In a move aimed at overhauling Nigeria’s revenue collection system, President Bola Tinubu has introduced plans to bar revenue-generating agencies from collecting funds on behalf of the Federal Government.
This shift would see the establishment of a single entity, the Nigeria Revenue Service, tasked with managing all revenue collection activities.
The proposed reform, part of a comprehensive tax reform package, would impact key agencies such as the Nigerian Customs Service, Nigerian Ports Authority, and over 60 other entities. These bodies would no longer handle revenue collection duties, which will instead be centralized under the new Nigeria Revenue Service. The initiative seeks to optimize tax collection and reduce inefficiencies across the board.
Streamlining Revenue Collection
The reforms were unveiled as the President transmitted four executive bills to the National Assembly, including the Nigeria Revenue Service (Establishment) Bill. This new law aims to rename the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service, marking a shift in how the government handles its financial inflows. The bill will remove the revenue collection arm from existing agencies, allowing them to focus on their core mandates such as trade facilitation.
According to a senior official at the Presidency, “This is not a merger. The new agency will be similar to revenue agencies in the US or UK, which collect all government revenues. Other agencies will focus on their core duties.”
Improving Nigeria’s Tax-to-GDP Ratio
One of the major goals of the proposed reforms is to increase Nigeria’s tax-to-GDP ratio, which is currently one of the lowest in the world, falling below the African average. By implementing the Nigeria Revenue Service, the government aims to hit a minimum tax-to-GDP ratio of 18%, reducing the country’s reliance on borrowing and addressing the persistent fiscal deficit.
In addition to the name change, three other tax reform bills were submitted, including the Joint Revenue Board (Establishment) Bill, which seeks to create a Tax Tribunal and a Tax Ombudsman to handle disputes related to tax administration.
Reactions to the Proposal
The plan has elicited mixed reactions from various stakeholders. Dr. Eugene Nweke, former National President of the National Association of Government Approved Freight Forwarders, criticized the proposal, arguing that customs globally are responsible for both revenue collection and anti-smuggling operations. He warned that outsourcing this function could lead to inefficiencies.
Similarly, Taiwo Fatobilola, National Public Relations Officer of the Association of Registered Freight Forwarders of Nigeria, expressed doubts about the feasibility of the plan, questioning the government’s capacity to train new personnel for revenue collection.
However, supporters of the reform believe it will enhance transparency and improve Nigeria’s overall fiscal health, fostering investment and boosting economic growth. President Tinubu has emphasized that the bills, when passed, will create a more efficient, taxpayer-friendly system, driving both compliance and economic development.