Omolabake Fasogbon
Though the federal authorities has repeatedly reiterated the reduction embedded within the Nigerian Tax Reform Acts of 2025 for Small and Medium Enterprises, many operators stay unconvinced, opting as an alternative for defensive measures to defend themselves from perceived results.
Findings throughout a cross-section of small enterprise house owners present that, regardless of official assurances, some operators now insist on money funds, cautious that financial institution inflows may expose them to taxes.
Addressing SME exemptions, Chairman of the Presidential Committee on Fiscal Coverage and Tax Reforms, Mr Taiwo Oyedele, mentioned the framework was designed to ease the burden on small companies whereas introducing construction as they develop.
In keeping with him, small companies and casual operators would face considerably decrease tax stress with the availability.
He mentioned, “The reforms increase the small-company exemption threshold to N100 million in annual turnover, exempt qualifying companies from VAT assortment, capital beneficial properties tax and withholding tax, and introduce safeguards towards harassment by tax harmonization.
“Below the brand new framework, corporations with annual turnover of N100 million or much less and glued belongings not exceeding N250 million can be labeled as small corporations, successfully eradicating over 90 per cent of Nigeria’s micro and small companies from the most important tax web, together with Corporations Earnings Tax, VAT and improvement levies, and considerably easing compliance obligations”.
The brand new legislation, as just lately gazetted, positions banks and fintechs as not solely as tax-recovery channels however as information custodians and fee facilitators, a transfer which unsettled the general public, particularly SMEs who are actually extra cautious about inflows and outflows by their accounts.
In Osogbo, Osun State, THISDAY reporter sampled the opinion of some small enterprise house owners, together with a frozen meals retailer (identify undisclosed) whom she approached for patronage, their mindsets have been comparable.
The frozen meals retailer had requested upfront whether or not fee can be in money or by switch earlier than releasing the product.
Instructed switch, she declined, saying, ‘We’ve been requested to not settle for switch once more.’
Her stance was clearly linked to rumors and beliefs that taxes can be mechanically deducted from inflows into financial institution accounts, regardless of the federal government’s having debunked this narrative.
Requested what she would do with the day’s money, she replied, ‘I received’t take it to the financial institution. I’ll maintain it and use it to pay wholesalers to restock. That’s my manner out to flee their tax wahala.’
Ultimately, she nonetheless accepted money regardless of efforts to disabuse her of the notion.
She is just not alone. A number of operators now shun digital funds in a bid to evade tax, a development analysts say may stifle SME progress, whereas reversing beneficial properties in cashless coverage and monetary inclusion.
Talking on the implications, President of the Affiliation of Small Enterprise Homeowners of Nigeria, Dr Femi Egbesola, warned that rejecting digital funds exposes SMEs to lack of data, weak credibility and restricted entry to loans.
He mentioned reliance on money undermines monetary planning and shuts companies out of progress alternatives that require formal documentation.
“Money transactions enhance the danger of theft and poor accountability, whereas limiting entry to banking providers and authorities help programmes”, he warned.
From the buyer facet, resistance can also be rising, particularly the place retailers add costs between N50 to N 100 to just accept transfers, a transfer seen as shifting tax burden to consumers.
One shopper, Mr. Yemi Kolawole, mentioned he now prefers money for petty transactions to keep away from repeated costs, reserving transfers for bulk purchases.
A POS operator in Lagos, Mrs. Ify confirmed the surge in money withdrawal in latest instances, a development which is probably not unconnected to retailers and shoppers’ choice fo money transactions, amid tax concern.
Egbesola mentioned a lot of the panic was pushed by poor understanding of the legislation, stressing that almost all SMEs stay exempt from key taxes.
He mentioned the onus lies on authorities and tax directors to obviously clarify that financial institution transfers are usually not mechanically taxed and that exemptions are actual and enforceable to dispel the panic.
Noting that operators’ fears are comprehensible, he mentioned extra state efforts ought to be deployed to simplify communication.
“These embrace participating SMEs immediately in markets and clusters, publishing clear exemption pointers, and curb harassment by unlawful tax brokers. Belief grows when guidelines are easy and enforcement is truthful”, he remarked.
The SME advocate additionally suggested operators to undertake lawful methods of minimising tax publicity by correct registration, fundamental document maintaining and staying inside exemption thresholds.
“Fairly than making an attempt to evade the system, people and SMEs ought to search simple tax recommendation. Sound tax planning, not tax avoidance, stays the most secure and least expensive option to keep compliant and financially safe,” he suggested.
