Nigeria is moving to tax nearly 80% of its workforce operating in the informal sector by expanding the use of presumptive taxes, a policy designed to capture businesses that keep little or no financial records.
Presumptive taxation allows the government to impose a fixed or estimated tax on informal businesses based on visible indicators such as the nature of the trade, location, and scale of operations, rather than audited accounts or formal documentation.
Authorities see it as a practical response to the challenge of taxing millions of small traders, artisans, and micro-entrepreneurs who operate largely outside the formal economy.
Olufemi Olarinde, head of Fiscal and Tax Reforms Implementation at the Nigerian Revenue Service (NRS), said traditional tax frameworks have struggled to reach the informal sector due to poor record-keeping and limited financial transparency.
As a result, the government is turning to simplified assessment methods to broaden the tax base and boost non-oil revenue.
The informal sector accounts for the majority of Nigeria’s labour force, yet contributes only a small fraction of total tax revenue.
Policymakers argue that presumptive taxes could help close this gap by spreading the tax burden more evenly and reducing reliance on a narrow pool of compliant taxpayers.
However, the approach remains controversial. Critics warn that fixed or estimated taxes risk being arbitrary, unfair, and burdensome for low-income earners, especially in an economy grappling with inflation and weak consumer demand. There are also concerns about enforcement, transparency, and the potential for abuse by tax officials.
Despite these concerns, the government appears determined to proceed, viewing presumptive taxation as a necessary step toward fiscal sustainability and a more inclusive revenue system.
The success of the policy, analysts say, will depend on careful implementation, clear communication, and safeguards to protect vulnerable informal workers from excessive taxation.
Don’t Miss This: Africa’s largest hydropower project reshapes Ethiopia’s regional influence
If approved, the company’s total issued shares will increase from about 1.25 billion to approximately 1.50 billion ordinary shares, with the new shares ranking pari passu with existing ones.
The capital expansion is designed to support the issuance of bonus shares rather than raise fresh funds.
Vitafoam is proposing a bonus issue of one new ordinary share for every five shares currently held, subject to regulatory approvals.
A total of 250.17 million shares will be allotted under the scheme, funded through the capitalisation of N125.08 million from retained earnings.
Shareholders whose names appear on the company’s register as of February 6, 2026, will qualify for the bonus shares.
The company noted that the bonus shares will be fully paid and rank equally with existing shares, but will not qualify for dividends for the financial year ended September 30, 2025.
Following the proposed increase, Vitafoam will also seek approval to amend relevant clauses of its Memorandum and Articles of Association to reflect the enlarged share capital.
The move comes on the back of a sharp financial turnaround in the 2025 financial year. Vitafoam reported a surge in profitability, with profit before tax rising by about 1,775 per cent to N21.48 billion, compared with N1.15 billion in the previous year.
Profit after tax climbed by approximately 1,427 per cent to N14.54 billion, while revenue grew 35 per cent to N111.38 billion, driven by stronger sales and improved cost management.
On the strength of the improved performance, the board has also recommended a cash dividend of N3.00 per ordinary share, alongside the proposed bonus issue, both subject to shareholder approval at the AGM.
