While the current administration rolls out ambitious tax reforms aimed at widening the net for revenue generation and boosting a historically low tax-to-GDP ratio, there are concerns about an invisible barrier—a deeply entrenched trust deficit.
For decades, taxation has remained one of Nigeria’s most contentious public policy issues. This, according to analysts, stems from the fact that over time, the unwritten social contract between the state and its citizens has been fractured by opaque spending and minimal public return on investment.
As a result, many citizens developed negative attitude towards paying tax, viewing it less as a civic responsibility and more as another financial burden. Roads, public hospitals, and schools in many communities remain in poor state as they face chronic underfunding, while corruption scandals continue to dominate public discourse.
But one year after President Bola Ahmed Tinubu signed Nigeria’s most comprehensive tax reform laws in decades, government officials and tax professionals believe the country stands at a critical turning point.
The reforms have modernised tax administration, introduced new incentives for businesses and households, expanded digital tax systems and intensified taxpayer education. Yet experts say the reforms will ultimately succeed or fail depending on one crucial factor: public trust.
Experts who spoke with Pinnacle Daily maintained that while tax compliance is gradually improving, Nigeria still has a long journey ahead before voluntary tax payment becomes the norm rather than the exception.
Compliance Is Improving But Nigeria Is Still Far Behind
Speaking exclusively to Pinnacle Daily, the Head of Fiscal and Tax Reforms Division at the Nigeria Revenue Service (NRS), Femi Olarinde, said Nigeria has recorded measurable improvements in tax compliance over the past few years.
According to him, the gains did not happen by chance.
He attributed the progress to stronger tax administration, increased deployment of technology, improved taxpayer education, data-driven compliance initiatives and stronger collaboration among government institutions.
He also noted that reforms aimed at simplifying tax procedures while strengthening enforcement have encouraged more Nigerians to comply with tax obligations.
However, Olarinde cautioned against celebrating too early.
Despite recent improvements, he said Nigeria’s tax-to-GDP ratio remains well below its true economic potential, indicating that a substantial portion of taxable economic activity still lies outside the formal tax system.
“Our tax compliance has improved significantly, but there is still considerable room for improvement,” he told Pinnacle Daily.
That assessment reflects one of the country’s biggest fiscal realities. Africa’s largest economy continues to generate far less tax revenue relative to the size of its economy than many comparable developing nations, leaving government heavily dependent on borrowing and oil revenues.
Technology Is Changing the Tax Landscape
The Acting Director of the Competent Authority Department at the Nigeria Revenue Service, Kehinde Kajesomo, told Pinnacle Daily that technology has become one of the strongest drivers of improved compliance.
He pointed to the digitisation of tax administration through platforms such as TaxPro Max, which is being replaced by Rev360, electronic invoicing systems and other digital compliance tools.
According to him, digital platforms have made tax administration more efficient while giving authorities better information to identify tax evasion and abusive practices.
He added that closer collaboration with taxpayers, expansion of the tax net and successive legislative reforms from the Finance Act 2019 to the Tax Reform Acts of 2025 have collectively strengthened Nigeria’s revenue administration.
Improved access to taxpayer information, he said, is also making it increasingly difficult for habitual tax evaders to remain outside the system.
While compliance is rising, both experts insist that Nigeria’s greatest challenge is not the tax laws themselves but citizens’ confidence in government.
Olarinde believes voluntary compliance will only become widespread when taxpayers are convinced that public revenue is being managed responsibly.
According to him, transparency, accountability and quality public service delivery remain the strongest incentives for voluntary tax payment.
“When taxpayers see that their taxes translate into tangible development outcomes, voluntary compliance naturally improves,” he said.
Kajesomo echoed the same position but went further.
He argued that government must demonstrate prudent management of public funds, aggressively curb corruption and reduce waste if it expects Nigerians to willingly pay taxes.
Perhaps most significantly, he said influential Nigerians must lead by example.
“The rich and politically exposed persons should pay their fair share of taxes,” he stressed.
Many economists argue that Nigeria’s tax culture has long been undermined by perceptions that ordinary salary earners bear a disproportionate share of the burden while wealthy individuals and politically connected businesses often escape effective taxation.
Oyedele: Nigeria Doesn’t Need More Taxes
That position mirrors concerns expressed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, during activities marking the 2026 National Tax Awareness Day.
Speaking in Abuja, Oyedele said one of Nigeria’s biggest challenges is the widespread belief that taxation merely allows government to take money from citizens.
According to him, the country’s priority should not be introducing additional taxes but ensuring that existing tax obligations are fairly enforced.
He maintained that millions of eligible taxpayers remain outside the tax system.
“We are still not getting enough revenue from tax. It is not about increasing tax, but making sure that those who are supposed to pay tax pay.”
He argued that a well-functioning tax system could dramatically improve infrastructure, education, healthcare and other public services.
“If Nigeria gets its tax system right, the level of development will be monumental.”
Another challenge confronting the reforms is misinformation.
The President of the Chartered Institute of Taxation of Nigeria (CITN), Innocent Ohagwa, said widespread misunderstanding continues to shape public opinion about the new tax laws.
According to him, many Nigerians mistakenly believe the reforms introduced numerous new taxes or were designed simply to generate more government revenue.
In reality, he explained, several provisions actually reduce the burden on individuals and businesses.
Among the major reliefs are rent relief for eligible taxpayers, zero-rated VAT on essential goods and services including food, education, healthcare and electricity transmission, as well as higher tax exemption thresholds for compensation received following loss of employment or personal injury.
For businesses, particularly small enterprises, the reforms offer even greater incentives.
Companies with annual turnover of not more than N100 million and fixed assets below N250 million are now exempt from Companies Income Tax, Capital Gains Tax and the Development Levy.
Additional incentives target agriculture, dairy production, aquaculture, cocoa processing and animal feed manufacturing to stimulate investment and strengthen food security.
Reform Must Go Beyond Legislation
Both experts interviewed by Pinnacle Daily agreed that the next phase of Nigeria’s tax reforms should focus less on passing new laws and more on implementing existing ones fairly and consistently.
Olarinde said priority should be given to broadening the tax base instead of increasing tax rates.
He advocated bringing more businesses into the formal economy, simplifying tax administration, lowering compliance costs, strengthening inter-agency data sharing and providing policy certainty for investors.
He also called for the elimination of inefficient tax incentives while protecting small businesses.
Kajesomo recommended stronger focus on personal income tax, greater autonomy and professionalisation of tax authorities, improved collaboration among revenue agencies and wider deployment of technology throughout Nigeria’s tax administration system.
He also advocated targeted incentives for productive sectors capable of creating jobs and stimulating economic growth.
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To deepen public understanding of the reforms, the Nigeria Revenue Service and the Chartered Institute of Taxation of Nigeria jointly launched the maiden National Tax Awareness Day.
The nationwide campaign took tax education beyond government offices into markets, schools, communities, media platforms and stakeholder forums across all 36 states, the Federal Capital Territory and even international districts in the United Kingdom and North America.
Tax professionals engaged traders, students and business owners on the benefits of taxation while explaining the provisions of the new reforms.
Officials say the initiative reflects a shift away from enforcement alone towards taxpayer education and voluntary compliance.
The Revenue Challenge Ahead
Nigeria’s growing emphasis on voluntary compliance comes as government pursues increasingly ambitious revenue targets.
As previously reported by Pinnacle Daily, the Nigeria Revenue Service is targeting N40.7 trillion in revenue for 2026, about 44 per cent higher than the N28.29 trillion collected in 2025 and more than six times the N6.4 trillion generated in 2021.
Achieving that target will depend heavily on expanding the non-oil tax base, strengthening compliance, deploying technology and improving enforcement.
Yet experts insist those measures alone will not be enough.
Without public trust, they argue, Nigeria’s tax reforms may struggle to achieve their full potential.
One year after Nigeria embarked on its most ambitious tax overhaul in decades, the country appears to have crossed an important milestone.
Digital technology is improving compliance. Tax laws have been modernised. Small businesses are receiving new incentives. Public education is expanding, while enforcement is becoming more sophisticated.
But perhaps the greatest challenge remains rebuilding the relationship between citizens and the state.
For millions of Nigerians, paying tax will become easier long before it becomes meaningful. Until taxpayers consistently see better roads, stronger schools, reliable hospitals, accountable leadership and prudent management of public resources, experts believe trust will remain the missing ingredient in Nigeria’s tax revolution.
The success of the reforms, therefore, may ultimately be measured not by how much government collects, but by how many Nigerians become convinced that paying tax is an investment in their country’s future rather than simply another compulsory deduction.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.