The Federal Government has banned the use of roadblocks and cash payments in tax collection, rolling out new rules designed to curb harassment in the informal sector and draw millions of small businesses into the tax system through a simplified 1% levy.
The directive is contained in the newly unveiled Presumptive Tax Regulations and Guidelines, presented in Abuja as part of ongoing tax reforms.
The framework replaces physical enforcement and on-the-spot cash demands with a digital registration and payment structure aimed at standardising how artisans, traders and other informal operators are assessed.
N12 Million Turnover Exemption for Micro Businesses
At the centre of the new policy is a protection clause for micro-enterprises. Businesses with an annual turnover of N12 million or below are fully exempt from the presumptive tax regime.
For informal businesses earning above N12 million annually, a flat 1 per cent tax on turnover will apply.
Olusegun Adesokan, executive secretary of the Joint Revenue Board (JRB), said the intention is to shield the smallest operators while ensuring those with measurable income contribute fairly.
“It bans all forms of cash collection by tax authorities. It also bans the mounting of roadblocks for the collection of taxes. These regulations are another demonstration of the commitment to taxing prosperity and not poverty,” Adesokan said.
From Legislation to Implementation Across 36 States
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, described the move as the operational phase of the 2025/2026 tax reform agenda.
According to him, the focus has shifted from drafting policies to implementing them across the 36 states, with emphasis on widening the tax base rather than increasing rates for existing taxpayers.
“With the signing of these regulations, we are transitioning from regulation to structured implementation of the tax reforms. We will expand the tax base, not raising taxes, but expanding so that each bears his rightful contribution to the common cause,” Edun said.
Ending Arbitrary and Multiple Taxation
The informal sector accounts for more than 80% of Nigeria’s workforce but has long been associated with multiple taxation, arbitrary assessments and illegal collections by unauthorised agents.
Under the new guidelines, subnational governments are required to adopt a centralised Tax Identification platform to register artisans and traders. The aim is to reduce duplication and improve transparency.
Joseph Tegbe, chairman of the National Tax Policy Implementation Committee, said previous frameworks failed because they did not reflect the realities of how informal businesses operate.
“The informal sector remains the backbone of our economy. Past frameworks failed to reflect operational realities. It is not about imposing new burdens but restoring order where there has been fragmentation and replacing arbitrariness with transparency,” Tegbe said.
Ombudsman to Tackle Harassment
To enforce compliance with the ban on roadblocks and cash collection, the Federal Government has introduced an ombudsman mechanism. Small business owners will be able to report cases of harassment or demands for cash payments by revenue officials.
The Joint Revenue Board has also been tasked with overseeing the rollout to ensure the 1 per cent levy does not translate into fresh layers of multiple taxation at state and local levels.
Officials say the reforms are expected to strengthen non-oil revenue and improve the ease of doing business, particularly for trade and logistics operators who have long complained about checkpoints and informal levies.
Edun said the objective is to protect small businesses while ensuring broader participation in funding public services.
“Our aim is to ensure consistency, prevent arbitrary assessments and protect small businesses while supporting sustained economic growth,” he said.
