Nigeria’s Tax Reforms Drive Record Growth, with Non-Oil Taxes Leading the Charge
The Federal Inland Revenue Service (FIRS) has announced an ambitious ₦25.2 trillion revenue target for 2025, following an impressive performance in 2024, where the agency generated ₦21.6 trillion—a 76% increase from ₦12.474 trillion in 2023. This milestone underscores Nigeria’s shift towards non-oil revenue generation, as non-oil taxes contributed 73.4% of total revenue, exceeding targets by 28%, according to Zacch Adedeji, Executive Chairman, FIRS.
At the FIRS Strategic Management Retreat in Abuja, Adedeji highlighted that the tax agency’s performance surpassed the ₦19.4 trillion revenue target for 2024, reflecting a strong compliance push, tax digitalization, and strategic policy reforms.
The Rise of Non-Oil Revenue – A Game Changer
Historically, Nigeria relied heavily on oil revenues, but global market fluctuations and declining crude production have forced a revenue diversification strategy. The non-oil sector, now driving revenue growth, recorded remarkable tax collections across key segments:
- Value Added Tax (VAT): With automated tax invoicing and stricter enforcement, VAT collections surged past expectations, reaching ₦4.8 trillion in 2024, compared to ₦3.64 trillion in 2023.
- Company Income Tax (CIT): Multinational corporations and SMEs contributed significantly, as CIT revenue hit ₦5.2 trillion, a record-breaking 30% increase from the previous year.
- Stamp Duties & Capital Gains Tax: Enhanced compliance tracking boosted collections in these categories, adding ₦1.8 trillion to the total revenue pool.
Digitalization and Tax Compliance – The FIRS Effect
One of the major drivers of FIRS’ success has been its aggressive digitalization strategy, ensuring that tax evasion loopholes are closed. The TaxPro Max platform, introduced in 2022, became a game changer, streamlining:
- Real-time tax filing and payments
- Automated assessments for VAT and WHT
- Improved audit and compliance tracking
The impact was evident in revenue integrity and increased taxpayer participation, leading to a 20% rise in the number of registered taxpayers in 2024.
Challenges and 2025 Roadmap
Despite these successes, the journey to ₦25.2 trillion in 2025 is not without hurdles. Some pressing concerns include:
- Tax Compliance Resistance: Businesses, particularly in the informal sector, continue to resist full compliance, requiring stronger enforcement.
- Macroeconomic Volatility: Inflation, currency fluctuations, and economic uncertainties may impact tax collection efforts.
- Infrastructure Gaps: Expanding digital tax platforms requires improved internet access and technology adoption nationwide.
To meet the 2025 revenue target, FIRS aims to:
- Expand the tax net by onboarding more businesses, particularly in the informal and SME sectors.
- Enhance enforcement mechanisms, including stronger legal actions against tax defaulters.
- Optimize digital revenue collection by leveraging AI-driven tax audits and compliance monitoring.
A Sustainable Revenue Model for Nigeria
The FIRS’ success in 2024 signals a new era of economic sustainability through non-oil revenue generation. If the momentum continues, the ₦25.2 trillion target in 2025 is within reach, positioning Nigeria for fiscal resilience and long-term economic growth.
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