Nigeria’s efforts to establish a sustainable and transparent tax ecosystem risk being undermined as long as a significant proportion of Small and Medium Enterprises (SMEs) continue to operate without proper documentation.
This concern was raised by the President of the Institute of Chartered Accountants of Nigeria (ICAN), Dr. Haruna Nma Yahaya, at the 2025 Professional Services Group & Advocacy Tax Symposium of the Chartered Institute of Directors (CIoD) held last week.
Yahaya explained that SMEs remain the backbone of Nigeria’s private sector, yet many still operate with weak record-keeping structures, inadequate financial documentation, and limited compliance frameworks.
He stressed that the pace and success of the country’s tax reforms would hinge on how effectively SMEs strengthen their internal systems and embrace a culture of transparency, accountability, and accurate reporting.
“Capacity building must also be for SMEs, which constitute the bulk of Nigeria’s private sector. Directors who lead SMEs must champion record-keeping, financial literacy, and compliance culture.
“Nigeria cannot build a sustainable tax ecosystem if the backbone of the economy remains undocumented,” Yahaya stated.
He explained that proper documentation and a culture of compliance are now essential for all businesses. With Nigeria’s tax administration increasingly digital, SMEs that fail to maintain accurate financial records risk penalties, operational disruptions, and missed growth opportunities. In a digital tax environment, poor data quality has shifted from being a minor inconvenience to a significant business risk.
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The ICAN president emphasized the need for SME owners and directors to deliberately build capacity within their organisations. This includes enhancing financial literacy, providing regular training for accounting teams, and adopting digital accounting tools that promote accuracy and transparency.
Internal auditors and legal teams also need to strengthen their understanding of emerging regulatory changes, particularly those linked to automation and data-driven enforcement.
- Yahaya introduced the Director’s Tax Governance Framework (DTGF), a five-pillar model designed to guide organisations toward stronger tax governance. The framework focuses on policy, people, process, performance, and public transparency. He urged every organisation to establish a board-approved tax philosophy that clearly defines how fairness, compliance, and societal obligations guide business practices.
- He further stressed that directors must ensure robust internal controls covering filings, payments, audits, documentation, and dispute resolution. Weak controls create vulnerabilities that can expose organisations to regulatory action.
- Audit committees should broaden their oversight to include tax risks, while whistle-blowing mechanisms must be strengthened to allow employees to report misconduct safely.
Yahaya also highlighted that the 2025 tax reforms will bring faster and more predictable regulatory consequences. Automated systems will provide authorities with greater visibility across industries, making inconsistencies easier to detect. SMEs with poor documentation or irregular filing patterns may face disputes, penalties, or reputational harm as enforcement becomes more transparent.
