The federal government, under its newly signed tax laws, is aiming to consolidate various taxes paid by Nigerians under a single authority, with a view to shifting agencies’ focus from revenue generation to efficiency, while improving the tracking of collected funds.
The Nigeria Revenue Service Act, which is part of the tax laws to take effect in January 2026, will establish the Nigeria Revenue Service (NRS), an autonomous collector-in-chief responsible for most public revenues, including taxes.
Sixty-three federal agencies have historically had the authority to collect taxes and fees. The Nigeria Customs Service (NCS) collects customs duties, while the National Communications Commission (NCC) collects telecom levies, with oil-focused agencies receiving royalties and licensing fees.
The law however has rescinded this power, directing all taxed funds to the NRS.
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“If you’re not NRS, do not set levies, charges or taxes,” Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, told BusinessDay.
He said a lack of understanding of the core concept of taxes by different agencies may be hurting the nation’s capacity to entrench transparency in collection.
President Bola Tinubu, in late June, appended his signature on four tax bills: the Nigeria Tax Bill 2024, the Nigeria Tax Administration Bill 2024, the Nigeria Revenue Service (Establishment) Bill 2024, and the Joint Revenue Board of Nigeria (Establishment) Bill 2024.
The new law aims to revolutionise Nigeria’s tax system and protect low-income citizens, including small businesses.
With the new tax laws, all federally chargeable taxes and fees will flow into a single system managed by the NRS, making it easier to track and account for public funds. This, according to Oyedele, addresses the current ‘opaque’ system and builds trust.
The government reckons that centralisation, in addition to targeted orientation, will encourage non-tax payers to comply.
The centralised system models international best practices. Oyedele cited the Rwanda Revenue Authority (RRA), which has a single central agency responsible for collecting nearly all public revenues on behalf of the government.
France has the Direction Générale des Finances Publiques (DGFiP) or the General Directorate of Public Finances, which is responsible for collecting most public revenues, including taxes. The nation’s tax to GDP ratio is 43.8 percent, compared to Nigeria’s 10.86 percent.
The government also plans to include a provision in the law that will allow it to set an amount for refund before allocating revenue generated to states. He said that these refunds would be sent within a limit of 30 days.
“Companies will be able to use the refunds to pay other taxes, including import duties. This is a significant commitment to taxpayer fairness and liquidity,” he said.
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This directly addresses historical challenges taxpayers have faced in getting timely refunds, fostering trust in the tax system. “If we succeed with that, we will solve the problem permanently,” he said.
He noted that in the new bill, the use of technology will bolster data collection on taxpayers, reducing tax evasion and increasing revenue.
“The system tells us who is poor, and also those who aren’t so poor. We use third-party data, retrieve bank details, and phone details to draw the poverty line,” Oyedele said.
Coupled with the ambition to close the ‘tax evasion gap,’ estimated at up to 80 percent, leveraging the data indicates a serious move towards equity.
“If you’re able to close the tax evasion gap, you can generate more revenue. It also helps you address equity.”
Oyedele said data will be collected differently, using the Tax ID, which will be predicated on the National Identity Number (NIN) for individuals and the Corporate Affairs Commission (CAC) for corporations.
The new tax laws have cut the value added tax (VAT) on food, transport and education to zero. According to Oyedele, Nigerians at several levels spend 82 percent to 100 percent of their income on food, transport and education.
