President Bola Tinubu is working on a significant change that will remove the responsibility of revenue collection from various federal agencies. Instead, the collection of revenue will be managed by a new centralized body known as the Nigeria Revenue Service. This agency will take over from numerous revenue-generating bodies, including the Nigerian Customs Service and Nigerian Ports Authority, among others.
The reason for this major overhaul is rooted in the need to improve the efficiency of tax and revenue collection. Nigeria has struggled with a low tax-to-GDP ratio, one of the lowest in Africa and the world, and this has led to constant financial challenges for the government. By centralizing revenue collection, the Federal Government hopes to ensure that all entities that owe taxes or fees to the government pay their fair share. This move is part of a broader set of tax reforms aimed at fixing the country’s revenue problems, allowing the government to better fund public services and infrastructure projects.
These changes were formally initiated when President Tinubu sent a set of executive bills to the National Assembly for review. These bills include the Nigeria Revenue Service (Establishment) Bill, which aims to replace the existing Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service. This new body will be responsible for assessing, collecting, and managing all revenue due to the government.
The overhaul in the system comes as part of broader fiscal reforms, which have been long overdue. Nigeria’s over-reliance on borrowing to fund public spending has created a vicious cycle of fiscal deficit, leaving the government financially strained. The introduction of a single agency to collect revenue is intended to resolve some of these issues. The expectation is that this new system will allow the government to collect more revenue, address the shortfall in public finances, and avoid further excessive borrowing.
One of the most striking aspects of the reform is that many agencies that previously had the dual responsibility of regulating their sectors and collecting revenue from them will now be limited to their core functions. For example, agencies like Nigerian Customs, the Nigerian Ports Authority (NPA), and over 60 others will now focus exclusively on their original mandates. The collection of revenue, which often created conflicts of interest or inefficiencies, will be transferred to the newly formed Nigeria Revenue Service. An official from the presidency clarified that this move is not a merger of agencies but a redistribution of functions. Customs, for example, will no longer collect revenue but will focus solely on trade facilitation and anti-smuggling operations, while the Nigeria Revenue Service will handle the financial aspects.
This model mirrors that of other advanced economies like the United States and the United Kingdom, where centralized revenue bodies exist to ensure that taxes and other government revenues are collected uniformly. The goal is to enhance transparency and accountability, reducing the chances of financial leakages that have plagued Nigeria’s revenue collection system for years.
The proposed law to establish the Nigeria Revenue Service was detailed in a letter read aloud by Senate President Godswill Akpabio and Speaker of the House of Representatives Tajudeen Abbas during a plenary session. Alongside this bill, three other bills were submitted under the umbrella of fiscal and tax reforms. These included the Nigeria Tax Bill, which aims to provide a unified framework for taxation in Nigeria, and the Nigeria Tax Administration Bill, which seeks to streamline and clarify the legal processes surrounding tax collection. Another significant bill is the Joint Revenue Board (Establishment) Bill, which will create a tax tribunal and the Office of the Tax Ombudsman to manage disputes that arise within the revenue system.
President Tinubu is confident that these reforms will yield substantial benefits for the country. He believes that once these bills are passed into law, they will encourage investment, increase consumer spending, and help Nigeria’s economy grow by ensuring that all taxable entities are paying their fair share. He also sees these reforms as a means of creating a fairer and more efficient tax system that will be less burdensome on small businesses and the poor, while ensuring that wealthier individuals and larger corporations contribute more to the country’s coffers.
Speaker Tajudeen Abbas echoed these sentiments, stating that these bills are a reflection of the administration’s efforts to bring about sustainable economic growth. He also confirmed that the House would consolidate several existing bills, including those related to fiscal responsibility, into a broader legislative framework that would ensure prudent management of national resources and long-term economic stability.
At the heart of these reforms is a recognition of Nigeria’s dire need for a stronger revenue base. For many years, the country has relied on incremental changes to its tax system, but these changes have failed to provide the level of revenue necessary to sustain its economy. Now, with a new approach, the government is looking to make larger, more impactful reforms that will protect vulnerable groups and ensure that those who are able to pay more taxes do so.
The reforms are based on the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee led by Taiwo Oyedele. This committee’s work is central to the reform agenda, as it seeks to streamline Nigeria’s tax system, reducing the number of taxes while increasing efficiency. The committee has proposed reducing the number of federal taxes from 62 down to just nine, thereby simplifying the system and making it easier for businesses and individuals to comply.
In a statement, Oyedele emphasized that Nigeria cannot continue to celebrate minor progress in revenue generation, as the base from which the government is working is too small to sustain meaningful growth. He stressed the importance of shifting the tax burden away from low-income earners and small businesses, who have traditionally borne the brunt of Nigeria’s tax system, and ensuring that the wealthier segments of society contribute more.
The creation of the Nigeria Revenue Service is central to this strategy, as it will be responsible for collecting all types of government revenue, including company income tax, personal income tax, value-added tax, stamp duties, and other levies. By consolidating these functions within a single agency, the government hopes to make the process more transparent and reduce the opportunities for corruption and inefficiency.
However, not everyone is supportive of the new system. Some industry stakeholders, particularly within the Nigerian Customs Service, have raised concerns. Customs officials argue that revenue collection has long been part of their core functions and that outsourcing this responsibility could lead to inefficiencies. Dr. Eugene Nweke, a former president of the National Association of Government Approved Freight Forwarders, noted that revenue collection is a complex process that requires technical expertise, and shifting this responsibility to another agency could result in problems. He recommended that, instead of removing this function from Customs, the government should focus on training and improving the systems already in place to ensure more effective revenue collection.
Others, like Taiwo Fatobilola, the National Public Relations Officer for the Association of Registered Freight Forwarders of Nigeria, expressed skepticism about the government’s ability to successfully implement this new system. He pointed out that training new staff to take over Customs’ long-standing role in revenue collection would be a massive undertaking and doubted whether it could be done efficiently.
Despite these concerns, the Nigerian government seems determined to push ahead with the reforms. The idea is that by consolidating revenue collection into one agency, the country can create a more efficient system that will not only generate more revenue but also help to protect small businesses and low-income earners from unfair tax burdens. By improving efficiency and fairness in the system, the government hopes to overcome the financial challenges it has faced for years, and ensure that the country has the resources it needs to invest in public services and infrastructure for the future.