New tax law exempts 97% of informal sector from taxation – Oyedele
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, has disclosed that only three per cent of informal sector operators can pay taxes in Nigeria.
He stated that on Monday, in Lagos, at the PwC’s Executive Summit on Nigeria’s Tax Reform, with the theme “The New Tax Era: What Nigeria’s Tax Reform Means to Individuals and Businesses.”
He noted that globally, one per cent pays more taxes than the bottom 99 per cent.
He explained, “From our analysis, it is only the top three per cent of the informal sector that has the ability to pay. Therefore, in these reforms, we have legally exempted the bottom 97 per cent from paying taxes. Let them breathe. When they grow, they will have the capacity to pay. And many people would ask me, ‘Are you sure that all the companies in Nigeria will not become small?’.
“This will happen anywhere in the world if you create an exemption threshold. People want to force themselves to be under the threshold. Isn’t it because they don’t want to pay tax? It’s hard to pay tax anywhere in the world. Nigerians are not bad people. They’re not worse than people who live in other countries where things work. The difference is the system. So, the system we are building is that if you like to go and lie and say your business is small when it is not, we will find out, and there shall be consequences for those who underdeclare and engage in tax evasion.”
According to the FPTRC chair, the country’s tax is now progressive, and all the major taxes have become progressive.
Recall that President Bola Tinubu signed four bills into law on June 26, but they would become effective on January 1, 2026.
Also, the Regional Senior Partner, PwC West Market Area, Sam Abu, noted that the reforms embarked on by the government were a good starting point for engaging in that conversation very robustly.
“Policy alone won’t deliver. Real change requires partnership and commitment. It required every single one of us here, the government, business leaders, and private sector individuals, to collaborate and work together to shape what will come up, to shape the kind of society and the kind of business community that we want to operate together, that we want to believe is okay. It requires us to engage with the spirit of these reforms, with sincerity, with integrity and with optimism,” he emphasised.
He said perspectives of stakeholders were critical in ensuring that those reforms take root and deliver on the outcomes that had been promised.
“Everybody has had a part to play in this regard. So, a PWC objective is clear. We want to remove complexity from tax. We want to help our clients anticipate risk and deliver solutions that are practical and tailored to their businesses, so that you, as business leaders, can focus on what you do best, which is making an impact on growing your businesses,” Abu added.
Major highlights of the new tax law are the exemption of employees who earn less than N800,000 annually from the personal income tax, the harmonisation of federal taxes and making the Federal Inland Revenue Service the sole collector of federal taxes.
Source: Punch
