How the New Tax ID Requirement Could Affect Nigerian Farmers

Questions answered in this article:

-How will Nigeria’s new Tax ID requirement impact smallholder farmers in terms of formalisation, access to finance, and market opportunities?

-What compliance challenges might farmers face under the new tax reforms?

-What role will stakeholders play in determining whether the Tax ID system benefits farmers?

On Wednesday, 10 September 2025, Kamorudeen Yusuf, Personal Assistant on Special Duties to President Bola Tinubu, announced that Nigeria’s new tax reform laws have been published in the national gazette. This announcement means that the overhaul of the country’s fiscal framework is now official, moving away from ‘proposed’.

Part of the four key legislations is the Nigeria Tax Administration Act (NTAA) 2025, which includes the use of the Tax Identification Numbers (Tax IDs). Others are the Nigeria Tax Act (NTA) 2025, the Nigeria Revenue Service (Establishment) Act (NRSEA) 2025, and the Joint Revenue Board (Establishment) Act (JRBEA) 2025.

According to Yusuf’s tweet, the Nigeria Tax Act and the NTAA will take effect from January 1, 2026, and they mandate the use of Tax IDs for economic activities. This particular policy will have significant implications for the agricultural sector, particularly farmers who increasingly straddle the line between subsistence and agribusiness. 

While the law aims to simplify Nigeria’s tax system, support small businesses, attract investment, and strengthen fiscal stability, its impact on farmers will be both enabling and challenging.

Formalisation and Access to Finance

For farmers operating informally, the Tax ID requirement may serve as a gateway into the formal economy. With a Tax ID linked to a bank account, farmers stand a better chance of accessing credit, insurance, and government-backed support schemes. This could improve financial inclusion and business growth, especially for small and medium-scale farmers. 

In addition, households earning less than ₦250,000 per month and individuals making less than ₦800,000 per year would be exempted from paying tax if properly identified, which is part of the goal of this reform and could provide financial breathing space for poor farmers.

Also, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, explained that individuals’ National Identification Number (NIN) and companies’ Corporate Affairs Commission (CAC) registration numbers will serve as their Tax ID, reducing duplication. Existing TINs remain valid, while new applicants can process theirs online or at tax offices without any charges.

However, farmers without proper documentation or those unwilling to register still risk being excluded from financial systems, limiting their ability to secure loans or participate in value chains that require proof of compliance.

Compliance Burden and Market Implications

On the flip side, compliance may pose new challenges. Many smallholder farmers lack the financial literacy or record-keeping habits required for tax reporting. The obligation to track input costs, sales revenue, and profit margins may demand training and additional administrative effort. 

Furthermore, as larger buyers—including supermarkets, processors, and hotels—adopt stricter compliance measures, farmers without Tax IDs may be locked out of lucrative markets. This could deepen the divide between informal producers and commercially viable agribusinesses.

What Can Farmers Do?

Farmers can prepare for the transition by:

• Registering early: Obtaining a Tax ID before the January 2026 deadline to avoid disruptions in accessing markets and finance.
• Improving record-keeping: Tracking costs, sales, and profits to meet compliance requirements while also improving business planning.
• Forming cooperatives: Joining farmer groups to pool resources, access training, and reduce the cost and burden of compliance.
• Seeking guidance: Engaging with extension officers, accountants, or NGOs for support in navigating the registration and reporting process.

By taking proactive steps, farmers can turn the Tax ID policy from a challenge into an opportunity to professionalise their operations and gain better market access.

What Can Stakeholders Do?

The success of the policy will depend on how well key stakeholders—government, private sector, and NGOs—support farmers in the transition. They can:

• Government: Simplify the registration process, roll out nationwide sensitisation campaigns, and provide targeted training on financial literacy and tax compliance.
• Private sector: Buyers, processors, and agribusiness firms can assist their suppliers with registration drives and integrate compliance requirements gradually to avoid sudden exclusion.
• NGOs and development partners: Offer technical assistance, digital tools, and farmer-friendly guides to ease the learning curve, particularly for smallholders in rural areas.

Collaboration among these stakeholders can ensure that the policy strengthens Nigeria’s agricultural sector rather than marginalising vulnerable farmers.

Opportunities and Risks Ahead

The long-term benefits of the policy depend largely on implementation. If well-managed, the Tax ID system could streamline access to subsidies, boost credibility for farmers in formal markets, and create a fairer tax regime where all taxable players contribute. 

It could further close the 70% gap, as Oyedele once stated that Nigeria collects only about 30% of what the country should be receiving in taxes.

Conversely, poor rollout, limited awareness, or excessive bureaucracy could discourage compliance and further marginalise smallholder farmers. Policymakers will need to balance enforcement with farmer sensitisation, capacity building, and incentives to ensure that the policy enhances agricultural growth rather than stifling it.