By Ali Elias
Only Top 3% Have Ability to Pay, Says Tax Reform Committee Chair
LAGOS — In a landmark shift designed to ease the burden on Nigeria’s most vulnerable citizens, the Federal Government has announced that 97 percent of operators in the informal sector have been legally exempted from taxation under the country’s new tax reforms.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee (FPTRC), Mr. Taiwo Oyedele, made this known on Monday at the PwC Executive Summit on Nigeria’s Tax Reform, held in Lagos. Themed “The New Tax Era: What Nigeria’s Tax Reform Means to Individuals and Businesses,” the event brought together stakeholders from both public and private sectors.
Oyedele explained that from detailed analysis, only the top three percent of the informal sector small businesses and low income eaners) possess the financial capacity to pay taxes. “From our analysis, it is only the top three per cent of the informal sector that has the ability to pay. Therefore, in these reforms, we have legally exempted the bottom 97 per cent from paying taxes. Let them breathe,” he said.
He added that the policy is designed not to punish but to protect the vulnerable. “When they grow, they will have the capacity to pay,” he noted, emphasizing that the tax system is being restructured to prioritize fairness and progressiveness.
Addressing concerns about abuse of the exemption threshold, Oyedele warned that the government is building mechanisms to detect underreporting and evasion. “If you like, go and lie and say your business is small when it is not, we will find out, and there shall be consequences,” he warned.
The FPTRC chair also disclosed that the new tax laws, signed by President Bola Tinubu on June 26, will come into effect from January 1, 2026. Gazette printing is currently underway in Lagos, with the official public release expected soon.
Major highlights of the new tax law include:
– Exemption of employees earning below N800,000 annually from personal income tax.
– Harmonisation of federal taxes, eliminating overlapping mandates.
– Designation of the Federal Inland Revenue Service (FIRS) as the sole collector of federal taxes.
Also speaking at the summit, PwC West Africa Regional Senior Partner, Sam Abu, called for strong collaboration across sectors to actualize the reform’s goals. “Policy alone won’t deliver. Real change requires partnership and commitment,” he stated.
He emphasized that PwC aims to remove complexity from tax and assist businesses in navigating reform with tailored solutions, so leaders can “focus on making an impact and growing their businesses.”
This new tax policy is arguably one of the most people-focused fiscal reforms Nigeria has introduced in recent memory. For millions of Nigerians operating small, informal businesses — from roadside traders to micro artisans — this exemption offers a much-needed reprieve in a time of economic strain.
By removing the pressure to contribute taxes they cannot afford, the government recognizes a fundamental truth: that true economic contribution is not just about taxation, but about empowering people to grow, scale, and someday become contributors in a more formal way.
However, the challenge lies in enforcement and integrity — both on the side of the government and the public. If well-implemented, this reform could usher in a more equitable and inclusive economy. For now, it signals a refreshing willingness to “let the poor breathe” — not just in rhetoric, but in policy.