Nigeria’s 2025 tax act offers major reliefs, growth opportunities for SMEs

By Juliet Umeh

LAGOS—Financial analyst, Abayomi Muiz Tairu, has said that small businesses in Nigeria will enjoy unprecedented tax relief following the enactment of the Nigeria Tax Act 2025, signed into law by President Bola Ahmed Tinubu on June 26.

He explained that under the new law, companies with an annual turnover not exceeding N100 million and fixed assets of not more than N250 million are now exempted from Companies Income Tax, CIT, Capital Gains Tax, CGT, and the Development Levy.

This, he noted, represents a major expansion from the previous threshold of ¦ 25 million and offers wider support for SMEs across the country.

He said: “The reform introduces sweeping fiscal incentives designed to reduce the financial burden on small and medium enterprises, boost business sustainability, and stimulate economic growth.

“In addition to these full exemptions, the Act provides several other reliefs for small businesses.

“SMEs with turnover up to N50 million will enjoy profit exemptions from income tax, while withholding tax obligations on their profits have been eliminated.

“Furthermore, CIT rates will be gradually reduced from 30 percent to 27.5 percent in 2025, and to 25 percent in subsequent years.

“Another major advantage is the ability for SMEs to claim tax credits on VAT for eligible capital purchases, effectively reducing production costs by up to 7.5 percent.”

According to Tairu, this provision could translate into lower consumer prices and higher sales volumes.

“Lower production costs mean lower consumer prices, which will increase demand and encourage reinvestment. Ultimately, this creates a cycle of growth that strengthens the entire SME ecosystem,” he added.

The reform is expected to reduce operating costs, encourage innovation, and make goods and services more affordable for Nigerians. It also positions SMEs, which account for the majority of businesses and employment in the country, as central players in Nigeria’s economic transformation.

However, experts warn that the benefits could be weakened by persistent multiple taxation across federal and state agencies. Tairu advised SMEs to be proactive by keeping accurate records, engaging professional tax advisers, and collaborating with trade associations to streamline compliance.

He further emphasized that taxation remains critical for development, as it enables government investment in infrastructure and social services. He stressed that the new framework would help Nigeria diversify its revenue base away from oil and create a more business-friendly environment.

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