How Nigeria can improve tax collection efficiency

Nigeria's Federal Inland Revenue Service has set a target of twelve trillion naira in tax revenues for this year. Taiwo Oyedele, Partner and Africa Tax Leader at PriceWaterHouseCoopers, recently discussed the milestones achieved in tax revenue collection in Nigeria on a CNBC Africa interview. Oyedele highlighted the significance of surpassing the ten trillion naira mark, with non-oil revenue hitting around 5.6 trillion and oil revenue reaching 4 trillion. The country saw a record collection of over 10 trillion naira in 2022, with 59% coming from non-oil revenue and 40% from oil revenue. The improved performance in oil revenue was partly attributed to the surge in crude oil prices due to the crisis in Russia and Ukraine. However, challenges like oil theft still hindered optimal revenue collection. Despite the progress, Nigeria needs to enhance tax collection efficiency to fund its budget adequately. Oyedele emphasized the importance of capacity building, technology utilization, and stakeholder engagement in driving tax revenue growth. He stressed the need for harmonization of revenue collection agencies, leveraging technology for data-driven tax collection, and enhancing coordination among government bodies to optimize revenue generation. Oyedele also highlighted the significance of collaboration between the federal government and subnational entities, citing the joint tax audit system between the Federal Inland Revenue Service and Lagos State as a positive step. Oyedele urged for a nationwide collaborative effort to maximize tax revenue collection. The interview also touched upon concerns in the private sector regarding proposed amendments in the finance bill. Stakeholders expressed reservations about the lack of stakeholder engagement in the amendment process and raised apprehensions about higher taxes burdening businesses without sufficient accountability on previous tax spending. Oyedele emphasized the need for a balanced approach to tax policy to prevent overburdening the private sector and potentially stalling economic growth. As Nigeria aims to achieve its ambitious tax revenue target for this year, continued efforts in capacity building, technology adoption, stakeholder collaboration, and transparent tax governance are crucial for sustainable revenue generation and economic development.