How technology can help address tax gaps in Nigeria

Technology has become an indispensable tool in addressing tax gaps and ensuring compliance with evolving and complex tax regulations in Nigeria. Olufemi Babem, Partner and Tax Technology lead at KPMG Nigeria, emphasizes the importance of leveraging technology to improve tax collection efficiency and transparency. In a recent interview with CNBC Africa, Babem discussed how innovative technological solutions are reshaping the landscape of tax compliance in Nigeria. One of the key challenges faced by tax authorities in Nigeria is the large informal sector, which accounts for a significant portion of economic activity but often goes unreported. Babem highlighted how technology can help bridge this gap by enabling better tracking and monitoring of transactions in the informal economy. By leveraging data analytics and digital platforms, tax authorities can gain insights into previously untapped revenue streams and identify potential areas of tax evasion. Furthermore, Babem underscored the role of technology in enhancing taxpayer education and awareness. Digital tools can simplify the tax filing process and provide real-time guidance to taxpayers, promoting greater compliance and reducing the likelihood of errors. By equipping taxpayers with the necessary information and resources, technology empowers individuals and businesses to fulfill their tax obligations accurately and efficiently. In addition to improving tax collection efficiency, technology also plays a crucial role in enhancing transparency and accountability within the tax system. Babem pointed out how digital platforms enable real-time monitoring of tax transactions, reducing the risk of fraud and corruption. By establishing a digital trail of tax activities, authorities can track the flow of revenue and ensure that funds are allocated appropriately. Overall, Babem emphasized the transformative impact of technology on tax compliance in Nigeria. By embracing innovative solutions and digital tools, tax authorities can streamline processes, increase revenue collection, and foster a culture of transparency and accountability. As tax regulations continue to evolve and become more complex, technology remains a vital enabler of effective tax administration in Nigeria.