Nigerian Government's 2025 Tax Act: A Boost to Inclusive Economic Growth

Strategic Insights -

The Nigerian Association of Small and Medium Enterprises (NASMEs) has welcomed the 2025 Tax Act as a significant step towards inclusive economic growth and enterprise resilience. The tax reforms, which include exemptions for low-income earners and an increase in the turnover threshold for small businesses, mark a major policy shift towards a more equitable tax system. According to Dr Abdulrashid Yerima, President of NASMEs, the reforms align with global best practices and demonstrate a conscious effort to support income redistribution and stimulate enterprise growth.

Key Takeaways:

  • The 2025 Tax Act has exempted low-income earners from tax, aiming to alleviate the financial burden on vulnerable groups.
  • The turnover threshold for small businesses has been revised from N25 million to N100 million, providing a more substantial cushion for businesses to operate.
  • The removal of the 0.5% turnover tax on loss-making businesses is seen as a positive move, encouraging innovation and startup growth.
  • The new tax law has improved Nigeria's ease of doing business through simpler compliance processes and exemptions, reducing the cost and complexity of tax filing for small firms.
  • The tax reforms are expected to improve investor confidence, particularly with the clarification of the tax environment and its support for innovation.
  • The changes are also expected to boost reinvestment, local content expansion, and industrial clustering for MSMEs, aligning with the goals of the African Continental Free Trade Area (AfCFTA) and the ECOWAS Trade Liberalisation Scheme (ETLS).
  • NASMEs and the ACORE Small Business Coalition remain committed to working with the government, international partners, and the private sector to ensure effective implementation of the tax reforms.

Statistics:

  • The new turnover threshold of N100 million is a 400% increase from the previous threshold of N25 million.
  • The tax exemptions for small businesses are expected to support the growth of MSMEs, which have been recognized as engines of economic transformation.
  • The high exchange rates and commercial bank lending rates of over 37% have made it challenging for small businesses to survive, and the tax reforms aim to address these challenges.
  • The removal of the 0.5% turnover tax on loss-making businesses is expected to encourage innovation and startup growth.
  • The new tax law is expected to improve investor confidence, with the clearer, fairer, and more predictable tax regime.

Sources:

- News Agency of Nigeria (NAN), "Nigerian Government's 2025 Tax Act: A Boost to Inclusive Economic Growth" (June 2025)

- President of NASMEs, Dr Abdulrashid Yerima's interview with NAN (June 2025)