NRS: Why Nigeria’s Creative Industry Must Embrace Tax Formalisation

Nigeria’s growing creative industry may be generating millions of naira for content creators, social media influencers and other digital entrepreneurs, but operating largely outside formal business structures could undermine its ability to attract investment, access financing and translate its expanding revenue potential into sustainable enterprises.

As digital platforms create new income opportunities for young Nigerians, the absence of proper business registration, tax identification and financial records is increasingly becoming a barrier to the industry’s commercial growth, limiting opportunities for creators to secure corporate contracts, attract investors and build businesses that can outlive their founders.

Recognising this challenge, the Nigeria Revenue Service (NRS) called on content creators, social media influencers and other operators in the creative industry to formalise their businesses and integrate into the tax system, insisting that doing so would open access to incentives, investment opportunities and other benefits available under the country’s tax framework.

The service said many creative entrepreneurs risked limiting their business prospects by running their operations through personal bank accounts without proper registration and financial documentation, making it difficult to establish their actual business income, demonstrate financial capacity and attract institutional support.

Officials of the NRS made this known during a tax policy discussion at the ongoing Creative Africa Nexus Weekend 2026 in Lagos, where they highlighted the relationship between business formalisation, tax compliance and the development of a sustainable creative economy.

An Assistant Director of Tax at the NRS, Kazeem Lawal, said content creators earning substantial income through social media and other digital platforms needed to move beyond informal business arrangements if they intended to build sustainable enterprises. “Formalisation is what creates the pathway to growth and then sustainability in business,” he said.

According to him, business registration gives creative entrepreneurs separate legal identities, improves their credibility and positions them to attract investors, secure corporate contracts and establish operations capable of surviving beyond their founders.

He warned that creators who channelled business earnings entirely through personal bank accounts without maintaining proper records could undermine their commercial prospects, particularly when seeking financing or entering into formal business relationships.

For an industry increasingly dependent on brand partnerships, advertising revenue, digital distribution and intellectual property, the ability to demonstrate verifiable income and maintain transparent financial records is becoming essential to attracting serious business partners and investment.

Without proper business structures, many creators may remain confined to individual income-generating activities rather than developing companies capable of employing others, expanding their operations and competing for larger commercial opportunities.

An Assistant Director in the NRS Field Operation Monitoring Department, Simeon Onyegbula, also stressed that formalisation and accurate financial records were necessary for creative businesses to enjoy applicable tax reliefs.

“Formalise, register, and obtain a tax ID. Keep proper records with all of this, and comply with all the relevant tax laws. Enjoy all the incentives available, and then grow,” he stated, as he explained that businesses must retain invoices, receipts, ledgers and other financial documents to substantiate their expenses and determine their actual taxable profits.

He cautioned that personal expenditure could not be treated as business expenses for tax deduction purposes, stressing that all claims must be supported by appropriate documentation and comply with the law.

Beyond improving access to investment and financing, the NRS said formalisation would enable creative entrepreneurs to take advantage of tax incentives designed to encourage business expansion and capital investment.

The Director of Government Business South Directorate at the NRS, Mustapha Akaje, disclosed that qualifying investments in eligible sectors, including the creative industry, could attract a five per cent tax credit on capital expenditure of at least N250 million. “This tax credit is specifically saying that you have a five per cent tax credit on your investment that is based on qualified capital expenditure,” he said.

Akaje explained that companies with annual turnover not exceeding N100 million and fixed assets below N250 million could qualify for zero company income tax and exemption from the four per cent development levy.

Other incentives, he said, covered qualifying startups, research and development activities, foreign-source income, overseas tax credits and export-oriented businesses operating in free trade zones. For businesses operating in free trade zones, he explained that they must export at least 75 per cent of their products or services to qualify for the exemption discussed.

He further disclosed that small businesses no longer required separate exemption certificates but must continue filing tax returns to demonstrate their eligibility for applicable reliefs.

The NRS also clarified that small businesses were relieved of certain Value Added Tax (VAT) collection responsibilities, although they could still be charged VAT on taxable purchases. Lawal explained that taxpayers wrongly charged VAT could obtain refunds within 30 days without undergoing an audit beforehand.

These incentives, according to the service, provide an opportunity for creative businesses to reduce their tax burden where they meet the stipulated conditions and redirect resources towards expanding their operations.

However, the NRS acknowledged that uncertainty surrounding tax obligations and fear of penalties remained significant obstacles discouraging some operators from entering the formal economy.

The Executive Director of People, Stakeholders and Communication at the NRS, Obinna Ihedioha, cited the experience of a Lagos-based creative entrepreneur who became apprehensive about possible penalties after discovering that he had earned income for two years without filing tax returns.

He said such experiences demonstrated the need for clearer communication and engagement between the revenue agency and businesses, particularly those transitioning from informal operations into the formal economy. “Uncertainty is a tax nobody collects, but everybody pays,” Ihedioha said.

According to him, entrepreneurs would be more willing to formalise their operations when registration and tax compliance offered tangible benefits, including access to finance, markets, corporate contracts and intellectual property protection.

He maintained that the responsibility of the revenue agency was not simply to collect taxes but to create an environment in which businesses could understand their obligations and recognise the commercial benefits of operating within the formal system.

To address the information gap, Ihedioha announced the establishment of an NRS Investment and Tax Advisory Hub and a Creative Economy Tax and Investment Initiative. He said the platforms would provide guidance on business registration, tax incentives, investment opportunities and compliance, while strengthening engagement between the revenue agency and creative entrepreneurs.

The initiative would also support collaboration on tax education, business formalisation, investment facilitation and policy dialogue, with possible policy adjustments to address challenges confronting operators in the sector.

Meanwhile, the Executive Director of Finance and Corporate Services at the NRS, Mohammed Abubakar, cautioned that relief from international double taxation was not automatic, explaining that eligibility could depend on applicable tax agreements between Nigeria and other countries.

He said the tax jurisdiction applicable to individual taxpayers also depended on their residence, calling for further engagement to simplify complex tax provisions for creative entrepreneurs earning income from international platforms.

For the creative industry, the issue goes beyond obtaining a tax identification number or fulfilling statutory obligations. Formalisation provides the foundation for separating personal and business finances, establishing credible financial records, accessing investment and building companies capable of operating on a larger scale

As the industry expands, the transition from informal content creation to structured commercial enterprises could also improve its capacity to generate employment, attract institutional capital and contribute more meaningfully to the economy.