Nigeria continues to innovate in one area we have done well: tax collection. Yes, “the Federal Inland Revenue Service (FIRS) said it generated N10.1 trillion in 2022, a record revenue for the agency and the highest in Nigeria’s tax history.” If you run a company in Nigeria, you will understand how digitally transformed and efficient they have become.
“N146.27 billion is the total value of certificates issued by the Service to private investors and NNPC for road infrastructure under the Road Infrastructure Development Refurbishment Investment Tax Credit Scheme created by Executive Order No. 007 of 2019.
“The report also stated that the N10.1 trillion is exclusive of tax waived on account of various tax incentives granted under the respective laws, which amounted to N1,805,040,163,008,” the tax agency said in a statement on Monday.
In the past, I have written thus: “As I have noted here many times, the most innovative unit in Nigeria’s bureaucracy is the tax agency. I mean, give those men and women credit; they are innovating and moving really fast to hit revenue collection milestones. You are free to call them wizards of finding what belongs to the commonwealth!”
There was an email they sent on January 2, 2023 to companies. When I received it, I was like “really, the government is already up and running on Jan 2”. People, if Nigeria deploys 100% of the commitment it has put on collecting taxes from companies to help those companies grow, our GDP should be up by 50% now from the 2010 number.
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I commend FIRS for breaking tax collection records even as I challenge it to also work with its sister agencies to deepen the enabling environments so that the companies can make more money to be taxed.
Indeed, a world where companies in Nigeria pay about 74 different taxes and fees will not help FIRS in the long-term as most of the firms will die.
The Chief Consultant of B. Adedipe Associates Limited, Dr Biodun Adedipe, said that Nigerian manufacturers are confronted with about 74 different taxes from their factory to the market and down to the final consumer.
Adedipe disclosed this while speaking at this year’s edition of the FirstBank Nigeria Economic Outlook.
He also used the occasion to urge the Federal Government to do something about the ease of doing business to make the country more globally competitive.
Nigeria’s Tax Agency, FIRS, Said it Generated Historic N10.1trn Revenue in 2022
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The real deal is personal income tax (PIT), not really company tax. Our operating environment is not really attractive for the high company tax we command. By lowering the company tax and reforming the personal income tax, with a new minimum wage regime, we will be scoring lots of fantastic goals, without losing anything.
What we currently have is a situation where government is announcing improved tax receipts, while the citizens feel that nothing positive is happening in their lives. With lower company tax, you attract more investments, create more jobs with better wages, and then collect your money via PIT.