The Chartered Institute of Taxation of Nigeria (CITN) has clarified the categories of individuals and businesses exempt from the country's presumptive tax regime, which took effect on January 1, 2026. The guidance, shared through tax education materials on X, highlights provisions under the Nigeria Presumptive Tax Regulations, 2026, and Section 29 of the Nigeria Tax Act, 2025. Nano businesses with annual turnover not exceeding N12 million attract a zero per cent tax rate and can obtain a free Tax Exemption Certificate, according to the institute.
Who Qualifies for Exemption Under the 2026 Rules
CITN pointed to Section 162 of the Nigeria Tax Act, 2025, which already excludes certain groups from income tax entirely, and confirmed that those same groups are also excluded from the presumptive tax regime. The exempt categories include registered co-operative societies where profits do not come from trade or business, persons running educational, religious, or charitable activities of a public character on the same condition, and registered trade unions.
Federal, state, and local governments, along with their ministries, departments, and agencies, are also exempt, except where profits arise from trading activities. The regime targets informal operators whose incomes are difficult to determine because of poor record-keeping, as derived from Section 29 of the Nigeria Tax Act, 2025.
Nano Businesses: Zero Per Cent Tax Rate and Free Certificate
Nano businesses form a separate exempt category under the regulations. A nano business is defined as a sole proprietorship or household-run enterprise that has no fixed premises, no formal employees, and an annual turnover of no more than N12 million, which works out to roughly N40,000 per day over 300 working days. Their estimated net income is subject to a zero per cent tax rate under the Nigeria Tax Act, 2025.
The First Schedule to the regulations gives concrete examples of nano businesses: roadside food vendors, mobile barbers, tailors using manual sewing machines, local cobblers, newspaper vendors, sachet water hawkers, and wheelbarrow pushers, among other petty traders. CITN noted that the zero-rate treatment for nano businesses is already built into the Nigeria Tax Act, 2025, and the exemption formalises what the law already provides for at that scale of operations.
How to Access the Tax Exemption Sticker or Certificate
Those who qualify can request a Tax Exemption Sticker or Certificate from the relevant tax authority at no cost. The document lasts one year and must be renewed after the authority confirms the holder still meets the eligibility criteria. CITN advised affected persons and businesses to confirm their eligibility, apply for the sticker or certificate where applicable, and keep the documentation as proof of their exempt status.
For informal operators above the nano threshold who do fall within the presumptive regime, a one per cent tax applies to actual or estimated turnover, with separate rules covering chargeable gains. By spelling out who is excluded, CITN aims to cut down on confusion and encourage voluntary compliance as the broader tax reform continues to roll out across Nigeria.
