Federal Gov’t Ends Roadblock Tax Enforcement, Exempts Informal Traders With N2m Turnover

The federal government on Tuesday formally unveiled, for the first time, a set of regulations to bring millions of informal businesses into the tax net, prohibiting cash collections and roadside enforcement by subnational authorities in what officials described as a decisive shift from legislation to implementation.

At a signing ceremony in Abuja, Wale Edun, finance minister and coordinating minister of the economy, said the new presumptive tax regulations marked the operational phase of tax reforms, with the enabling Acts having taken effect between mid-2025 and January 2026. He said the move is central to President Bola Tinubu’s growth agenda, arguing that a simplified framework would expand the tax base without increasing rates.

“With the signing of these regulations, we are transiting from legislation to structural implementation of the tax reforms,” Edun said, adding that the guidelines are anchored on “transparency, fairness, clarity, and indeed equity and economic inclusion for all Nigerians.”

Edun said the regulations, issued under powers vested in his office on the advice of the Joint Revenue Board, are designed to ensure consistency across federal, state and local governments, prevent arbitrary assessments and protect small businesses.

Nigeria’s economy grew about 4% in the final quarter of 2025, he noted, describing the trajectory as positive but short of the administration’s near-term ambition of 7% annual growth and longer-term $1trillion economy targets set for 2030.

Rather than raise taxes, the government intends to widen compliance, particularly among micro and small enterprises that dominate commercial activity. By formalising entry into the tax system, Edun said, authorities aim to give small firms a structured pathway into the formal economy, improving access to growth opportunities while ensuring each taxpayer bears a “rightful contribution.” He added that implementation would be closely monitored, with an ombudsman in place to safeguard fairness, as the government pivots from economic stabilisation to growth.

Olusegun Philip Adesokan, executive secretary of the Joint Revenue Board, described the regulations as a practical expression of the president’s often-repeated stance that reforms should target prosperity, not hardship. “He doesn’t seek to tax poverty… his government will not tax seeds, but fruits,” Adesokan said the framework was a “uniform code” for subnational governments to deal with the informal sector.

Under the guidelines, informal businesses with an annual turnover of up to N2 million will be exempt from tax, a threshold Adesokan said would shield the most vulnerable operators and leave them with more working capital. Other eligible informal businesses will pay a presumptive levy of 1% of turnover.

The rules also mandate the use of technology for payments, outlaw cash collections by tax officials and ban the mounting of roadblocks for tax enforcement — practices long criticised by traders and transport operators.

Adesokan said the measures would create a seamless process for onboarding informal operators into the tax net and address disparities in how states approach collection, while signalling a commitment to equity in tax administration.

Joseph Tegbe, chairman of the National Tax Policy Implementation Committee, said the signing closes the gap between statutory provisions and practical execution.

The reforms, he said, are intended to replace fragmentation and discretion with order and transparency in a sector that accounts for more than 80% of employment but contributes relatively little to structured public revenue.

“The informal sector remains the backbone of our economy,” Tegbe said, arguing that past frameworks failed to reflect operational realities. With all 36 states aligned on the guidelines, he said, the focus now shifts to disciplined rollout and safeguards against arbitrary assessments. “With today’s signing, we move decisively from intention to execution.”