Nigeria’s Tax Reform May Fail Without Gradual Implementation, CPPE Warns
- CPPE has warned that Nigeria’s tax reform may fail if implemented too aggressively
- High inflation and weak incomes were driving public resistance to new tax demands
- The group said Nigeria’s large informal economy poses major implementation challenges
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
Nigeria’s ongoing tax reform has sparked growing public concern, with households and businesses expressing anxiety over new compliance demands at a time when Nigerians grapple with economic hardship.
Amid the rising resistance, the Centre for the Promotion of Private Enterprise (CPPE) has warned that the reform could fail unless it is implemented gradually and with strong consideration for Nigeria’s economic and political realities.
Source: UGC
In a policy note issued on Sunday and signed by its Chief Executive Officer, Dr Muda Yusuf, the think tank described the reform as one of Nigeria’s most far-reaching fiscal restructuring efforts in recent decades, Premium Times reported.
According to CPPE, the tax reform framework is well-designed in principle, with objectives that include improving revenue mobilisation, enhancing equity, simplifying the tax system and supporting economic diversification.
However, the organisation cautioned that successful outcomes will depend less on the law itself and more on how it is executed.
Poorly-timed implementation can affect livelihoods
CPPE said past experience shows that even well-intended reforms can face failure if implementation lacks proper sequencing, political sensitivity and economic realism. It warned that poorly timed enforcement could disrupt livelihoods and further weaken public trust.
The warning comes as Nigerians continue to feel the impact of recent economic reforms, including fuel subsidy removal and foreign exchange adjustments. Many households are grappling with declining purchasing power, while businesses face higher costs related to energy, transportation and financing.
Against this background, expectations of immediate and full tax compliance have triggered strong pushback, particularly on social media, among business associations and within the informal sector.
CPPE acknowledges protection of vulnerable Nigerians in tax reforms
Meanwhile, the CPPE acknowledged that the reform includes provisions aimed at protecting vulnerable groups. These include tax exemptions for low-income earners, value-added tax relief on basic goods and essential services such as education, healthcare and agriculture, as well as incentives for small businesses.
The organisation said these reforms could ease pressure on households and support long-term economic growth if implemented effectively.
Source: UGC
However, CPPE noted that public scepticism remains high due to past experiences where tax increases were followed by rising living costs, with limited improvement in public services. According to the think tank, this weak trust between citizens and government continues to fuel resistance to reforms.
The group also identified Nigeria’s large informal economy as a major challenge. It cited National Bureau of Statistics data showing that about 40 million micro, small and nano enterprises account for more than 90% of employment nationwide.
CPPE warned that strict enforcement of filing requirements, record-keeping standards and penalties could overwhelm informal operators who often lack capacity and operate on narrow margins. It cautioned that an aggressive approach could criminalise informality rather than encourage voluntary formalisation.
Additional concerns include proposals for mandatory reporting of certain bank transactions, which small businesses fear could expose pass-through funds to scrutiny. Proposed increases in capital gains tax and restrictions on rent relief have also unsettled investors and middle-income earners.
CPPE advised tax authorities to focus enforcement efforts on large corporations, established SMEs and high-net-worth individuals, who contribute the majority of tax revenue.
The organisation also cautioned that aggressive enforcement close to the 2026 pre-election period could trigger social unrest and undermine the stability of the reform.
CPPE concluded that tax reform should be treated as a long-term process rather than a one-off event, calling for a phased and pragmatic approach built on trust, economic realities and appropriate political timing.
99% of capital market investors exempt from CGT – Oyedele
Legit.ng earlier reported that the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, advised Nigerians not to panic regarding the new tax laws, stating that about 99% of Nigerian stock market investors are exempt from the proposed capital gains tax.
He explained that investors selling shares worth up to N150 million annually, with gains not exceeding N10 million, will not pay CGT.
He added that the tax reforms include incentives aimed at strengthening the capital market and protecting retail investors. The government also exempt low income earners from income tax, while essential commodities are also exempt from value added tax.
Proofreading by Funmilayo Aremu, copy editor at Legit.ng.
Source: Legit.ng
