KEY POINTS

• The Senate passed bills to replace FIRS with a unified Nigeria Revenue Service and Joint Revenue Board, targeting inefficiency and corruption.
• Reforms aim to boost Nigeria’s 6% tax-to-GDP ratio amid inflation and oil revenue declines, leveraging technology for compliance.
• Two additional bills on tax policy and digital services await passage, critical for completing Tinubu’s fiscal transformation agenda.

The Nigerian Senate on Wednesday approved two pivotal tax reform bills aimed at restructuring the nation’s revenue framework, marking a critical step in President Bola Tinubu’s economic agenda.

The legislation seeks to repeal the Federal Inland Revenue Service (FIRS) Act and establish a Joint Revenue Board and Nigeria Revenue Service, designed to centralize and modernize tax administration.

Senate President Godswill Akpabio hailed the move, stating, “These bills will add immense value to governance and transform how taxes are collected and shared in Nigeria.”

The reforms target Nigeria’s low tax-to-GDP ratio of 6%—among the world’s lowest—by curbing leakages, harmonizing fragmented systems, and expanding the formal tax base. President Tinubu had submitted four bills in October 2024, with the remaining two set for deliberation on Thursday.

Tax reforms aim to tackle inflation, dependency on oil

The overhaul comes as Nigeria grapples with inflation at 33.2% and dwindling oil revenues, which historically funded 70% of the budget.

The new Nigeria Revenue Service will replace FIRS, criticized for inefficiency and corruption, while the Joint Revenue Board aims to resolve inter-agency conflicts between federal and state tax authorities. “Multiple taxation has stifled businesses. This law could ease burdens if implemented transparently,” said Lagos Chamber of Commerce CEO Chinyere Almona.

Economists warn that success hinges on addressing enforcement challenges. Only 40% of registered businesses comply with tax obligations, per National Bureau of Statistics data.

Channelstv reports that the bill introduces tech-driven solutions, including biometric taxpayer identification and real-time auditing, modeled after Kenya’s iTax system, which boosted collections by 30%.