An economist and founder of Captworld, Abiodun Olusola, has provided clarity on the implications of the Federal Government’s revised tax framework, saying the new system offers significant reliefs for micro and small enterprises that comply with regulatory requirements.
In a post titled “The New Tax Is Not a Problem for Smart Small Businesses on his Facebook handle, Olusola explained that the reforms are designed to ease operational pressures on smaller firms while improving transparency in the tax system.
According to him, businesses with annual turnover of ₦50 million and below are exempt from Company Income Tax (CIT), Capital Gains Tax (CGT) and the newly introduced Development Levy. He noted that the exemptions are intended to allow micro-enterprises retain more profit for reinvestment.
Despite the reliefs, Olusola said business owners must still register with the Corporate Affairs Commission (CAC), obtain a Tax Identification Number (TIN) and keep proper financial records or risk penalties.
Olusola noted that while Value Added Tax stays at 7.5 per cent, only businesses earning above ₦25 million annually are required to charge and remit VAT. Those below the threshold neither collect nor remit VAT.
He added that essential items including foodstuff, basic medical supplies, educational materials and essential household goods remain VAT-exempt even for firms operating above the ₦25 million turnover level.
The economist stressed the importance of proper documentation, stating that businesses must maintain verifiable records covering sales, expenses, profit, staff salaries, inventory and all transactions. Without adequate documentation, he warned, exemptions may not be recognised.
Under the revised law, VAT paid on equipment such as computers, machinery and work tools can be claimed back as input VAT, provided the business is properly registered. Olusola described this as an incentive that reduces operational cost and supports expansion.
Olusola said the government expects small businesses to channel tax savings into operational upgrades, staff recruitment and expansion, in line with its broader economic reform agenda.
He pointed out that individuals earning below ₦800,000 yearly are now exempt from personal income tax, while higher earnings fall under new progressive tax bands.
Digital income from platforms such as TikTok, Facebook, YouTube, freelance services and online product sales — is now taxable and must be declared, he added.
Micro-enterprises in cash-heavy sectors including POS operators, food vendors, petty traders, fashion businesses and beauty service providers should expect increased digital monitoring aimed at reducing tax evasion.
He noted that penalties for non-compliance have been increased, with measures such as higher fines, faster enforcement and potential bank account restrictions for repeated default.
The financial literacy advocate added that the shift to fully digital tax filing is expected to make the process quicker, cheaper and more transparent, reducing reliance on middlemen.
The Economist maintained that the new regime, though stringent on compliance, presents substantial benefits for small businesses that keep accurate records and operate formally.
