CPPE calls for phased implementation of Nigeria’s tax reforms

By Seun Ibiyemi

The Centre for the Promotion of Private Enterprise (CPPE) has described Nigeria’s ongoing tax reform as one of the most ambitious fiscal restructuring efforts in recent decades but warned that its success will depend largely on careful, pragmatic implementation rather than legislative design alone.

In a statement issued yesterday by its Chief Executive Officer, Dr. Muda Yusuf, the policy think-tank noted that while the reform framework is conceptually sound and progressive aimed at boosting revenue mobilisation, improving equity, simplifying the tax system and supporting economic diversification poor sequencing and rigid enforcement could undermine its objectives.

Dr Yusuf cautioned that Nigeria’s fragile economic environment, marked by elevated inflation, weakened purchasing power and adjustment pressures from fuel subsidy removal and foreign exchange reforms, has left households and businesses grappling with reform fatigue. 

With the country also approaching a politically sensitive pre-election period, CPPE said expecting full and immediate compliance across all sectors is unrealistic.

“Tax reform is a process, not an event,” the statement said, stressing that reforms must evolve in response to economic realities, social feedback and implementation challenges. 

It warned that an enforcement-heavy approach could trigger resistance, disrupt livelihoods and further erode public trust.

Despite public controversy, CPPE acknowledged that the reform contains several pro-welfare provisions, including exemptions for low-income earners from personal income tax, VAT relief on basic goods and essential services, and tax reliefs for small businesses. 

The Centre also praised incentives targeted at priority and job-creating sectors, as well as efforts to rationalise multiple taxes and repeal obsolete laws, which it said could improve predictability and investor confidence if properly implemented.

However, CPPE noted that resistance to the reform is rooted in Nigerians’ lived experiences, where past reforms often translated into higher living costs without corresponding improvements in public services. 

Weak trust in government’s ability to deploy tax revenues transparently and efficiently continues to undermine public confidence, it said.

The statement highlighted the scale of Nigeria’s informal economy as a critical challenge. 

With an estimated 40 million micro, small and nano enterprises over 80 per cent operating informally and more than 90 per cent of jobs located in the informal sector, CPPE warned that complex filing requirements, record-keeping standards and penalties could criminalise informality rather than encourage gradual formalisation.

Specific policy provisions have also heightened anxiety, according to CPPE. These include mandatory reporting of quarterly bank transactions of ₦25 million and above, proposed increases in capital gains tax, the ₦500,000 annual rent relief cap, and the wide enforcement powers granted to tax authorities.

CPPE advocated a revenue-efficiency-driven enforcement strategy, arguing that a small proportion of taxpayers account for the bulk of tax revenue. 

It said focusing enforcement on large corporations, established SMEs and high-net-worth individuals would yield substantial gains without destabilising livelihoods.

The centre urged tax authorities to prioritise the formal sector in the short to medium term, while integrating the informal sector gradually through incentives, tax education and simplified compliance tools. It also called for political sensitivity as 2026 approaches, warning that aggressive enforcement could provoke social discontent and reform reversal.

“Tax reform is essential for fiscal sustainability, but a phased, pragmatic and socially sensitive approach is the most credible path to long-term success,” CPPE concluded.