The Federal Government has introduced new regulations allowing tax authorities to examine Nigerians' lifestyles, assets, business locations and financial transactions to determine how much tax they should pay when their business earnings cannot be reliably established.
The move, contained in the Nigeria Presumptive Tax Regulations, 2026, could affect business owners who fail to maintain proper financial records or conceal information about their earnings.
How the FG will assess Nigerians' lifestyles
The regulations, published in the Federal Government's Official Gazette on May 13, 2026, took effect from January 1, 2026. Issued under Section 29 of the Nigeria Tax Act, 2025, the framework empowers revenue agencies to estimate taxable business turnover using available information, including spending patterns and community intelligence.
Under Regulation 10(2), tax authorities can consider a taxpayer's lifestyle, assets, business location, associations and electronic or cash transactions when estimating undeclared earnings. Information obtained from communities may also help officials determine the likely turnover of businesses without reliable financial records.
However, the provision does not automatically impose taxes on Nigerians simply because they own expensive assets or maintain a particular lifestyle. Rather, these indicators may support assessments where business income cannot be accurately established. Taxpayers also retain the right to challenge assessments they consider inaccurate or excessive.
Businesses earning below ₦12m get exemption
The regulations provide significant relief for small businesses and informal traders. Under Regulation 6(2), businesses with actual or estimated annual turnover not exceeding ₦12 million are exempt from the presumptive income tax.
However, businesses exceeding the threshold and qualifying for assessment under the framework will pay one per cent of their annual turnover. For example, a business generating ₦20 million annually could face a presumptive tax liability of ₦200,000.
Where only daily sales figures are available, tax officials may estimate annual turnover using a maximum of 300 working days. A trader generating ₦50,000 daily over 300 days would therefore have an estimated annual turnover of ₦15 million, attracting ₦150,000 in presumptive tax.
Akara sellers, barbers, others get tax relief
The regulations also exempt several categories of small-scale informal businesses. These include akara sellers, roasted yam and plantain vendors, groundnut sellers, mobile barbers, manual tailors, local cobblers and newspaper vendors.
Others include wheelbarrow pushers, roadside car washers, phone-charging operators, sachet water hawkers, recharge card sellers and small-scale garri processors. Eligible operators may obtain exemption stickers or certificates from the relevant tax authority without paying any fee. The documents remain valid for one year and can be renewed after verification.
New rules cover property and asset sales
Beyond business turnover, the regulations introduce a two per cent presumptive tax on consideration received from certain transactions involving chargeable capital gains. Affected transactions may include the disposal of land, buildings, shares, movable assets and intangible property, subject to statutory exemptions.
Liable individuals must remit the tax within 30 days of completing the transaction or receiving payment, whichever occurs earlier, Punch reports. The regulations also permit revenue agencies to register taxpayers without Tax Identification Numbers and assign identification numbers.
The framework signals a stronger push to bring previously unrecorded business income into Nigeria's tax system while protecting qualifying small-scale operators from additional tax burdens.
