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💼 Finance Coach | Tax Strategist
💡 I help you master money & reduce tax stress
📚Tax education and advisory for SMEs, professionals, and diaspora Nigerians.
✔️ 20 years of experience, FCA, FCTI, Banking Consultant.

THE ₦12 MILLION THRESHOLD EXPLAINED₦12 million is not profit. It is not the amount left after expenses. Under these Regu...
27/09/2026

THE ₦12 MILLION THRESHOLD EXPLAINED

₦12 million is not profit. It is not the amount left after expenses.

Under these Regulations, the threshold question is about turnover.

WHAT DOES THE LAW SAY?
Regulation 6(2)(b) says presumptive income tax shall not be charged on a taxable person whose actual or estimated turnover from trade or business for the relevant year of assessment does not exceed ₦12 million.

“Does not exceed” means up to and including ₦12 million.

TURNOVER IS THE KEY WORD
Regulation 12 defines turnover as gross income, actual or deemed, from any business or economic activity from all sources for the assessment period.

The assessment period is the 12 months from 1 January to 31 December.

So if you are testing the ₦12 million threshold, do not start by deducting rent, stock, transport, salaries or other expenses and calling what remains your turnover. That is a different calculation.

THE ₦40,000-A-DAY SHORTCUT
The Regulations define a nano business partly by reference to annual turnover not exceeding ₦12 million, with ₦40,000 daily assuming 300 working days in a year.

That ₦40,000 figure is a useful illustration, not permission to ignore the actual or estimated annual turnover where it can be established.

WHAT HAPPENS ABOVE ₦12 MILLION?
Crossing the threshold does not automatically mean every business pays 1%. The taxpayer must still be within the presumptive regime and not otherwise exempt.

But where Regulation 6(3) applies, the 1% is assessed on the actual or estimated turnover. The Regulations do not say “1% of the amount above ₦12 million.”

EXAMPLE
If an otherwise eligible presumptive taxpayer has turnover of ₦13 million, the relevant 1% base under Regulation 6(3) is ₦13 million, not ₦1 million.

That distinction is exactly why understanding the threshold before year-end matters.

THE TAX ADVANTAGE INSIGHT
For the ₦12 million threshold, the relevant number is turnover, not profit. And crossing the line does not mean only the excess is exposed.

Do you track annual turnover as one number, or do you only look at what is left after expenses?

WHO REALLY PAYS NIGERIA’S PRESUMPTIVE TAX?A boli seller, a POS operator, a limited company consultant and a building-mat...
24/09/2026

WHO REALLY PAYS NIGERIA’S PRESUMPTIVE TAX?

A boli seller, a POS operator, a limited company consultant and a building-materials dealer hear the same headline: “1% of turnover.”

Do all four pay? No.

FIRST, SOME EVERYDAY TRADES ARE EXPRESSLY EXCLUDED

The First Schedule to the Regulations names 16 trades or businesses for which presumptive income tax is not charged under

Regulation 6(2)(a).

They include akara/roasted-yam sellers, guguru/corn/groundnut sellers, boli vendors, mobile barbers, certain manual tailors, local cobblers, newspaper vendors, wheelbarrow load carriers, bucket car-wash operators, roadside phone-charging stations, house-to-house manual dry cleaners, petty hawkers, recharge-card/mobile-accessory hawkers and local garri processing or small grating machines.

The law literally calls recognisable everyday Nigerian activities by name.

SECOND, THERE IS A TURNOVER EXEMPTION

A taxable person whose actual or estimated turnover from trade or business for the relevant year of assessment does not exceed ₦12 million is not charged presumptive income tax under Regulation 6(2)(b).

THIRD, COMPANIES ARE OUTSIDE THIS REGIME

The definition of “person” in Regulation 12 covers individuals and business enterprises other than a company. A limited company should therefore not be treated as a presumptive-tax taxpayer merely because it is small or has poor records.

FOURTH, PROPER RECORDS MATTER

Regulation 3(7) provides that a taxpayer who keeps proper records of business transactions shall not be eligible for presumptive taxation.

SO WHO MAY ACTUALLY FACE THE 1%?

A taxable person within the presumptive regime, not covered by the listed exemptions, whose turnover is above ₦12 million and whose income cannot be properly ascertained may be assessed at 1% of actual or estimated turnover under Regulation 6(3).

Notice how many questions had to be answered before we reached the 1%.

THE TAX ADVANTAGE INSIGHT

The 1% is not for everyone. Eligibility, exemptions, turnover and records all come before the rate.

Which of the First Schedule trades surprised you most? Tag or share with someone who has heard only the “1% tax” headline.

WHO IS THE PRESUMPTIVE TAX REGIME REALLY FOR?If your books can tell the story of your business, presumptive tax may not ...
21/09/2026

WHO IS THE PRESUMPTIVE TAX REGIME REALLY FOR?

If your books can tell the story of your business, presumptive tax may not be the story you need to worry about.

THE MISCONCEPTION

Many people hear “presumptive tax” and immediately translate it to “tax for informal businesses.” That is too broad.

The Regulations focus on taxable persons whose income cannot be ascertained, including informal-sector operators whose incomes cannot be ascertained with reasonable accuracy because proper business records are absent.

RECORDS SIT AT THE CENTRE

Regulation 3 includes businesses that are not organised or structured to keep adequate transaction records for tax purposes. It also reaches situations where income cannot be ascertained accurately for other reasons, including deliberate withholding, concealment or misrepresentation of relevant information.

This means the regime is not simply a label attached to the size, location or appearance of a business. The real question is whether the income can be properly determined.

AND PROPER RECORDS CAN TAKE YOU OUT

The Regulations go further. A person subject to the regime may elect to exit for a relevant year of assessment and file under self-assessment, subject to the required notification. Where the Relevant Tax Authority determines that the minimum record-keeping requirements are met, it is to notify the taxpayer in writing and the taxpayer commences self-assessment.

Regulation 3(7) is particularly important: a taxpayer who keeps proper records of business transactions shall not be eligible for presumptive taxation.

PRACTICAL CHECK

• Can you show what you sold?

• Can you show what you received?

• Can you support your expenses and business transactions?

• Can your records be used to determine your income with reasonable accuracy?

THE TAX ADVANTAGE INSIGHT

Presumptive tax is not simply a tax on informality. It is a framework for assessment where income cannot be properly ascertained.

If someone described presumptive tax to you as “tax for all informal businesses,” did that explanation leave out the records question?

The Tax Advantage is now on Facebook.If you've seen some of my tax articles elsewhere, you already know the idea: take N...
14/09/2026

The Tax Advantage is now on Facebook.

If you've seen some of my tax articles elsewhere, you already know the idea: take Nigeria's tax laws out of legal language and explain what they mean in everyday life.

We're starting from Season One: Understanding Nigeria's Presumptive Tax Regulations.

Article 1 of 10 👇

THE 1% TAX EVERYONE IS TALKING ABOUT... BUT FEW ACTUALLY UNDERSTAND
“Government will now collect 1% from small businesses.” That is the headline. No, no, no, it is not the rule.

WHAT THE LAW ACTUALLY STARTS WITH

The Nigeria Presumptive Tax Regulations, 2026 do not begin by saying every informal or small business should pay 1% of turnover. They begin with a problem: income cannot be properly ascertained, or records are not kept in a way that allows a proper income-tax assessment.

That's important because presumptive tax is a fallback assessment framework. It exists for situations where the normal route of working from reliable records to taxable income is not reasonably available.

So before asking, “Is the rate 1%?”, the better first question is: “Why would I be in the presumptive regime at all?”

THE 1% COMES LATER

Regulation 6 then deals with the assessment. Even within the regime, some trades and businesses are exempt, taxable persons whose actual or estimated turnover does not exceed ₦12 million are exempt, and persons covered by Regulation 4 are exempt.

Only taxable persons within the presumptive regime who do not fall within those Regulation 6(2) exclusions are assessed at 1% of actual or estimated turnover.

That is a much narrower statement than “every small business pays 1%.”

A SIMPLE WAY TO THINK ABOUT IT

Imagine two business owners with similar turnover. One keeps proper records that allow income to be ascertained. The other has no reliable books and the income cannot be properly determined.

The fact that both are “small businesses” does not automatically put both in the same tax position. The quality of the records matters because the regime itself is built around the inability to ascertain income properly.

WHAT TO DO NOW

• Do not assume the 1% applies merely because your business is informal or small.
• Check whether your income can be properly ascertained from your records.
• Check the specific exemptions before calculating anything.
• If you are within the regime, understand that turnover, not profit, becomes central to the presumptive assessment.

THE TAX ADVANTAGE INSIGHT

The 1% is not the starting point. The starting point is whether the presumptive regime applies to you at all.

Have you heard the “1% tax” explained as though it applies to every small business? Share this with a business owner who needs the difference.

Legal Reference: Nigeria Presumptive Tax Regulations, 2026

Just because your business earned money doesn't automatically mean that's your profit.And your profit isn't necessarily ...
22/06/2026

Just because your business earned money doesn't automatically mean that's your profit.

And your profit isn't necessarily your taxable income either.

Understanding these differences can help you make smarter decisions and gain better control over your finances.

Swipe through today's post to learn more.

One reason some businesses struggle financially isn't because they aren't making money.It's because they aren't planning...
19/06/2026

One reason some businesses struggle financially isn't because they aren't making money.

It's because they aren't planning for expenses that they already know are coming.

Tax obligations shouldn't be a surprise.

A little planning today can help reduce stress and improve your cash flow tomorrow.

Let's be honest.Keeping records isn't the most exciting part of running a business.But when tax season arrives or you ne...
17/06/2026

Let's be honest.

Keeping records isn't the most exciting part of running a business.

But when tax season arrives or you need important financial information, you'll be glad you kept those receipts, invoices, and bank statements.

Good record keeping saves time, reduces stress, and helps you stay in control of your business finances.

Running a business comes with many responsibilities, and tax compliance is one of them.The challenge is that many busine...
15/06/2026

Running a business comes with many responsibilities, and tax compliance is one of them.

The challenge is that many business owners only think about taxes when a deadline is approaching. By then, the pressure has already started building.

Being tax-ready means keeping proper records, staying organized, and understanding your obligations before they become urgent.

Take a look at today's checklist and see how prepared your business really is.

Many business owners see tax as an obligation.Successful business owners see it as an asset.Good tax knowledge helps you...
12/06/2026

Many business owners see tax as an obligation.

Successful business owners see it as an asset.

Good tax knowledge helps you make better financial decisions, manage cash flow effectively, avoid costly mistakes, and position your business for sustainable growth.

Tax is more than compliance. It's a tool for building a stronger business.

A lot of people still carry wrong ideas about tax, and those misunderstandings can quietly lead to avoidable problems.Th...
10/06/2026

A lot of people still carry wrong ideas about tax, and those misunderstandings can quietly lead to avoidable problems.

This post highlights 5 common tax myths Nigerians still believe and gives a clearer picture of how tax really works in everyday life. It doesn’t matter if you run a small business, work a job, or freelance, tax is something that eventually touches everyone in one form or another.

Understanding it early helps you stay prepared and avoid unnecessary issues later on. Go through the slides and see what you may have been missing.

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