Babatunde Akin-Moses, CEO and Co-founder of Sycamore, has stressed the need for small businesses to understand the recently passed tax reforms, describing them as both an opportunity and a challenge for entrepreneurs.
He spoke during a session on "Understanding Nigeria's Tax Reform," highlighting how the new laws will reshape compliance and ease some burdens for SMEs.
According to him, the reforms, which take effect from January 2026, aim to simplify Nigeria's complex tax system by modernising processes, plugging leakages, and harmonising taxes across federal, state, and local levels. He explained that while the reforms will increase government revenue, they are designed to reduce ambiguity and make compliance easier for businesses.
One of the biggest wins for SMEs, Akin-Moses noted, is the new exemption threshold for company income tax. "Small companies with annual turnover of up to ₦100 million and fixed assets not exceeding ₦250 million will no longer pay company income tax," he said. This is a major increase from the previous ₦25 million threshold, offering relief to thousands of small enterprises.
The reforms also introduce progressive personal income tax, where individuals earning ₦800,000 or less annually will be completely exempt.
Those earning below ₦1.5 million monthly are also expected to pay less tax than before. "This approach ensures fairness, as low-income earners and small businesses are shielded from heavier burdens, while higher earners contribute more," Akin-Moses explained.
For service-based SMEs, the reforms also expand Value Added Tax (VAT) recovery to include services and fixed assets, a privilege previously restricted to manufacturers.
This means professionals such as lawyers, accountants, and consultants can now offset input VAT against their output VAT, potentially lowering costs and improving pricing flexibility for clients.
Akin-Moses advised entrepreneurs to prepare for digital compliance as invoicing systems will soon be integrated with tax authorities. He urged SMEs to consult tax experts, restructure where necessary, and embrace the changes with an open mind.
"Overall, these reforms do more good than harm. They open up opportunities for cost savings, business growth, and better planning, if small businesses position themselves early," he concluded.
