adequate funding for infrastructure and services, benefiting local businesses.
Benefits for SMEs
The reforms offer numerous advantages that address key pain points for SMEs:
- Cost Reductions: The elimination of nuisance taxes and simplified VAT processes reduce financial and administrative burdens.
- Increased Profitability: Higher tax exemption thresholds allow SMEs to retain more earnings for reinvestment and growth.
- Enhanced Liquidity: Faster VAT refunds ease cash flow constraints, enabling businesses to meet obligations and explore growth opportunities.
- Improved Competitiveness: Lower production costs and targeted incentives empower SMEs to enhance quality, scale operations, and expand into new markets.
- Infrastructural Support: Equitable revenue sharing fosters improved infrastructure, reducing logistical challenges and operational costs.
- Incentivized Formalization: Simplified compliance encourages informal businesses to register, unlocking access to credit, government support, and broader markets.
Conclusion
The new tax reform bill marks a transformative step toward creating a supportive fiscal environment for SMEs in Nigeria. By addressing systemic inefficiencies, eliminating excessive levies, and introducing progressive incentives, the reforms empower SMEs to thrive and contribute meaningfully to national development.
As these measures are implemented, collaboration between government, businesses, and stakeholders will be vital to ensure the reforms achieve their intended impact. With a more inclusive tax system, Nigeria’s SMEs are well-positioned to drive sustainable economic growth, innovation, and prosperity.
References
- SMEDAN (2021). Small and Medium Enterprises (SMEs) in Nigeria: Contributions and Challenges.
- Oyedele, T. (2024). Presidential Fiscal Policy and Tax Reforms Committee Report.
- Presidential Fiscal Policy and Tax Reforms Committee (2024). Overview of Tax Reform Bills.
Nigeria’s Inflation Drops to 15.10% as NBS Reports Deflationary Trend
Nigeria’s headline inflation rate declined to 15.10 per cent in January 2026, marking a significant drop from 27.61 per cent recorded in January 2025, according to the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics.
The report also showed that month-on-month inflation recorded a deflationary trend of –2.88 per cent, representing a 3.42 percentage-point decrease compared to December 2025. Analysts say the development signals easing price pressures across key sectors of the economy.
Food inflation stood at 8.89 per cent year-on-year, down from 29.63 per cent in January 2025. On a month-on-month basis, food prices declined by 6.02 per cent, reflecting lower costs in several staple commodities.
The data suggests a sustained downward trajectory in inflation over the past 12 months, pointing to improving macroeconomic stability.
The administration of President Bola Ahmed Tinubu has consistently attributed recent economic adjustments to ongoing fiscal and monetary reforms aimed at stabilising prices, boosting agricultural output, and strengthening domestic supply chains.
Economic analysts note that while the latest figures indicate progress, sustaining the downward trend will depend on continued policy discipline, exchange rate stability, and improvements in food production and distribution.
The January report provides one of the clearest indications yet that inflationary pressures, which surged in early 2025, may be moderating.
Nigeria’s headline inflation rate declined to 15.10 per cent in January 2026, marking a significant drop from 27.61 per cent recorded in January 2025, according to the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics.
The report also showed that month-on-month inflation recorded a deflationary trend of –2.88 per cent, representing a 3.42 percentage-point decrease compared to December 2025. Analysts say the development signals easing price pressures across key sectors of the economy.
Food inflation stood at 8.89 per cent year-on-year, down from 29.63 per cent in January 2025. On a month-on-month basis, food prices declined by 6.02 per cent, reflecting lower costs in several staple commodities.
The data suggests a sustained downward trajectory in inflation over the past 12 months, pointing to improving macroeconomic stability.
The administration of President Bola Ahmed Tinubu has consistently attributed recent economic adjustments to ongoing fiscal and monetary reforms aimed at stabilising prices, boosting agricultural output, and strengthening domestic supply chains.
Economic analysts note that while the latest figures indicate progress, sustaining the downward trend will depend on continued policy discipline, exchange rate stability, and improvements in food production and distribution.
The January report provides one of the clearest indications yet that inflationary pressures, which surged in early 2025, may be moderating.
Alpha Morgan to Host 19th Economic Review Webinar
In an economy shaped by constant shifts, the edge often belongs to those with the right information.
On Wednesday, February 25, 2026, Alpha Morgan Bank will host the 19th edition of its Economic Review Webinar, a high-level thought leadership session designed to equip businesses, investors, and individuals with timely financial and economic insight.
The session, which will hold live on Zoom at 10:00am WAT and will feature economist Bismarck Rewane, who will examine the key signals influencing Nigeria’s economic direction in 2026, including policy trends, market movements, and global developments shaping the local landscape.
With a consistent track record of delivering clarity in uncertain times, the Alpha Morgan Economic Review continues to provide practical context for decision-making in a dynamic environment.
Registration for the 19th Alpha Morgan Economic Review is free and can be completed via https://bit.ly/registeramerseries19
It is a bi-monthly platform that is open to the public and is held virtually.
Visit www.alphamorganbank to know more.
GTBank Launches Quick Airtime Loan at 2.95%
Guaranty Trust Bank Ltd (GTBank), the flagship banking franchise of GTCO Plc, Africa’s leading financial services group, today announced the launch of Quick Airtime Loan, an innovative digital solution that gives customers instant access to airtime when they run out of call credit and have limited funds in their bank accounts, ensuring customers can stay connected when it matters most.
In today’s always-on world, running out of airtime is more than a minor inconvenience. It can mean missed opportunities, disrupted plans, and lost connections, often at the very moment when funds are tight, and options are limited. Quick Airtime Loan was created to solve this problem, offering customers instant access to airtime on credit, directly from their bank. With Quick Airtime Loan, eligible GTBank customers can access from ₦100 and up to ₦10,000 by dialing *737*90#. Available across all major mobile networks in Nigeria, the service will soon expand to include data loans, further strengthening its proposition as a reliable on-demand platform.
For years, the airtime credit market has been dominated by Telcos, where charges for this service are at 15%. GTBank is now changing the narrative by offering a customer-centric, bank-led digital alternative priced at 2.95%. Built on transparency, convenience and affordability, Quick Airtime Loan has the potential to broaden access to airtime, deliver meaningful cost savings for millions of Nigerians, and redefine how financial services show up in everyday life, not just in banking moments.
Commenting on the product launch, Miriam Olusanya, Managing Director of Guaranty Trust Bank Ltd, said: “Quick Airtime Loan reflects GTBank’s continued focus on delivering digital solutions that are relevant, accessible, and built around real customer needs. The solution underscores the power of a connected financial ecosystem, combining GTBank’s digital reach and lending expertise with the capabilities of HabariPay to deliver a smooth, end-to-end experience. By leveraging unique strengths across the Group, we are able to accelerate innovation, strengthen execution, and deliver a more integrated customer experience across all our service channels.”
Importantly, Quick Airtime Loan highlights GTCO’s evolution as a fully diversified financial services group. Leveraging HabariPay’s Squad, the solution reinforces the Group’s ecosystem proposition by bringing together banking, payment technology, and digital channels to deliver intuitive, one-stop experiences for customers.
With this new product launch, Guaranty Trust Bank is extending its legacy of pioneering digital-first solutions that have redefined customer access to financial services across the industry, building on the proven strength of its widely adopted QuickCredit offering and the convenience of the Bank’s iconic *737# USSD Banking platform.
About Guaranty Trust Bank
Guaranty Trust Bank (GTBank) is the flagship banking franchise of GTCO Plc, a leading financial services group with a strong presence across Africa and the United Kingdom. The Bank is widely recognized for its leadership in digital banking, customer experience, and innovative financial solutions that deliver value to individuals, businesses, and communities.
About HabariPay
HabariPay is the payments fintech subsidiary of GTCO Plc, focused on enabling fast, secure, and accessible digital payments for individuals and businesses. By integrating payments and digital technology, HabariPay supports innovative services that make everyday financial interactions simpler and more seamless.
Enquiries:
GTCO
Group Corporate Communication
[email protected]
+234-1-2715227
www.gtcoplc.com
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