Follow Us on Google
By Merit Ibe
Nigeria’s recently rolled-out tax regime is being hailed as a game-changer for small businesses and certain manufacturing sectors, but experts warn that implementation challenges could limit its impact. Designed to ease the tax burden for small and medium-sized enterprises (SMEs) while broadening the tax net, the new laws promise both opportunities and complexities for businesses across the country.
Daniel Dickson-Okezie, an SMEs expert and member of the Lagos Chamber of Commerce and Industry (LCCI), described the new tax laws as the most favourable for smaller businesses in recent history. “This is the best when it comes to reducing the tax burden of SMEs. It will help small businesses grow and encourage more SMEs to come into the tax net,” he said.
According to Dickson-Okezie, the regime may not favour larger businesses as much, but small manufacturing firms are expected to benefit in the long run.
However, he highlighted concerns over the implementation of the laws.
“In Nigeria, we have always had good laws, but corruption and poor enforcement remain major problems. The new tax laws will not solve the high level of corruption in the tax administration,” he said. He also flagged a legislative controversy: evidence suggests the federal government altered some provisions of the tax law without notifying the National Assembly, prompting calls from lawmakers and stakeholders to postpone implementation beyond the January 1, 2026 start date to allow for harmonisation.
On the upside, Dickson-Okezie noted that the new regime is expected to bring major tax avoiders into the system, potentially boosting government revenue significantly in the months and years ahead. “As long as the regime is properly implemented, a lot of taxpayers who had hitherto avoided tax payments will now contribute,” he said.
From a manufacturing perspective, Dr. Muda Yusuf, Director at the Centre for Petroleum Policy and Economics (CPPE), said the new tax framework provides a host of incentives for the sector, particularly for priority industries such as food and beverages. Concessions on VAT and withholding taxes, he noted, are expected to benefit both domestic manufacturers and those who had previously complained about the perceived advantage of companies operating in free zones. The regime now taxes free-zone businesses, leveling the playing field for domestic manufacturers operating outside such zones.
Other News
Dr. Yusuf also highlighted harmonisation of multiple taxes as a key benefit.
“Before, manufacturers faced numerous taxes and levies around 30 or so. Now, harmonization will ease the burden, reducing administrative complexity and multiple taxation,” he explained.
Despite these advantages, challenges remain. Companies that have not been paying taxes in the past will now be required to do so, which some view as a disadvantage. In addition, the new VAT fiscalisation system, which allows tax authorities to monitor transactions electronically, has raised privacy concerns among manufacturers and other businesses. Many are uncomfortable with the idea of government access to their financial systems, fearing potential misuse of data.
The informal sector, which plays a critical role in distributing manufactured products, may also be significantly affected. “Many informal operators are not used to preparing accounts, filing tax returns, or paying company taxes. The new regime may compel them to do so, creating challenges not just for them, but also for the manufacturers who rely on them for distribution,” Dr. Yusuf explained.
He emphasized that unless the government adopts a softer approach toward the informal sector, these requirements could indirectly disrupt the manufacturing supply chain.
Both experts agree that while the tax regime presents opportunities, its success will ultimately depend on careful implementation. SMEs stand to benefit from reduced tax burdens and greater inclusion in the tax net, while manufacturers could gain from harmonized levies, priority-sector incentives, and a more level playing field. Yet without strong enforcement, transparency, and consideration for informal operators, some of the intended gains may be undermined.
In sum, Nigeria’s new tax regime offers a bold vision for the economy: encouraging compliance, expanding revenue, and supporting smaller businesses, while fostering fairness within the manufacturing sector. But as Dickson-Okezie cautions, “only the future can say what will happen,” with the outcome hinging on government integrity, effective oversight, and careful management of transitional challenges. For now, SMEs and manufacturers alike are preparing to navigate a system that promises both relief and responsibility in equal measure.
