11 States End Cash-based Tax Collection, 10 More Set To Follow

Eleven Nigerian States have enacted harmonised tax laws ending cash-based collections, abolishing nuisance levies such as TV and radio licence fees and pool betting taxes, and banning illegal physical barriers used to extort businesses.

The states are; Bayelsa, Anambra, Ekiti, Gombe, Kogi, Nasarawa, Plateau, Kwara, Zamfara, Kano, and Cross River.

Also, 10 additional states have transmitted similar bills to their respective Houses of Assembly, while others were in advanced stages of adoption, signalling a rare alignment of political will across Nigeria’s fragmented fiscal system.

The chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, revealed this at a SMEDAN Tax Reforms Town Hall meeting in Abuja with SMEs, civil society groups, and interested members of the public, describing the reforms as a decisive response to decades of arbitrary taxation.

“This shows that the country is finally confronting a problem that has crippled businesses for decades.

“The speed at which states are enacting these laws has exceeded expectations. The progress was presented to the National Economic Council, underscoring the central government’s push for nationwide implementation,” he added.

Oyedele said the country’s tax system, until the latest reform, was deeply fragmented across federal, state, and local governments, exposing businesses to overlapping levies, informal charges, and coercive enforcement practices.

According to him, Nigeria officially recognised more than 60 taxes, with countless unofficial levies imposed by state agencies, local councils, and non-state actors.

“In many cases, taxes are collected legally in an illegal manner. Most times, the taxes collected from you go into private pockets, and one of the incentives for that is because the collection is in cash,” he said.

He explained that the new laws prohibit cash payments, mandating digital or formal financial channels for all tax remittances. “Nobody can erect physical or digital barriers to collect taxes. We want a system where things are done properly,” Oyedele said.

Oyedele disclosed that long-standing nuisance levies targeted for elimination include TV and radio fees, pool betting taxes, and other minor charges that have historically burdened households and businesses. He noted that some of these were embedded in Nigeria’s constitution, prompting the federal government to pursue amendments to remove them.

Closely tied to Nigeria’s MSME strategy, Oyedele said the reforms target an estimated 39 million micro, small, and medium enterprises, which employ a large share of the workforce. By ending arbitrary levies and cash-based enforcement, he said, the measures were expected to lower compliance costs, improve ease of doing business, and accelerate formalisation.

“No country can become rich by taxing poverty,” Oyedele said, stressing that the reforms aimed to rationalise overlapping taxes, strengthen formalisation, and boost Nigeria’s competitiveness.

Director-general of SMEDAN, Charles Odii,
in his opening remarks, emphasised the sector’s critical role in Nigeria’s survival-driven economy.

Addressing concerns about taxation, Odii noted that listening sessions revealed SMEs’ apprehensions about the new tax law. He said the town hall was organised to clarify the new tax regulations and answer questions directly.

Odii urged SMEs to participate actively in shaping national SME policies, ensuring that government support reaches businesses across the country.

He highlighted the federal government’s funding support for small businesses: ₦75 billion for manufacturers, ₦75 billion for SMEs, and ₦50 billion in grants for nano businesses—small ventures that do not need to repay the funds. These measures aim to reach over one million nano businesses across Nigeria.

He said the agency has also partnered with state governments and banks to provide additional funding, and introduced the ICS entrepreneurship curriculum to equip small business owners with the skills needed to access financial support.

Additionally, he added that the National MSME Council has been established to ensure business issues are escalated efficiently from local to federal levels if necessary.