Oyedele: Stronger Tax Compliance Critical to Nigeria’s Sustainable Revenue Growth Despite Ongoing Reforms

Nigeria is still falling short of its revenue generation potential despite ongoing reforms aimed at strengthening the country’s tax system, according to Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele.

Speaking at a recent tax policy event, Oyedele said while significant progress has been made in reforming Nigeria’s fiscal landscape, the country continues to struggle with low tax revenue largely because of poor compliance, limited taxpayer awareness, and a narrow tax base.

His remarks underscore an important challenge facing Africa’s largest economy: generating sufficient domestic revenue to finance sustainable development without placing additional tax burdens on compliant businesses and citizens.

As governments across the world seek more sustainable ways to finance infrastructure, healthcare, education, climate resilience, and social protection programmes, strengthening tax compliance has become an increasingly important governance issue. Rather than relying heavily on borrowing or increasing tax rates, many countries are focusing on improving tax administration, broadening the tax net, and encouraging voluntary compliance.

Tax Compliance Rather Than Higher Taxes

According to Oyedele, Nigeria’s tax challenge is not necessarily that tax rates are too low, but that many individuals and businesses that should be paying taxes remain outside the formal tax system.

He explained that improving voluntary compliance could significantly increase government revenue without introducing additional taxes or raising existing rates.

This approach reflects a broader philosophy behind Nigeria’s ongoing tax reforms, which seek to simplify tax administration, eliminate multiple taxation, improve transparency, and encourage more businesses to participate in the formal economy.

For compliant taxpayers, expanding the tax base could also help create a fairer system where the responsibility for financing public services is shared more equitably.

Why Tax Revenue Matters

Tax revenue remains one of the most sustainable sources of public finance for any country.

Unlike debt financing, which creates future repayment obligations, tax revenue provides governments with recurring resources to invest in national development priorities.

These include:

• Education
• Healthcare
• Road infrastructure
• Public transportation
• Water and sanitation
• Climate adaptation projects
• Renewable energy investments
• Security
• Social welfare programmes

For Nigeria, improving tax collection has become increasingly important as governments seek to reduce dependence on oil revenues while expanding investment in critical sectors of the economy.

A stronger domestic revenue base also improves fiscal stability and reduces exposure to fluctuations in global commodity prices.

Responsible Tax Practices and Corporate Governance

Tax compliance is increasingly recognised as an important component of Environmental, Social and Governance (ESG) principles.

Responsible businesses are expected not only to generate profits but also to contribute fairly to the societies in which they operate through transparent and responsible tax practices.

Companies that maintain strong tax governance demonstrate accountability to shareholders, regulators, customers, and the wider public.

They also help create the financial resources governments need to provide public services and invest in long-term economic development.

As ESG reporting continues to evolve globally, responsible tax behaviour is becoming an increasingly important measure of corporate sustainability.

Building Public Trust

One of the recurring challenges in tax administration is public confidence.

Many citizens and businesses are more willing to comply with tax obligations when they believe public funds are managed transparently and used effectively.

Strengthening accountability, improving public service delivery, and demonstrating how tax revenues translate into visible development outcomes can help encourage voluntary compliance.

Public education also plays an important role.

Many small businesses, particularly those operating in the informal sector, remain unfamiliar with tax obligations or perceive the system as overly complex.

Improving taxpayer education and simplifying compliance processes can therefore contribute to higher revenue collection while reducing administrative burdens on businesses.

Ongoing Tax Reforms

Nigeria has introduced several reforms aimed at modernising its tax system and creating a more business-friendly environment.

Recent efforts have focused on simplifying tax administration, harmonising tax laws, reducing duplication across different levels of government, and improving digital tax collection systems.

These reforms also seek to enhance the ease of doing business by reducing unnecessary compliance costs while encouraging more businesses to formalise their operations.

A more efficient tax system can strengthen investor confidence by providing greater certainty, consistency, and transparency for businesses operating in Nigeria.

Related: The New Tax Law and the Deepening Poverty in Nigeria: Who Really Bears the Cost?

Supporting Sustainable Development

Improving tax compliance extends beyond revenue generation.

It directly supports the achievement of national development objectives by providing governments with resources needed to finance essential public services and infrastructure.

Reliable domestic revenue enables countries to invest in climate resilience, renewable energy, healthcare, education, agricultural development, digital infrastructure, and social protection programmes.

These investments contribute to inclusive economic growth while reducing reliance on external borrowing and development assistance.

For developing economies, stronger domestic resource mobilisation is increasingly viewed as a cornerstone of sustainable development.

Expanding the Tax Base

One of the priorities highlighted by tax reform advocates is expanding Nigeria’s tax base.

This involves bringing more eligible individuals and businesses into the formal tax system rather than increasing the burden on those already complying.

A broader tax base creates a more balanced system where revenue generation is shared more fairly across the economy.

It also reduces pressure on compliant taxpayers who often shoulder a disproportionate share of government revenue collection.

Digital technologies, improved taxpayer registration systems, and stronger collaboration among government agencies are expected to play an important role in achieving this objective.

A Shared Responsibility

Strengthening Nigeria’s tax system requires collaboration between government, businesses, professional bodies, and citizens.

Government institutions must continue improving transparency, efficiency, and accountability in revenue administration.

Businesses should embrace responsible tax practices as part of good corporate governance, while citizens have a role to play by meeting their tax obligations and participating in the formal economy.

Professional organisations, tax practitioners, and financial institutions also contribute by promoting awareness, supporting compliance, and helping taxpayers understand evolving regulations.

Looking Ahead

Nigeria’s ongoing fiscal reforms represent an important opportunity to build a more efficient, transparent, and equitable tax system capable of supporting long-term economic growth.

While challenges remain, improving voluntary compliance, expanding the tax base, and strengthening public trust could significantly increase domestic revenue without placing additional financial pressure on compliant taxpayers.

As the country continues its journey toward sustainable economic development, responsible tax governance will remain a critical pillar for financing public services, supporting infrastructure development, attracting investment, and building a more resilient economy.

Ultimately, stronger tax compliance is not solely about increasing government revenue—it is about creating a fairer fiscal system where businesses and citizens contribute to national development while benefiting from improved public services and stronger institutions.

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