In what is being hailed as a bold and strategic step toward economic reform, President Bola Ahmed Tinubu’s signing of the Tax Reforms Act has drawn commendation from experts, particularly for its projected impact on Nigeria’s micro, small, and medium enterprises (MSMEs).

According to Professor Christian Harrison, an enterprise development expert, the Act, which aims to harmonize Nigeria’s fragmented tax system and ease compliance burdens, could be a game changer for the country’s 39 million MSMEs, if well implemented.

According to Professor Harrison, “This is not just a tax law. This is a critical step in repositioning Nigeria’s MSMEs as the true drivers of our economic growth,” Harrison said in a live TV interview on Monday. “These businesses represent 96% of Nigeria’s enterprises, contribute 50% to GDP, and provide 84% of employment. If this reform works, the ripple effect will be massive.”

The Tax Reforms Act, signed into law earlier this year, is a consolidation of four separate tax bills aimed at simplifying and improving the business environment. Some of its most notable provisions include: Income Tax Exemption: Nigerians earning below ¦ 1 million annually will now be exempted from personal income tax. Company Income Tax Relief: MSMEs with annual revenue of ¦ 15 million or less will not be required to pay company income tax. Zero VAT on Essentials: Value Added Tax (VAT) has been eliminated on essential goods and services such as food, transport, and cooking gas. Unified Tax System: Through the Joint Revenue Board Establishment Bill 2024, the federal, state, and local governments are expected to adopt a single, harmonized tax framework to eliminate double taxation and bureaucratic overlap.

Professor Harrison described the Act as both a financial reprieve and a strategic opportunity for small business owners, many of whom operate in challenging conditions. “The tax burden has been a major barrier for MSMEs,” he explained. “Reducing or eliminating taxes on essentials, simplifying tax compliance, and exempting low-income earners creates room for small businesses to breathe and grow.”

He further noted that the VAT exemption on essential goods directly reduces operating costs for small enterprises, particularly those in agriculture, food processing, and retail sectors. “The VAT exemption ensures that essential products do not carry the extra cost that is typically passed down to the final consumer. That protects low-income earners and helps MSMEs stay competitive,” Harrison added.

While the expert lauded the reforms, he was quick to caution that tax relief alone will not solve the structural problems plaguing MSMEs.

“We must not forget that taxation is just one part of the puzzle,” Harrison said. “Without access to finance, reliable infrastructure, and digital literacy, MSMEs will still struggle, tax holiday or not.”

He called on the federal government and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to intensify efforts around capacity building, access to capital, and widespread sensitization.

“Many businesses operating informally are not even aware that this reform exists. How can they benefit from what they don’t understand?” he queried.

With the reforms scheduled to take effect on January 1, 2026, Professor Harrison expressed concern about the short runway of six months to adequately prepare the system and sensitize the public.

“Six months can work, but only if we start today,” he warned. “If we delay implementation or fail to engage stakeholders, we risk repeating the mistakes of past reforms.” He called for immediate action, including nationwide awareness campaigns, online filing support, and tech infrastructure to reach informal sector players.

“The informal sector is the beating heart of this economy. If we fail to bring them into the fold, we lose the whole point of reform,” he stressed.

At the core of Harrison’s argument was the urgent need for leadership across all levels, from policymakers to business owners, to make the reforms succeed.

“Visionary leadership at the top must be matched with entrepreneurial energy at the grassroots and transparency in civil service,” he said. “Reform is not just about passing laws. It’s about building systems that enable, not entangle.”

He likened successful models in Rwanda, Malaysia, and India, where similar reforms boosted GDP and formalized MSMEs, and said Nigeria has a golden opportunity to follow suit.

“We are a sleeping giant. This reform could be the wake-up call we need,” he added.

The Tax Reforms Act represents one of the most significant fiscal policy shifts in recent Nigerian history. If the government can ensure seamless implementation, stakeholder engagement, and continued support for the informal sector, the reforms could unleash the full potential of MSMEs and help diversify the economy beyond oil. For now, cautious optimism prevails, and all eyes will be on January 2026.