FG Can Use Lifestyle, Assets and Bank Transactions to Estimate Tax Under New 2026 Rules

Tax authorities can now use Nigerians’ lifestyles, assets, spending and community information to estimate business earnings when reliable records are missing. The power sits in the Nigeria Presumptive Tax Regulations, 2026.

The regulations were published in the Federal Government’s Official Gazette on May 13, 2026, and took effect from January 1, 2026. They were issued under Section 29 of the Nigeria Tax Act, 2025.

How tax authorities can estimate earnings

Under Regulation 10(2), tax authorities can consider a taxpayer’s lifestyle, assets, business location, associations and electronic or cash transactions when estimating undeclared earnings. Information from communities may also help officials determine likely turnover where financial records are unreliable.

The provision does not automatically impose tax on Nigerians simply because they own expensive assets or maintain a particular lifestyle. The indicators may support assessments only where business income cannot be accurately established. Taxpayers can still challenge assessments they consider inaccurate or excessive.

Small business relief and tax examples

Under Regulation 6(2), businesses with actual or estimated annual turnover not exceeding ₦12 million are exempt from the presumptive income tax. Businesses above the threshold that qualify for assessment will pay one per cent of annual turnover.

A business generating ₦20 million annually could face a presumptive tax liability of ₦200,000. Where only daily sales figures are available, tax officials may estimate annual turnover using a maximum of 300 working days. A trader generating ₦50,000 daily over 300 days would have estimated annual turnover of ₦15 million and pay ₦150,000.

Several small-scale informal businesses are exempt. They include akara sellers, roasted yam and plantain vendors, groundnut sellers, mobile barbers, manual tailors, local cobblers and newspaper vendors. Others are wheelbarrow pushers, roadside car washers, phone-charging operators, sachet water hawkers, recharge card sellers and small-scale garri processors. Eligible operators may obtain exemption stickers or certificates from the relevant tax authority without paying a fee. The documents remain valid for one year and can be renewed after verification.

Asset sales and taxpayer registration

The regulations introduce a two per cent presumptive tax on consideration received from certain transactions involving chargeable capital gains. Affected transactions may include disposal of land, buildings, shares, movable assets and intangible property, subject to statutory exemptions. Liable individuals must remit the tax within 30 days of completing the transaction or receiving payment, whichever occurs earlier.

Revenue agencies may also register taxpayers without Tax Identification Numbers and assign identification numbers.

Separately, the Joint Revenue Board said harmonised tax legislation passed in 21 states seeks to eliminate overlapping levies, unauthorised collections and tax-related roadblocks that increase business costs and affect consumer prices.

The framework aims to bring previously unrecorded business income into Nigeria’s tax system while protecting qualifying small-scale operators from additional tax burdens.