Lagos: The Pan-African Alliance of Small and Medium Industries (PAOSMI) has announced that the newly enacted tax laws in Nigeria are set to stimulate the growth of Small and Medium Enterprises (SMEs) and attract local investment. Dr. Henry Emejuo, PAOSMI’s Director-General, stated that these laws, recently signed by President Bola Tinubu, represent a significant overhaul of Nigeria’s fiscal framework.
According to News Agency of Nigeria, Emejuo emphasized that the new tax regime has the potential to simplify the tax system, boost compliance, and improve the business climate for Micro, Small and Medium Enterprises (MSMEs). The regime introduces exemptions and reliefs aimed at reducing the financial and administrative burdens on small businesses, thereby freeing up capital for reinvestment, business expansion, and job creation.
Emejuo highlighted the significant relief brought by the exemption for low-income earners and the increase in the tax exemption threshold for small companies from N25 million to N100 million in annual turnovers. This change exempts many companies from Companies Income Tax (CIT), Capital Gains Tax (CGT), and the Development Levy, which he described as a “game-changer.”
The new regime also exempts MSMEs with turnovers below N50 million from the requirement of audited accounts for tax filing, simplifying compliance and reducing operational costs. Furthermore, the discontinuation of the 0.5 percent turnover tax for companies recording losses, while retaining a minimum tax, introduces new exemptions for small companies, startups, and businesses in primary agriculture.
Emejuo noted the broader benefit these reforms bring to Nigeria’s business environment, including the consolidation of over 60 fragmented taxes into fewer than 10. The establishment of the Nigeria Revenue Service (NRS) as the central federal tax agency aims to address fragmentation and improve tax administration efficiency.
The new incentives under the law, such as the Economic Development Incentive (EDI), allow qualifying companies to claim a five percent annual tax credit for five years on capital expenditure. Emejuo believes these incentives will encourage expansion, innovation, and reinvestment by local firms, particularly in manufacturing and agriculture.
On regional competitiveness, Emejuo remarked that Nigeria’s tax reforms align the country more closely with other African nations like Ghana and South Africa in terms of corporate tax rates, VAT structure, and tax-to-Gross Domestic Product (GDP) strategies. He noted that Nigeria’s historically low tax-to-GDP ratio of 13.5 percent is projected to rise to 18 percent by 2026 with improved efficiency and base expansion.
However, Emejuo stressed that the success of these reforms hinges on effective and transparent implementation across all levels of government. He recommended sustained public awareness campaigns, training for tax officials, and improved digital infrastructure to ensure compliance and prevent arbitrary levies.
He reaffirmed PAOSMI’s commitment to working closely with the government and relevant agencies to support the implementation and advocate for policies that support industrialization and inclusive growth in Nigeria.
NAN reports that PAOSMI is a continental body representing the interests of small and medium-scale manufacturers and service providers across Africa, with a significant membership base in Nigeria.