Nigeria’s landmark 2025 Tax Reform Acts promise a transformative shift for the nation’s economic landscape, particularly for its vast Small and Medium Enterprise (SME) sector. However, according to tax expert Mr. Olugbenga Obatola, a Fellow of the Chartered Institute of Taxation of Nigeria (CITN), the success of this sweeping policy hinges on a critical, often-overlooked factor: robust digital infrastructure and the eradication of predatory multiple taxation.
In an exclusive interview, Obatola framed the reforms—scheduled for January 2026—as one of the most significant fiscal opportunities for SMEs in decades. “For the artisan, the market trader, the tech startup, and the small manufacturer, this legislation is designed to be a catalyst, not a constraint,” he explained. The core incentive exempts companies with an annual turnover not exceeding ₦100 million from key federal taxes, including Companies Income Tax (CIT), Capital Gains Tax (CGT), Stamp Duty, and the Education Tax.
Beyond Tax Breaks: A Strategic Growth Stimulus
Obatola emphasized that the policy’s value extends far beyond mere savings. “This is not just a reduction in liability; it’s a deliberate growth stimulus,” he stated. “The intended outcome is for SMEs to reinvest freed-up capital into machinery, technology, and workforce expansion, thereby improving competitiveness and gaining better access to formal credit.” The legislation also aims to consolidate levies for larger companies and introduces digital tools to enhance transparency across the board.
The Digital Divide: A Threat to Inclusive Reform
The expert’s primary concern lies in implementation. He warned that the reform’s digital ambitions could inadvertently exclude the very businesses it aims to help. “Mandatory e-invoicing, electronic VAT reporting, and real-time documentation are pillars of the new system,” Obatola noted. “Yet, for micro-enterprises and rural businesses operating without reliable internet or digital literacy, these requirements pose a severe compliance barrier. The risk is creating a two-tier system where only digitally-equipped businesses reap the benefits.”
The Persistent Scourge of Multiple Taxation
Perhaps the most formidable challenge is the entrenched issue of unauthorized state and local government levies. Obatola cautioned that without stringent enforcement, these duplicative charges could completely nullify the federal tax relief. “A business saved from paying CIT only to be burdened by arbitrary local ‘development’ or ‘environmental’ levies sees no net gain. This parallel, informal taxation system must be decisively addressed for the reform to have tangible meaning.”
A Blueprint for Effective Implementation
To bridge these gaps, Obatola proposed a multi-pronged action plan for regulators:
- Grassroots Sensitization: Agencies like SMEDAN and the National Orientation Agency must move beyond press releases and conduct direct, localized education campaigns.
- Subsidized Digital Tools: Government should partner with tech providers to offer affordable, simplified accounting and filing software to qualifying SMEs.
- Advisory Support: Establishing dedicated help desks within tax offices to guide businesses through the new digital processes.
- Vigilant Enforcement: Creating clear, accessible channels for businesses to report unauthorized levies and actively sanctioning sub-national authorities that impose them.
Obatola’s final advice to SMEs was unequivocal: “Secure a competent tax advisor now. Navigating this transition effectively will be complex, but the potential rewards are substantial.” He concluded with a powerful summation: “With faithful, transparent, and inclusive execution, this reform can be a historic engine for job creation and economic diversification. Without it—if digital gaps widen and multiple taxes persist—we risk a policy that looks transformative on paper but fails to deliver its promise on the ground.”
Edited by Sandra Umeh
