For years, many small businesses in Nigeria operated outside the conventional tax system because they kept little or no accounting records, making it difficult for tax authorities to determine how much income they actually earned.
Nigeria’s new Presumptive Tax Regulations, which took effect on January 1, 2026, seek to change that by introducing a simplified framework for taxing eligible informal businesses while encouraging them to gradually transition into the regular tax system.
Issued under Section 29 of the Nigeria Tax Act, 2025, the regulations establish how tax authorities can assess businesses whose income cannot be accurately determined, while setting out exemptions, digital payment requirements and new taxpayer protections.
Why the regulations were introduced
The informal sector accounts for a significant share of Nigeria’s businesses and employment, yet many operators do not maintain financial records that allow tax authorities to calculate income under the normal tax rules.
The presumptive tax framework is designed to
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