The Chief Executive of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, has called for phased, pragmatic and socially sensitive approach to the implementation of Nigeria’s new tax reforms.
Yusuf said that the implementation should also be anchored on trust, economic realities and political timing.
He said in a statement issued in Lagos that the reforms were essential for fiscal sustainability of the country, but stressed that its implementation strategy would ultimately determine their success or failure.
The CCPPE boss advocated a strategic implementation framework anchored on revenue efficiency rather than blanket enforcement.
“Empirical evidence consistently shows that a small proportion of taxpayers account for the bulk of tax revenue. Roughly 20 per cent of businesses generate close to 90 per cent of tax receipts, while about 20 per cent of taxpayers contribute over 80 per cent of personal income tax.
“Concentrating enforcement on large corporations, established SMEs, and high-net-worth individuals will deliver substantial revenue gains without destabilising livelihoods or deepening social resistance.
“In the short to medium term, tax authorities should prioritise the formal sector, where compliance capacity already exists.
“The informal sector should be integrated gradually through incentives, sustained tax education, simplified compliance tools, and digital onboarding support.
“Shifting the emphasis from penalties to compliance-building will produce more durable outcomes.
“The objective should be to grow the tax net organically, not force it prematurely,” he said.
According to him, in spite of public criticism, the tax reform framework contain several commendable and pro-welfare provisions.
Heexplained that under the new laws, low-income earners are being exempted from personal income tax, while VAT relief on basic goods and essential services, including education, healthcare, agriculture, and cultural activities, provides important social protection.
“Small businesses benefit from relief from company income tax and VAT obligations, easing compliance pressures on vulnerable enterprises.
“On the growth side, targeted incentives for priority and job-creating sectors strengthen alignment between tax policy and Nigeria’s diversification agenda.
“The rationalisation of multiple taxes, repeal of obsolete laws, and improved coherence of the tax system also respond to long-standing private-sector demands and could enhance predictability and investor confidence if properly implemented.
He, however, advised the government to take note of some of the provisions and regulations in the reforms that have intensified concerns among small businesses and households.
There included the mandatory reporting of quarterly bank transactions of N25 million and above to the tax authority has raised anxiety among SMEs that handle pass-through or custodial funds that do not constitute income.
Others are the high-turnover, low-margin businesses risk undue scrutiny and costly compliance disputes and the proposed increase in capital gains tax from 10 per cent to 30 per cent, despite assurances around thresholds, has unsettled investors in the stock market and real estate at a time when confidence remains fragile.
He noted that the ₦500,000 annual rent relief cap is misaligned with prevailing urban housing costs and risks further squeezing the middle-class disposable income.
These concerns, he explained, have been further heightened by the wide enforcement powers granted to tax authorities and the severity of penalties and sanctions embedded in the tax laws.
GIK/APA