Small and medium-sized enterprises would gain significantly from the new tax laws by repositioning their internal processes, strengthening tax reporting, and deepening engagement with the government, according to business stakeholders.
In separate phone interviews with The PUNCH, stakeholders, including the Director of Africa Retail Academy, Prof Uchenna Uzo, explained that SMEs, particularly retailers, should adopt stronger internal operations under the new tax regime.
Uzo said the retail sector would be one of the most exposed to the new tax regime, making operational adjustments inevitable. He said retailers would need to review “the way they do tax reporting, the way they do their invoicing, the way they manage their pricing, and also supplier management, the way suppliers are managed, and even manufacturers.”
The Lagos Business School don noted that businesses were already studying the early stages of implementation before restructuring to align with emerging enforcement patterns.
Uzo said the reforms would end business-as-usual practices in the retail space, stressing that firms would need to introduce systems and processes they had previously ignored.
He said, “A lot of businesses are going to need to change a lot of their internal processes. Some things they were not doing before, they will need to incorporate them to be able to harness the potential of this new policy.”
Drawing lessons from other countries, Uzo said Nigeria’s situation differed because the tax reforms were “quite many and quite significant,” unlike more formal economies, where changes were incremental.
He mentioned that one key takeaway was the importance of compliance and regulatory units within retail businesses. “Retail businesses also have a compliance unit or a regulatory unit that allows them to be up to date with regulatory requirements and to implement those as appropriate in their own businesses,” he said.
Uzo advocated stronger stakeholder engagement, noting that in countries such as India, retail players proactively worked with regulators and even proposed a national retail policy. “Which, by the way, we don’t have in Nigeria or in any African country at the moment,” he said, adding that South Africa was making some efforts in that direction.
Uzo said such a framework would only emerge if retail stakeholders took the lead, likening it to how the banking sector pushed reforms such as the Bank Verification Number, which eventually supported the national identity system.
Similarly, the President of the Association of Small Business Owners, Dr Femi Egbesola, revealed that awareness of the new tax laws was improving among SMEs, despite gaps in understanding.
He said, “There are a lot of misconceptions, but those misconceptions are beginning to clear out. We are having many conversations about this in all districts, and I think an average SME has come to understand that this (new tax regime) has come to stay.”
Egbesola said, despite growing acceptance, the government must do more to reach operators in the informal sector, many of whom still do not understand how the new laws work or how to benefit from them.
“As much as they are aware that there is a new tax law, many of them still do not understand the methodology of this law and how they personally can use it,” ASBON’s president stated.
He noted that some benefits existed for small business owners but remained underutilised due to a poor understanding.
He urged authorities to adopt grassroots communication strategies. “The government needs to come to their level. Sometimes it may mean that they have to go through their community development associations, business membership associations, or religious organisations. Speak with them in the language they understand, sometimes in their local dialect or in pidgin,” Egbesola advised.
The ASBON leader also called for transparency and accountability, urging government agencies to create platforms where businesses could ask questions about how tax revenues were being utilised. “(Such avenues) would help to build up trust. That would help those people who are supposed to pay to see more reasons why they should begin to pay,” he remarked.
Meanwhile, Egbesola warned that failure by states and local governments to align with the federal reforms could undermine their impact. “If you say you are compressing over a hundred tax laws, and it comes back to your state, and you still have to contend with another 60 different taxes, it makes a mockery of what happens at the centre,” he cautioned.
Earlier, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reform, Taiwo Oyedele, said the new tax laws were designed to protect Micro, Small, and Medium-Sized Enterprises from exploitation and arbitrary enforcement. He said many of Nigeria’s estimated 30 million MSMEs lacked the capacity to hire accountants, lawyers, or tax practitioners, leaving them vulnerable when confronted by tax officials. “When regulators and tax officers show up, they don’t even understand what they’re being asked to pay for,” he said.
Oyedele said the absence of protection often forced small business owners into informal negotiations, exposing them to extortion and repeated harassment. “You negotiate, you pay into private accounts, you pay a small amount officially, they give you receipts, and the cycle continues,” he said, adding that businesses could not seek redress because the payments were illegitimate.
He said the new laws addressed this gap by creating the Office of the Tax Ombuds, which would protect businesses, especially MSMEs.
