President Bola Tinubu has introduced a sweeping reform aimed at transforming Nigeria’s revenue collection system by centralizing all collection activities under a new agency – the Nigeria Revenue Service (NRS). This proposal marks a significant shift in the management of government revenues, with the goal of increasing efficiency and addressing the country’s chronic revenue shortfalls.
Under the proposed reforms, over 60 revenue-generating agencies, including the Nigerian Customs Service (NCS) and Nigerian Ports Authority (NPA), will no longer be responsible for collecting revenue. Instead, the newly formed NRS will handle all revenue-related functions. The agencies will focus solely on their core responsibilities, such as trade facilitation and regulation.
A Response to Nigeria’s Revenue Crisis
Nigeria’s tax-to-GDP ratio currently sits below the African average, one of the lowest globally. This has led to fiscal deficits and heavy reliance on borrowing, which constrains the government’s ability to fund socio-economic development projects. With a target to raise the tax-to-GDP ratio to 18%, the Tinubu administration is pushing for comprehensive tax reforms, hoping to put the nation on a more sustainable financial footing.
The proposed changes were outlined in a series of executive bills forwarded to the National Assembly. These include the Nigeria Revenue Service (Establishment) Bill, which seeks to rename the Federal Inland Revenue Service (FIRS) and centralize all revenue collection activities under the NRS. According to a source from the Presidency, this move does not involve merging agencies but rather reallocates the revenue collection function to the new service.
“This reform is modeled after revenue agencies in the US and UK, where a single body handles all government revenue. Agencies like NIMASA, NPA, and Customs will remain focused on trade facilitation and regulation, while NRS will be tasked with revenue collection,” said the official.
A Comprehensive Reform Package
In addition to the establishment of the NRS, President Tinubu has submitted three other tax-related bills under the title “Transmission of Fiscal Policy and Tax Reform Bills.” These include:
- Nigeria Tax Bill: This bill aims to consolidate Nigeria’s fiscal framework for taxation.
- Nigeria Tax Administration Bill: Aims to provide a clear legal framework for tax administration, facilitating compliance and reducing disputes.
- Joint Revenue Board (Establishment) Bill: Seeks to establish the Joint Revenue Board, a Tax Appeal Tribunal, and the Office of the Tax Ombudsman to harmonize and resolve tax disputes.
President Tinubu expressed confidence that these bills, if passed, would not only enhance tax compliance but also stimulate investment, consumer spending, and overall economic growth. He stressed the importance of strengthening fiscal institutions and creating a transparent fiscal regime to foster long-term economic stability.
Reactions from Stakeholders
The proposed reforms have sparked debate among stakeholders in Nigeria’s revenue collection ecosystem. Dr. Eugene Nweke, a former National President of the National Association of Government Approved Freight Forwarders, expressed reservations about removing revenue collection from Customs.
“Customs worldwide are known for revenue collection. Outsourcing this function could introduce third-party complexities, and Customs is equipped with the technical expertise for this role,” Nweke stated.
Similarly, Taiwo Fatobilola, National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria, doubted the feasibility of the plan, questioning whether the government truly understands the technical demands of revenue collection.
On the other hand, Abdullahi Maiwada, National Public Relations Officer of the Nigeria Customs Service, said he was not aware of the proposed bill but acknowledged the significance of the matter.
A Step Towards Fiscal Sustainability
The proposed reforms are part of President Tinubu’s broader vision to address Nigeria’s revenue challenges and create a more efficient tax system. According to the Presidential Fiscal Policy and Tax Reforms Committee, led by Taiwo Oyedele, the goal is to reduce the number of taxes from 62 to a maximum of nine, ensuring that the tax burden is shifted away from vulnerable populations and small businesses while targeting the wealthy.
With these reforms, Nigeria aims to transition from incremental tax progress to a more robust and sustainable revenue system that supports national growth and development.
The coming months will reveal whether the National Assembly and various stakeholders can find common ground on these ambitious proposals, and whether the new Nigeria Revenue Service will mark the dawn of a more efficient and transparent tax collection era in the country.
