Nigeria targets 18% tax-to-GDP ratio through legal, digital restructuring

Nigeria is pursuing a two-pillar tax reform strategy aimed at raising its tax-to-GDP ratio to 18 percent, combining legislative restructuring with digital infrastructure to drive automated, data-led compliance.

Timothy Siloma, partner in tax reporting and strategy at PwC Nigeria, said the reform addresses long-standing structural weaknesses in the country’s revenue framework, including a heavy dependence on oil receipts, a low tax-to-GDP ratio, and a high cost of tax collection.

“The national tax-to-GDP ratio is about 10 percent, compared with the African average of 18 percent. Meanwhile, the cost of tax collection stands at 4 percent, far above the global average of 1 percent. This is clearly unsustainable,” Siloma said at a PwC webinar on Tax Technology and E-invoicing.

The first pillar of the reform focuses on simplifying the tax laws. Authorities plan to collapse roughly 60 separate taxes into a single-digit number of levies to reduce fragmentation and improve the ease of doing business.

“We want to push the national tax-to-GDP ratio to 18 percent, collapse approximately 60 taxes down to a single digit, and fundamentally improve the ease of doing business,” Siloma said.

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The second pillar centres on digital integration. Under this framework, tax authorities will rely on real-time data flows across agencies, creating a unified ecosystem that enhances visibility over economic activity.

“Data is the fuel for this digital engine, moving the country from fragmented tax systems to a single, integrated, data-driven ecosystem,” Siloma said.

Electronic filing and e-invoicing are key components of the digital strategy. Mohammad Bawa, e-invoicing project manager at the Nigeria Revenue Service (NRS), said the rollout began in 2024 and is being implemented in phases, starting with the country’s largest taxpayers.

He noted that many large taxpayers have met the go-live deadline, while others are at varying stages of integration. Once fully operational, the system will allow authorities to validate transactions in real time and reconcile declarations more effectively.

For companies, the reforms signal a shift away from manual processes. Kenneth Erikume, tax reporting and strategy lead at PwC Nigeria, said companies that fail to digitise risk falling behind in an increasingly automated compliance environment.

“Without the right systems, firms cannot perform reconciliations that provide clear evidence for the tax authorities,” he said.

He added that automation could help resolve long-standing inefficiencies in areas such as withholding tax and value-added tax, particularly for companies that struggle with applying the correct rates. “Technology can resolve all of that,” Erikume said.

Beyond improving compliance among registered taxpayers, officials expect the reforms to broaden the tax base. By combining fiscalisation measures, withholding tax mechanisms, and expanded access to transaction data, authorities are positioning the system to capture previously under-reported segments of the economy.

With legislative simplification on one hand and digital enforcement on the other, the government is betting that greater transparency and real-time visibility will reduce reliance on reactive audits and improve revenue stability.

“All this is being done to make the adoption very easy for all taxpayers,” Bawa said.

Together, the reforms represent a structural shift in Nigeria’s tax administration, linking legal clarity with technology-driven oversight in an effort to strengthen revenue mobilisation and modernise governance.