Nigeria moves to boost tax-to-GDP ratio to 18% amid fiscal reform drive

The Federal Government is targeting an increase in Nigeria’s tax-to-GDP ratio to 18 percent as part of sweeping fiscal reforms aimed at modernising the country’s tax system, boosting revenue generation and improving economic competitiveness.

…as finance minister plans company tax cut to 25%

Kashim Shettima, Vice President, represented by Tope Fasua, Special Adviser to President Bola Tinubu on Economic Affairs, disclosed this in Abuja at the 28th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria, where policymakers and tax experts highlighted ongoing reforms under President Bola Ahmed Tinubu’s administration.

According to Fasua, Nigeria’s tax-to-GDP ratio has improved from about 6 percent three years ago to 10 percent currently, with government now targeting 18 percent in the medium term.

“The idea is to be able to move Nigeria’s tax-to-GDP ratio from 10 percent. The destination in the interim is 18 percent,” Fasua said.

He described the ongoing reforms as the most comprehensive overhaul of Nigeria’s tax system in more than 35 years, noting that President Tinubu inaugurated the Fiscal Policy and Tax Reform Committee shortly after assuming office in May 2023 to address the country’s revenue generation challenges and build a more sustainable fiscal structure.

“The idea is not merely to generate revenue. You also have to build trust with the people,” Fasua said.

According to him, the reforms seek to reduce multiple taxation, streamline tax laws and improve Nigeria’s business environment. Fasua also said many Nigerians remain unaware of some pro-poor aspects of the reforms, including tax exemptions for individuals earning N1 million and below annually and small businesses with turnover below N100 million.

“We have to continue to educate people because many Nigerians still do not know these reforms are designed to support the poor and encourage enterprise,” he said.

Speaking earlier at the conference, Taiwo Oyedele, Minister of Finance said the reforms were designed to create a globally competitive, transparent and sustainable fiscal framework capable of supporting long-term economic growth.

According to the minister, the reforms seek to simplify taxation, improve compliance, reduce pressure on low-income earners and encourage investment.

“We are moving from a framework driven by discretion and fragmentation to one anchored on clarity, certainty and accountability,” the minister said.

Oyedele noted that Nigeria’s tax system had for years been weakened by poor compliance, multiplicity of taxes, high levels of informality and insufficient revenue generation relative to the country’s development needs.

He explained that the reforms are intended to strengthen the real economy while rebuilding trust between government and citizens.

Among the measures highlighted were exemptions for minimum wage earners from personal income tax, tax reliefs for small businesses, expansion of VAT input credits and efforts to modernise tax administration systems across the country.

The finance minister also disclosed plans to reduce company income tax from 30 percent to 25 percent in a bid to improve Nigeria’s attractiveness to investors and support enterprise growth.

In his remarks, Innocent Ohagwa, 17th President and Chairman of Council of CITN described the reforms as a major turning point for Nigeria’s fiscal future.

According to Ohagwa, the reforms are central to the Federal Government’s ambition of growing Nigeria into a $1 trillion economy by the end of the decade.

Ohagwa said Nigeria had historically struggled with low revenue generation and high debt servicing obligations due to a weak and fragmented tax system.

He noted that the government had reduced the country’s revenue-to-debt servicing ratio from 120 percent in December 2022 to 68 percent by the end of 2025 through fiscal reforms and improved revenue mobilisation.

“By streamlining our tax code and broadening the tax base, we are generating the lifeblood necessary to improve our national balance sheet,” he said.

Caroline Ndubisi, Chairperson of the conference, called for stronger collaboration among tax professionals and policymakers to build a tax system that is fair, transparent and globally competitive.

She stressed the need for digital transformation, taxpayer education and inclusive policies capable of supporting businesses and sustainable economic growth. Also speaking at the conference, Adams Oshiomhole advocated higher taxes for wealthy individuals and luxury asset owners, arguing that taxation should play a stronger role in reducing inequality and funding public services.

“If you earn more than N20 million a month and own a private jet, government can take as much as 70 percent. That is not anything new; it happens in Europe and other developed economies,” Oshiomhole said.

The conference brought together tax practitioners, government officials, lawmakers and private sector stakeholders to deliberate on positioning Nigeria’s tax system for sustainable growth and global relevance.