By Chukwuma Okoli & Ndu Nwokolo
Taxes are a major source of revenue for countries. However, Nigeria’s performance in the area of taxation has been poor. Nigeria’s tax-to-GDP ratio has remained below the 15% benchmark set by the World Bank and the IMF, which is considered important for financing core government functions in developing countries like Nigeria. A 2025 report published by the OECD showed that between 2013 and 2023, Nigeria’s tax-to-GDP ratio declined by 0.1 percentage points, from 8.3% to 8.2%, while the average tax-to-GDP ratio of 38 African countries increased by 1.4 percentage points, from 14.7% in 2013 to 16.1% in 2023. Nigeria’s poor performance in revenue mobilisation has far-reaching implications for governance, especially in budgeting, public debt management, and public service delivery. Over the years, Nigeria’s budget deficit, debt profile, and debt servicing have continued to increase in unsustainable ways. For instance, the deficit for the 2026 budget is projected at N23.86 trillion. Similarly, Nigeria’s total public debt stood at over N152 trillion as of June 2025. These are indications that Nigeria is in dire need of expanding its revenue base.
Against the backdrop of Nigeria’s poor performance in tax revenue mobilisation, the President Bola Ahmed Tinubu led administration set up the Presidential Fiscal Policy and Tax Reforms Committee upon assuming office to review and redesign Nigeria’s fiscal system with respect to (1) revenue mobilisation, both tax and non-tax; (2) quality of government spending; and (3) sustainable debt management. Following the extensive work of the Presidential Committee, the Presidencycame up with draft tax bills which were eventually passed into law as: Joint Revenue Board of Nigeria (Establishment) Act, 2025; Nigeria Revenue Service (Establishment) Act, 2025; Nigeria Tax Administration Act, 2025; and Nigeria Tax Act, 2025. The passage of the tax bills into law has triggered various concerns and controversies. There is a concern over the risks associated with Nigeria’s recent memorandum of understanding (MOU) with France on taxation. However, a major controversy is over the differences between the gazetted version of the law and the version passed by the National Assembly. If not properly resolved, the controversies surrounding tax laws can undermine their smooth implementation and even spark anti-tax social movements. This edition of the Nextier SPD Policy Weekly presents a political economy analysis of Nigeria’s recent tax reform with a view to analysing the power relations, interests and incentives that shaped the formulation and passage of the four Nigerian tax laws passed in 2025, as well as the potential conflicts that may trail the implementation.
Nigeria’s Tax Reform: Stakeholder Politics, Powers and Incentives
On January 1st, 2026, Nigeria commenced implementation of the new tax Acts amid controversies surrounding their passage. Which actors are behind the controversies over the tax Acts, and what are their interests and incentives? How can these controversies be resolved to ensure the smooth implementation of the tax laws? Drawing from the political economy framework developed by Campos and Riech, we analysed five broad groups of stakeholders, their powers and incentives that shaped Nigeria’s 2025 tax laws from the point of formulation to the point of passage, as well as the implementation phase.
The first group of actors is the leadership stakeholders, including the Presidency and the National Assembly, both of which exercised political leadership to enable the reform and theeventual passage of the tax bills into law. The Presidency exercised powers and leadership influence by initiating the idea and process of the tax reforms, appointing members of the Tax Reforms Committee and determining their mandate. On its part, the National Assembly played an important leadership role by deliberating on the tax bills and ultimately passing them into law. Within the leadership stakeholders, the Presidency is the most powerful leadership stakeholder in the entire process from formulation to adoption and implementation. Its powers and influence were felt more when it was able to gazette a version of the Acts different from that passed by the National Assembly. Despite the public outcry and clamour to put implementation of the Act on hold pending resolution of the conflict over the differences in the gazetted Acts and those passed by the National Assembly, the Presidency was able to ensure commencement offull implementation of the Acts as planned on January 1st, 2026. By gazetting an Act different from that passed by the National Assembly and also ensuring the implementation of the laws despite the unresolved controversies, the Presidency undermined the powers and influence of the National Assembly over the tax laws, thereby demonstrating its overriding powers and influence over other stakeholders in the tax reform. In all, despite lingering conflict over the re-gazetting of the Acts, the leadership stakeholders’ overall incentive is to expand the country’s revenue base through taxation and increase the volume of funds available for running the government.
Next to the leadership, stakeholders are the bureaucratic stakeholders, which include the Presidential Fiscal Policy and Tax Reforms Committee, other government agencies such as the Joint Revenue Board of Nigeria, and the Nigeria Revenue Service (NRS), the tax consultants and financial institutions. The Presidential Tax Reforms Committee exercised influence over the tax reform at the point of designing and formulating tax laws. The Committee’s technical expertise shaped the overall content and orientation of the tax laws. More so, the Committee has continued to engage the public to shape public opinion,including countering alleged disinformation over the new tax laws. The powers and influence of the NRS and the Joint Revenue Board are mainly at the point of implementation. The Joint Revenue Board exercises powers in the areas of dispute resolution between tax authorities as stipulated in Section 5 of the Joint Revenue Board of Nigeria (Establishment) Act, 2025. On its part, the NRS exercises powers in the area of assessing, collecting and recovering taxes from corporations, companies and individuals chargeable with tax as provided for in the Nigeria Revenue Service (Establishment) Act, 2025. The overall interest of the NRS and Joint Revenue Board is the successful implementation of the tax laws. It is important to know that the interests and incentives of the NRS and Joint Revenue Board align with those of the Presidency. This is demonstrated by their support for the Presidency for the immediate implementation of the laws despite the controversies surrounding the gazetted law. The tax consultants and financial institutions are also important actors whose work would influence compliance by taxable individuals and companies. The tax consultants are in a position to properly advise their clients and assist them in complyingwith the tax laws. Financial institutions keep transaction records, which will be useful for providing such records when needed to assist tax administrators in their duties.
The interest groups are an important stakeholder group in the tax reform ecosystem. Interest groups like the Nigerian Governors Forum, Northern Governors Forum, the Organised Private Sector (OPS) and Civil Society Organisations (CSOs). At the point of formulation and debate of the tax laws, the Nigerian Governors Forum (NGF) and the Northern States Governors Forum (NSGF) were very visible, powerful interest groups mounting pressures on the Presidency and the National Assembly to ensure the interests of their states were protected in the area of revenue sharing proposed under the laws. For instance, while the bills were at the National Assembly, the NSGF vehemently opposed the derivation model proposed in the bill, which translated to some states earning more based on the revenue collected within such states. On their own, the CSOs have played important roles at the point of formulation and debate of the bills at the National Assembly through their public enlightenment and advocacy that the interests of the public, particularly the vulnerable groups in the society, be protected. Following the discovery of discrepancies between the gazetted laws and those passed by the National Assembly, CSOs have been at the forefront of calls to ensure that proper procedures are followed to address the discrepancies, including re-gazetting of the laws. On its own, the Organized Private Sector of Nigeria (OPS), comprising groups like the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Manufacturers Association of Nigeria (MAN), the Nigeria Employers’ Consultative Association (NECA), National Association of Small and Medium Enterprises (NASME) and the National Association of Small Scale Industrialists (NASSI), has continued to engage the Presidency and the National Assembly up to the point of implementation to ensure their interests were protected.
Generally, the four tax laws being implemented in Nigeria since January 1st, 2026, are products of power play between different actors, each trying to protect its interests and maximise incentives. However, the unequal power relations among the various actors explain why the Presidency’s interest overrides the interests of other stakeholders, as the Presidency is able to ensure the commencement of implementation of the tax laws despite controversies over the gazetted laws and those passed by the National Assembly.
Recommendations
- Public Enlightenment and Strategic Communication: the Presidency, through the Presidential Office of Digital Engagement & Strategy Production, should deepen public enlightenment and strategic communication on the new tax laws, particularly regarding the controversies surroundingthe gazetted laws and those passed by the National Assembly. The spread of fake news and misinformation about tax laws should also be countered by engaging relevant stakeholders, particularly small and medium-scale enterprises operating in informal sectors and rural settings.
- Ensure due process is adhered to in re-gazetting of the law: The Presidency should engage the National Assembly to reconcile the reported discrepancies between gazetted laws and those passed by the National Assembly, and thereafter follow the due process in re-gazetting the laws. This will lend legitimacy to the laws and enhance voluntary compliance.
- Deepen Engagement with Organised Private Sector (OPS): The Nigeria Revenue Service (NRS) must establish accessible platforms to engage and support members of the OPS over the implementation of the new tax laws and how they affect their businesses. Such regular engagement will be of mutual benefit because it will build trust and enhance compliance.
- Tax consultants: Tax consultants must provide objective advisory and technical assistance to taxable individuals and companies to ensure voluntary compliance with the new tax laws.
- Civil Society Organisations and Media: CSOs and the media should scale up public education to ensure public understanding of the new tax laws. The CSOs and the media should eschew fake news, but where necessary,engage the tax authorities for clarification and peaceful settlement of disputes between tax administrators and taxpayers.
Conclusion
On January 1st, 2026, implementation of the four tax laws signed in 2025 commenced. This is despite controversies surrounding the laws following the discovery of discrepancies between the gazetted laws and those passed by the National Assembly. The controversies and conflicts surrounding tax laws are rooted in the unequal power relations that shape reform processes and outcomes in Nigeria. In the case of the tax reform, the dominant powers of the Presidency explain why implementation of the tax laws commenced despite controversies surrounding it. However, all stakeholders need to work together to resolve the controversies surrounding the laws promptly, ensuring the objective of the tax reforms is realised.
(Dr Chukwuma Okoli is an Associate Consultant at Nextier and a Lecturer at the Political Science Department at Nnamdi Azikiwe University, Awka, Nigeria; while Dr Ndu Nwokolo is a Managing Partner at Nextier and an Honorary Fellow at the School of Government at the University of Birmingham, UK)
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