Nigeria’s Tax Reform Push Seeks Broader Base and Tech-Driven Efficiency

The Executive Chairman of Nigeria’s Federal Inland Revenue Service (FIRS), Zacch Adedeji, has outlined a sweeping programme of tax reforms aimed at modernising the country’s tax system and expanding its revenue base. Speaking through Oti Olaniyi, the Acting Director of the Medium Taxpayers Department (South), Adedeji highlighted the agency’s efforts to improve efficiency and responsiveness, particularly through the use of digital platforms.

Addressing industry leaders at the Lagos Chamber of Commerce and Industry’s (LCCI) Organised Private Sector Stakeholders’ Engagement on Emerging Tax Matters, Adedeji emphasised that the FIRS is transitioning towards a more customer-centric approach. This includes the introduction of the ‘TaxPro Max’ platform, designed to streamline tax filing and enhance compliance through digital solutions such as e-filing and e-reporting.

“FIRS is committed to a customer-focused service delivery aimed at boosting voluntary compliance and increasing revenue generation,” Adedeji said, underscoring the need to broaden Nigeria’s tax base beyond the country’s heavy reliance on oil revenues. He pointed out that decentralising FIRS operations and introducing a simplified tax regime for small businesses were central to the agency’s strategy for increasing compliance and reducing tax avoidance.

Nigeria’s low tax-to-GDP ratio, currently at 10.86%, remains a significant challenge, particularly when compared with the African average of 15-20%. Gabriel Idahosa, President of the LCCI, called for stronger collaboration between the private sector and the government to address the country’s fiscal challenges. He noted that Nigeria needs comprehensive reforms and concerted efforts to raise the tax-to-GDP ratio to 18% within three years.

Adedeji echoed this sentiment, noting that the new FIRS structure includes three operational groups—small, medium, and large taxpayers—each tailored to better address the needs of different segments of the economy. He also highlighted tax incentives in the gas sector, particularly zero VAT on compressed natural gas and liquefied petroleum gas, as part of broader efforts to diversify Nigeria’s energy mix and stimulate investment.

The reforms, however, face certain delays. Dr Chinyere Almona, Director General of the LCCI and a member of the Presidential Committee on Fiscal Policy and Tax Reforms, expressed concerns over the slow pace of legislative approval for the new withholding tax regime. “The tax law is being revised, but it has to go through a process of approval,” she said, urging patience from industry players.

Adedeji also stressed the importance of tax education and public awareness, noting that fostering a culture of compliance is crucial for long-term success. He called on both businesses and citizens to actively collaborate in advancing Nigeria’s tax system, arguing that transparency and innovation are key to ensuring its effectiveness in driving economic growth.