Nigeria’s informal economy, powered by millions of micro-entrepreneurs, has long posed a challenge for tax authorities seeking to broaden the country’s revenue base. A new legal framework now aims to bridge that gap by introducing simplified tax returns designed specifically for small-scale operators.
The approach seeks to reduce the complexity that has historically discouraged informal businesses from registering and filing. By offering a streamlined return process, policymakers hope to make voluntary compliance more attractive than operating in the shadows.
Micro-enterprises—ranging from market traders and artisans to small service providers—constitute a significant share of economic activity in Nigeria. Many of these businesses remain unregistered, partly due to the perception that tax compliance is cumbersome, costly, and designed for larger corporations.
The simplified return mechanism addresses that friction directly. Details of the law clarify that qualifying micro-businesses can fulfil their tax obligations through a lighter reporting format, reducing paperwork and professional fees that often eat into thin margins.
The move aligns with broader efforts to expand Nigeria’s tax base without imposing disproportionate burdens on the most vulnerable operators. By formalising these enterprises, the government also unlocks access to financial services, credit, and government support schemes that require proof of registration and tax compliance.
