Taiwo Oyedele, Chair of the Presidential Committee on Fiscal Policy and Tax Reforms, has revealed a troubling reality: Nigeria is capturing just 30% of its potential tax revenue, leaving a 70% shortfall—one of the most severe globally.
Speaking at the 27th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), Oyedele attributed this gap to deeply entrenched inefficiencies within the tax structure. He highlighted flaws such as policy inconsistencies, abuse of exemptions, and weak oversight as key factors undermining revenue performance.
One of the major loopholes, he noted, lies in the misuse of import waivers and duty exemptions, which allows individuals and corporations to bypass proper tax contributions.
“Nobody should benefit from incentives or tax deductions on imports unless they’ve fully met their duty obligations,” he insisted.
To tighten oversight, Oyedele advocated the deployment of sophisticated digital tax systems that enable real-time tracking of inventories, transactions, and lifestyle indicators that may reveal undisclosed income.
He described how advanced analytics can expose discrepancies—such as individuals living lavishly despite declaring minimal income—and hold them accountable.
Another area of concern is corporate tax avoidance, particularly in the oil and gas industry. Oyedele disclosed that although some firms face statutory tax rates nearing 85%, many have not made significant payments in over a decade—due to aggressive tax planning and unchecked incentives.
He criticized the ethical implications of this, arguing that companies profiting from Nigeria’s economy must contribute fairly to its development.
Crackdown on Unethical Tax Agents
Oyedele also took aim at unscrupulous tax practitioners, accusing some of facilitating tax evasion through deceptive schemes and a lack of professional integrity.
He proposed strict licensing standards for tax agents, requiring proof of technical competence, personal tax compliance, and ethical conduct. Under the proposed system, all filings would need to be traceable to the responsible agent.
“Agents who mislead clients—such as claiming VAT and withholding tax cancel each other out—must face disciplinary consequences,” he warned.
He further called for every business, regardless of size, to have a dedicated, registered tax advisor. Drawing examples from countries like the U.S., Malaysia, Australia, and South Africa, he urged Nigeria to regulate both individual agents and the bodies that accredit them.
Despite anticipating resistance, Oyedele maintained that plugging fiscal leakages and enhancing tax transparency are essential to Nigeria’s financial survival.
BoI Backs Reforms, Urges Participation
Also speaking at the event, Abimbola Oyelola, Chief Economist at the Bank of Industry (BoI), emphasized that the reforms require collective ownership.
Representing Olusupo Olusi, the bank’s Managing Director, Oyelola stressed that the success of tax reform hinges on the public’s active engagement, not just passive observation.
“If we want to shape the future, we must help build it—complaints alone are not enough,” she said.
The BoI reaffirmed its support for national industrial growth by providing financial and advisory resources to businesses across sectors.
Correcting VAT Misconceptions
Oyedele also addressed common misunderstandings around Nigeria’s 7.5% VAT rate, stating that many small business owners mistakenly believe they’re responsible for the tax, when it’s actually paid by their customers.
He noted that VAT participation can benefit SMEs through input tax credits, especially since many basic consumer goods are now zero-rated or VAT-exempt, thereby reducing the burden on lower-income households.
Although there were earlier suggestions to raise VAT to 15%, Oyedele clarified that the government has decided to maintain the current rate for now, until protective measures for the vulnerable are in place.
Strengthening Personal Income Tax & Cross-Border Vigilance
He also spotlighted Nigeria’s personal income tax system, noting that most state authorities still rely on outdated methods and lack sufficient data for effective collection.
Collaborations are underway with the Joint Tax Board to make the process more transparent and user-friendly.
Oyedele further warned about the dangers of inconsistent VAT rates across West African countries, which could encourage tax arbitrage and smuggling.
BoI Champions Innovation as Catalyst for Growth
In closing remarks, Oyelola highlighted BoI’s focus on supporting young entrepreneurs and tech innovators through startup hubs and digital incubators. She shared that the bank currently runs five innovation centers in two major cities, with plans to expand nationwide.
She called on Nigerians—whether professionals, entrepreneurs, or private citizens—to become active participants in the country’s tax transformation.
“Paying tax should be a symbol of national pride—not a punishment,” she said. “It’s time we stop spectating and start shaping the future we want.”
