Nigeria is pushing to raise its tax-to-GDP ratio from under 10% to at least 18% within three years, according to the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele.
He made the projection during a live interview, saying the country’s tax reforms—now signed into law by President Bola Tinubu—aim to correct long-standing inefficiencies and improve fairness in tax administration.
Oyedele described Nigeria’s current tax performance as inadequate for an economy estimated between ₦270 trillion and ₦300 trillion.
“When it comes to the tax yield, it’s even very embarrassing,” he said.
He compared Nigeria’s sub-10% tax ratio with South Africa’s 26% and France’s 40%, noting that a wide tax gap leaves the country underperforming and indirectly rewarding tax evaders.
Reforms Aim to Close Gaps Without Raising Tax Rates
Oyedele said that the newly enacted tax laws include several provisions to reduce evasion and make compliance easier.
“What we found was the tax gap—the difference between what we’re collecting and what we could be collecting—is as high as 70%,” he said.
According to him, closing even half of that gap will be enough to double Nigeria’s tax revenue.
“We think that we can close that gap by more than half and therefore double Nigeria’s tax revenue,” he stated.
He added that this growth can be achieved without increasing tax rates but by improving the system.
The suite of newly passed legislation includes the Nigeria Tax Bill, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Bill.
Low-Income Earners and Small Businesses Get Tax Relief
One major provision in the new laws is the exemption of individuals earning less than ₦1 million annually from personal income tax.
Oyedele said, “People who don’t earn up to a million naira a year will no longer pay income tax.”
Previously, citizens earning as little as ₦300,000 were taxed at rates of up to 7%.
For businesses, the reforms provide relief for small firms whose yearly gross turnover does not exceed ₦50 million.
“They will not pay company income tax,” Oyedele explained.
Corporate income tax remains at 30%, while VAT stays at 7.5%. However, exemptions now apply to essential items like food, healthcare, education, rent, and public transport.
Reforms Meant to Restore Public Trust and Government Accountability
Oyedele acknowledged the widespread doubt among citizens about the use of tax revenue.
He said the reform plan addresses this concern by tying revenue collection to transparency and better governance.
“Our reforms also address the application of tax revenue… almost like a reset of the social contract, so Nigeria can work for Nigerians,” he said.
He stressed that government must show citizens how their taxes are used, as this is key to rebuilding trust.
Oyedele described the changes as overdue and said they should have happened 30 years ago.
“This is a real demonstration of political will, courage and character,” he said about President Tinubu’s approval of the reforms.
He revealed that some proposals in the tax bills caused backlash during the drafting stage, but the president remained committed.
“Some of the things we demanded for, he didn’t even know we put them in those bills,” he said.
Oyedele praised Tinubu for taking responsibility despite criticism, adding that he never shifted blame.
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