The Centre for the Promotion of Private Enterprises (CPPE) has advised the federal government to embrace careful sequencing, political sensitivity and economic realism in implementing Nigeria's tax reform laws to avoid triggering citizens' resistance that could erode public trust on the reform.
The CPPE also advised the government to target large corporations, established SMEs, and high-net-worth individuals that would deliver substantial revenue gains without destabilising livelihoods or deepening social resistance.
The Chief Executive Officer of CPPE, Dr. Muda Yusuf, gave this advice yesterday in a press statement captioned "Nigeria Tax Reform: Why Strategy, Timing and Trust Will Determine Success."
Yusuf pinned the success or failure of Nigeria's new tax reform on government's implementation strategy rather than these laws' lofty legislative provisions because "good policy design does not guarantee good outcomes."
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He said: "The ultimate success or failure of Nigeria's tax reform will depend far less on its legislative provisions and far more on how it is implemented.
"Without careful sequencing, political sensitivity, and economic realism, even well-intentioned reforms can trigger resistance, disrupt livelihoods, and further erode public trust.
"This is the central concern of the CPPE."
The CPPE observed that 2026 is a pre-election year and said that political and social caution should be applied by avoiding aggressive and broad-based enforcement that could risk social discontent, political backlash, and potential reversal of the tax reform.
Yusuf said that public resistance to the reform might not stem from communication failure but from lived experience of many Nigerians from past reforms that translated into higher living costs and declining welfare, with little evidence that sacrifices result in improved public services.
He said: "A weak social contract continues to undermine confidence that additional tax revenues will be transparently and efficiently deployed.
"With businesses and households still recovering from recent macroeconomic shocks, tolerance for new compliance demands is understandably low.
"In this environment, trust is as critical as technical design."
Yusuf added that Nigeria's current reform is unfolding under unusually delicate circumstances when the economy is still absorbing the aftershocks of elevated inflation, weakened purchasing power, and the adjustment costs of fuel subsidy removal and foreign exchange reforms.
"Many households and businesses are experiencing reform fatigue. Compounding this is the approach of a politically sensitive pre-election period.
"In this context, expecting full and simultaneous compliance across all sectors of the economy is unrealistic.
"A rigid, enforcement-heavy approach risks undermining reform credibility before its benefits have time to materialise," Yusuf said, adding that "tax reform is not a one-off exercise; it is a dynamic process that must evolve with implementation feedback, economic conditions, and social realities."
The CPPE also made a case for operators in the informal sector who lacked structured record-keeping systems and have limited understanding of tax concepts such as tax filing obligations, Company Income Tax (CIT), VAT, PIT, Withholding Tax, etc.
Yusuf said that these businesses are largely cash-based, operate on thin margins, and often lack the literacy and digital capacity required for compliance.
"They also lack the capacity to digest the technical and somewhat complex issues around taxation.
"Yet the new tax framework introduces mandatory filing requirements, defined record-keeping standards, penalties for non-compliance, and presumptive taxation where records are inadequate.
"Without careful sequencing, these provisions risk criminalising informality rather than encouraging gradual and voluntary formalisation," he said.
The CPPE also argued that tax authorities should prioritise the formal sector, where compliance capacity already exists in the short to medium term while the informal sector should be integrated gradually through incentives, sustained tax education, simplified compliance tools, and digital onboarding support.
It also advised that shifting the emphasis from penalties to compliance-building would produce more durable outcomes, adding that "the objective should be to grow the tax net organically, not force it prematurely."
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He also noted that several specific provisions and regulations in the new tax laws, like the mandatory reporting of quarterly bank transactions of ₦25 million and above to the tax authority, have raised anxiety among SMEs that handle pass-through or custodial funds that do not constitute income.
He stated that "high-turnover, low-margin businesses risk undue scrutiny and costly compliance disputes.
"Similarly, the ₦500,000 annual rent relief cap is misaligned with prevailing urban housing costs and risks further squeezing middle-class disposable income."
Yusuf also raised concern over the wide enforcement powers granted to tax authorities and the severity of penalties and sanctions embedded in the tax laws.
He said that "tax reform is essential for Nigeria's fiscal sustainability, but implementation strategy will ultimately determine success or failure. A phased, pragmatic, and socially sensitive approach--anchored on trust, economic realities, and political timing--offers the most credible pathway to sustainable revenue growth, expanded compliance, and long-term legitimacy."
