Nigeria Tax Act 2025: Practical Steps Small Businesses Should Take Now

The recent Nigeria Tax Act 2025 (along with related reforms like the Nigeria Tax Administration Act 2025), signed into law in June 2025 and effective from January 1, 2026, has sparked widespread confusion and apprehension among small business owners, sole proprietors, freelancers, and individual taxpayers.

The changes aim to simplify the tax system, broaden the base, provide reliefs for smaller players, and improve compliance—but the shift from old laws (like the Companies Income Tax Act) has left many unsure about obligations, thresholds, and risks.

Key points causing confusion include new definitions of “small companies,” filing requirements even for exempt entities, stricter record-keeping, ban on cash-heavy transactions in some interpretations, and fears of audits or penalties.

The reforms raise thresholds for exemptions (e.g., from N25m to higher levels in some reports, often cited as N50m–N100m turnover for small company status), exempt qualifying small businesses from Companies Income Tax (CIT), Capital Gains Tax (CGT), and certain levies, but emphasize that everyone must maintain records and file returns where required.

If you’re a small business owner or taxpayer, here’s practical, actionable advice you can start implementing right away—no deep dives into sections or numbers, just steps from Monday onward. These build on proven best practices amid uncertainty.

1. Seek expert advice immediately, don’t go it alone. Speak with a qualified tax consultant, accountant, or finance expert familiar with the new regime. Many offer initial consultations affordably. If cost is a barrier, join forces: pool resources with your trade association, cooperative, market union, or business group to hire an expert for a group session or shared advisory.

This spreads the fee and gets tailored guidance on your specific situation (e.g., whether you’re classified as a small company, sole trader, or partnership). Professional advice is often tax-deductible where applicable, and it’s far cheaper than penalties later.

2. Prioritize impeccable record-keeping—make it non-negotiable. Start scanning and digitizing every transaction daily. No excuses: install a free or low-cost scanning app on your smartphone (Genius Scan, Adobe Scan, CamScanner, or Microsoft Lens work well). Capture receipts, invoices, payment proofs, bank statements, and expense notes at the end of each day or shift. Upload them to a secure cloud folder (Google Drive, Dropbox) organized by date/month.

This creates a clear audit trail, helps claim deductions/reliefs, and protects you if queried. Even if your turnover qualifies for exemptions (commonly thresholds like ₦50m–₦100m annual gross turnover plus fixed assets ≤ ₦250m for small company status), poor records can lead to assumptions of higher taxable income or disputes.

3. Retain an accountant or bookkeeper for regular reviews. Hire someone affordable for monthly (or quarterly) checks of your transactions, review entries, categorize expenses, flag issues, and prepare for any filings. Cost shouldn’t stop you: a final-year accounting/HND student, freelance bookkeeper, or junior accountant can handle basics effectively for modest fees. This is proactive compliance and often tax-deductible as a business expense. They can help confirm your status (small vs. larger), track if you’re nearing thresholds (e.g., VAT registration at higher levels like ₦50m in some contexts), and ensure you’re not missing reliefs.

4. Shift away from cash transactions—build a traceable trail. Going forward, minimize or eliminate cash deals where possible. Use bank transfers, mobile money (OPay, PalmPay, etc.), POS, or digital wallets for payments and receipts. Cash lacks easy tracking, making it hard to prove expenses, claim inputs, or defend audits. Issue/retain invoices or e-receipts for everything. This aligns with the reforms’ push for transparency and digital trails, reducing risks of unreported income assumptions.

A critical reminder: Don’t rely solely on “I earn below N800,000 as an individual” or “my business turnover is under N100m, so no tax.” Even exempt or low-liability taxpayers often must file annual returns (personal or corporate) to get a clean compliance certificate or “tax clearance.”

Filing declares your position officially, avoids automatic penalties for non-filing, and unlocks benefits like proofs for loans, contracts, or travel. The reforms stress voluntary compliance with records over evasion. These steps aren’t about overcomplicating things—they’re simple habits that protect you under any interpretation of the new laws.

Start small: scan today’s transactions tonight, book that expert call this week, and set up a separate business account if you don’t have one. The goal is peace of mind and sustainability. Implementing now positions you ahead of potential enforcement ramps.

The reforms offer real reliefs for genuine small operators—embrace the structure rather than fear it. If your situation is unique (e.g., digital freelancer, informal trader), the expert step is even more vital. Stay compliant, stay informed, and keep building—Nigeria’s economy needs thriving small businesses like yours.