Parthian Capital MD says new tax reforms will stimulate growth of SMEs in Nigeria

The Managing Director of Parthian Capital Limited has expressed strong optimism that Nigeria’s recently enacted tax reforms will serve as a major catalyst for the growth and expansion of small and medium-sized enterprises (SMEs) across the country.

Speaking at a business policy roundtable in Lagos, the MD noted that the new tax laws are poised to ease long-standing fiscal burdens on entrepreneurs and make the operating environment more favourable for local businesses.

According to the Parthian Capital boss, the changes introduced by the Federal Government through the new tax reform package represent a strategic shift towards a more inclusive and supportive tax regime. He emphasized that small businesses, which have traditionally been overwhelmed by the weight of multiple taxation and regulatory complexities, now stand to benefit significantly from provisions that promote compliance, reduce liabilities, and reward formalization.

The MD noted that SMEs are the backbone of Nigeria’s economy, contributing nearly 50 percent of the Gross Domestic Product (GDP) and employing over 80 percent of the labour force. However, he observed that despite their importance, SMEs have faced daunting challenges in navigating the country’s complicated tax system, which has stifled innovation, discouraged investment, and slowed job creation. With the new reforms, he stated, many of those barriers are now being addressed.

One of the key features of the reform is the introduction of exemptions on Companies Income Tax (CIT) for small enterprises with annual turnover below a defined threshold. The MD noted that this move will allow small business owners to re-invest more of their earnings into their operations, leading to increased capacity, employment opportunities, and resilience against economic shocks. He added that such fiscal space is especially critical in the current macroeconomic climate, where inflationary pressures and rising input costs continue to affect operating margins.

He also highlighted the benefits of the new tax administration framework, which aims to consolidate and harmonize tax collection efforts across the federation. This, he said, will reduce the incidence of multiple taxation by federal, state, and local government agencies — a burden that has historically led to confusion and disputes for small businesses. By simplifying processes and introducing clearer guidelines, the reforms are expected to reduce compliance costs and increase predictability for entrepreneurs.

Another significant area of reform identified by the Parthian Capital MD is the digitization of tax processes. He applauded the government’s efforts to transition to an electronic filing and payment system, which will make it easier for businesses to fulfill their tax obligations from anywhere, avoid manual bottlenecks, and improve transparency. He noted that the digital shift will be especially beneficial to younger, tech-driven SMEs that operate online or across multiple jurisdictions.

Furthermore, the MD stated that the reforms offer long-term structural benefits by encouraging informal businesses to enter the formal economy. He pointed out that the fear of excessive taxation has kept many microenterprises from registering with the Corporate Affairs Commission and tax authorities. Now, with the promise of exemptions and supportive policies, more entrepreneurs may be encouraged to formalize, which will in turn expand the country’s tax base over time without the need for coercion.

The reforms, signed into law by the President in late June, are set to take effect from January 2026. They are embodied in four primary legislative instruments: the Nigeria Revenue Service Act, the Nigeria Tax Act, the Nigeria Tax Administration Act, and the Joint Revenue Board Act. These collectively aim to overhaul outdated tax policies, improve inter-agency coordination, and promote accountability in revenue collection.

Reacting to the reforms, other industry stakeholders at the roundtable echoed similar sentiments. Many praised the clarity and structure provided by the legislation, describing it as a long-overdue step toward building a more equitable and growth-oriented fiscal environment. Some experts also called for further measures, including capacity-building for tax officials, business-friendly tax audits, and continuous stakeholder engagement to ensure that the reforms are implemented smoothly.

Despite the optimism, the Parthian Capital MD acknowledged that tax reform alone cannot guarantee the success of SMEs. He emphasized the need for complementary efforts in access to finance, infrastructure development, and macroeconomic stability. Nonetheless, he reiterated that the new tax framework provides a solid foundation upon which other support initiatives can thrive.

He called on SMEs to take full advantage of the opportunity presented by the reforms by updating their business records, embracing digital accounting tools, and seeking professional tax advice where necessary. He also urged the government to ensure that the implementation process is transparent and inclusive, with regular feedback mechanisms to identify challenges and make timely adjustments.

In conclusion, the Parthian Capital MD expressed hope that the new tax regime would not only accelerate SME growth but also boost investor confidence, foster economic diversification, and deepen Nigeria’s path toward sustainable development. He stressed that when small businesses succeed, the entire economy benefits, and that smart tax policy is a crucial part of making that vision a reality.