Nigeria has a population of over 170 million and is Africa’s largest economy, with a GDP of 378 billion USD in 2017. The government debt amounted to 16% of the GDP in that same year. In spite of being the largest economy on the continent, 69% of the country’s population falls below the poverty line. The most recent data on tax-to-GDP ratio reveals it being at 14% in 2013.
The country is richly endowed with natural resources and this, combined with poor tax policies, has resulted in the fact that oil tax constitutes 73% of government revenues. This makes the country largely dependent on extractive revenues and vulnerable to the fluctuations of international prices. As part of new efforts at diversifying revenue sources there now is renewed emphasis on taxation.
The tax administration system in Nigeria is characterized by a low capacity and low level of enforcement as well as is suffering from leakages arising from corruption of tax officials, under assessments, under-filing, and under-reporting. A policy for the collection of tax from the informal sector is lacking, resulting in a wide tax gap and general low levels of tax compliance.
Recently, the Federal Ministry of Finance has commenced a participatory process of establishing a Presumptive Tax Regime to effectively tax the informal sector, while Nigeria’s Joint Tax Board (JTB) has commenced the process of harmonizing the various (about 85) different taxes levied across the federation to avoid multiple taxation and criminalizing the collection of taxes by non-statutory bodies. The introduction of a Tax Identification Number (TIN), which allocates a number to an individual as a condition for participation in certain economic activities, has brought previously excluded persons into the tax net.
Due to the dwindling revenue collected from the extractive sector, the Nigerian government is planning to tax luxury goods such as private jets, yachts, alcoholic beverages and expensive cars. Additionally, efforts are made to bring more people into the tax net, such as the VAIDS programme.

Lead Organization

CISLAC is a non-governmental, non-profit legislative advocacy, lobbying, information sharing and research organization in Nigeria.