The Centre for the Promotion of Private Enterprise has warned that Nigeria’s tax reform could unintentionally criminalise as many as 40 million informal businesses if implemented without careful sequencing and adequate support.

This was disclosed in a policy document signed by the CPPE’s Chief Executive Officer, Dr Muda Yusuf.

The PUNCH reports that the implementation of the remaining tax laws signed into law on 26 June 2025 has commenced as planned by the Federal Government, despite allegations that gazetted copies were altered.

Yusuf described the reforms as among the most ambitious fiscal restructuring efforts in recent decades but cautioned that the informal sector could bear the brunt of implementation challenges.

He said, “Any serious discussion of tax reform in Nigeria must confront the scale of the informal economy.

With an estimated 40 million micro, small, and nano enterprises, over 80 per cent operating informally, the sector is central to employment, income generation, and economic resilience. Over 90 per cent of jobs are in the informal economy, according to the Nigeria Labour Force Survey by the National Bureau of Statistics.

It read, “Most informal operators lack structured record-keeping systems and have limited understanding of tax concepts such as company income tax, VAT, personal income tax, and withholding tax. Businesses are largely cash-based, operate on thin margins, and often lack the literacy and digital capacity required for compliance. The new framework introduces mandatory filing requirements, record-keeping standards, penalties, and presumptive taxation. Without careful sequencing, these provisions risk criminalising informality rather than encouraging gradual formalisation.”