THE Chartered Institute of Taxation of Nigeria (CITN) has clarified the categories of persons and businesses exempt from the country’s presumptive tax regime, offering guidance to taxpayers under the Nigeria Presumptive Tax Regulations, 2026.

In tax education materials shared on X, the institute noted that not every individual or business falls under the simplified tax system designed for those whose incomes cannot be readily ascertained due to inadequate records.

The regime, which took effect on 1 January 2026 under Section 29 of the Nigeria Tax Act, 2025, aims to broaden the tax base while easing compliance for informal operators.

Persons already exempt from income tax under Section 162 of the Nigeria Tax Act, 2025, are also excluded from the presumptive tax regime. These include: Registered co-operative societies (where profits are not derived from trade or business)

Persons engaged in educational, religious or charitable activities of a public character (subject to the same condition), registered trade unions

Federal, state and local governments, their ministries, departments and agencies, and other public institutions (except where profits arise from trade or business)

Nano businesses are separately exempt. A nano business is defined as a sole proprietorship or household-run enterprise with no fixed business premises, no formal employees, and annual turnover not exceeding ₦12 million (equivalent to about ₦40,000 daily, based on 300 working days).

Their estimated equivalent net income attracts a 0 per cent tax rate under the Nigeria Tax Act, 2025. The First Schedule to the regulations lists examples, including roadside food vendors, mobile barbers, tailors using manual sewing machines, local cobblers, newspaper vendors, sachet water hawkers, wheelbarrow pushers and similar petty traders.

The relevant tax authority must, upon request, issue a Tax Exemption Sticker or Certificate free of charge. The document is valid for one year and may be renewed after revalidation of continued eligibility.

CITN advised affected persons and businesses to confirm their eligibility, request the exemption sticker or certificate where applicable, and retain evidence of the exemption. The institute emphasised that the exemption for nano businesses reflects the zero-rate treatment already provided for their scale of operations.

The clarifications draw from Regulation 4 and Schedule I of the Nigeria Presumptive Tax Regulations, 2026; Section 162 of the Nigeria Tax Act, 2025; and the interpretation provisions of the regulations.

The presumptive regime itself applies a 1% tax on actual or estimated turnover for qualifying informal operators above the nano threshold, with additional rules on chargeable gains. By spelling out the exclusions, CITN aims to reduce uncertainty and promote voluntary compliance as Nigeria continues implementing its broader tax reforms. (Nigerian Tribune)