FG Imposes Tax on Vulcanisers, Wielders, Electricians, Others, Bans Cash Collections
- Nigeria's new tax framework targets informal sector to enhance transparency and eliminate coercive practices
- Small businesses earning N12 million or less exempt from presumptive tax under new regulations
- The government also aims to broaden tax base, ensuring fairness and accountability in Nigeria's revenue system
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s federal government has introduced a sweeping tax framework targeting the country’s vast informal sector, including artisans such as electricians, welders, vulcanizers and other small-scale operators.
The new regulations also outlaw the collection of taxes in cash and prohibit the mounting of roadblocks for tax enforcement, practices long associated with harassment and irregular collections.
Source: Getty Images
Officials say the move is designed to streamline tax administration, eliminate coercive practices and improve transparency across Nigeria’s revenue system.
End to cash tax collections and roadblocks
The directive is contained in the newly signed presumptive tax regulations and implementation guidelines, unveiled in Abuja on Tuesday.
Speaking during the signing ceremony, Olusegun Adesokan, executive secretary of the Joint Revenue Board (JRB), said the framework aims to dismantle fragmented and informal tax practices that have plagued the informal sector.
According to him, tax officials will no longer be permitted to collect money physically from businesses or mount checkpoints to demand payments.
According to a report by TheCable, the new system instead encourages the use of digital platforms for tax payments, ensuring traceability and accountability.
Adesokan explained that the reforms seek to establish fairness in tax administration while protecting small businesses from harassment by revenue agents.
Small businesses earning N12 million are exempt
Under the new guidelines, nano and small enterprises with an annual turnover of N12 million or less will be exempt from paying taxes under the presumptive tax regime.
However, informal businesses that earn above that threshold will pay a one per cent tax on turnover, a rate officials say is deliberately modest to encourage compliance rather than discourage enterprise.
Authorities say the approach will simplify taxation for small operators while gradually bringing informal businesses into Nigeria’s formal economic system.
The framework also introduces a uniform structure for states and local governments to tax commercial activities within the informal sector.
Through the new platform, businesses will be integrated into a national tax identification system designed to improve coordination across all tiers of government.
Tax reform moves from policy to implementation
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the signing of the regulations marks a critical shift from policy approval to the actual rollout of the tax reforms approved between 2025 and early 2026.
According to him, the reforms are built around three key principles: transparency, fairness and economic inclusion.
Edun stressed that the government’s goal is not to increase tax rates but to broaden the number of people and businesses participating in the tax system.
By expanding the tax base, he said, more citizens will contribute fairly to national development without placing excessive burden on any single group.
Informal sector holds major economic power
Joseph Tegbe, chairman of the National Tax Policy Implementation Committee, described the new regulations as a decisive step toward transforming Nigeria’s tax system.
He noted that the country’s informal sector accounts for more than 80 per cent of the workforce, yet its contribution to structured government revenue has remained limited.
This gap, he said, has largely been driven by systemic weaknesses, inconsistent enforcement and a lack of transparent mechanisms for tax collection.
Tegbe explained that the new framework seeks to replace arbitrary collections with clear rules, digital payments and coordinated oversight across government agencies.
He added that the implementation committee will work closely with tax authorities nationwide to ensure the reforms are rolled out in a disciplined and transparent manner.
Source: Getty Images
Officials also revealed that an ombudsman mechanism will be introduced to handle complaints and ensure fairness in the new tax system.
How FG plans to use banks to recover tax debt in 2026
Legit.ng earlier reported that Nigeria’s tax framework was tightening as the government looks to boost revenue and reduce leakages.
At the centre of the renewed enforcement drive is a clearer definition of what qualifies as tax debt, how it can be recovered, and the expanding role of technology in tracking liabilities.
With ambitious revenue targets set for 2026, taxpayers are under closer scrutiny than ever before.
Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
