How data will reshape Nigeria’s tax enforcement map

Nigeria’s newly reconstituted Nigeria Revenue Service (NRS) has set a target of N40.71 trillion for 2026, up 44 percent from the N28.3 trillion collected in 2025.

Achieving the additional N12.41 trillion will require more than higher rates; it demands a data-driven overhaul of enforcement and compliance monitoring.

“Looking at the big picture, government is trying to get multiple sources of data, so they can have a full picture,” said Kenneth Erikume, Partner, Tax Reporting & Strategy lead, PwC Nigeria, in a tax webinar hosted by PwC, titled ‘Tax technology and e-invoicing in Nigeria’.

This sets the stage for a system where every economic transaction, corporate or individual, can potentially be visible to the revenue authority.

Out of an estimated 69 million economically active Nigerians, according to CEIC data in 2020, only 1.2 million are active taxpayers according to NRS, and even fewer are active in e-filing or digital compliance.

The challenge for the NRS is clear: expanding the compliance net without overburdening taxpayers, while capturing economic activity that has historically escaped the formal system.

The emphasis on tax intelligence is not new. At a January economic outlook event reported by BusinessDay, Biodun Adedipe, a professor argued that the Nigeria Tax Reform Act 2025 would widen the tax net through credible data, stating that “with effective tax intelligence, there is no hiding place.”

Banks and other financial institutions are critical to this strategy. Individuals and businesses with cumulative turnover above N25 million per month are automatically reported to the NRS.

Cross-border transparency and a unified tax ID further strengthen enforcement. “The automatic exchange of information between Nigeria and other countries, there’s also the unified tax ID project,” he explained.

Together, these measures aim to create a single integrated view of taxpayers, linking corporate and personal accounts, bank deposits, imports, and cross-border transactions.

Data integration allows risk-based profiling, shifting the focus from random audits to precise targeting.

“They want to be able to look at that tax ID and be able to link it to the taxpayer’s spend, invest or save activity to properly profile that taxpayer,” Erikume explained.

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The NRS plans to leverage large compliant taxpayers to bring smaller, previously hidden operators into the formal tax net.

This approach underpins the projection that digital and integrated data can help mobilise a significant portion of the additional N12.41 trillion needed for 2026.

While the reforms promise broader compliance, they raise the stakes for non-digitised firms, even those that consider themselves compliant.

“If government has adopted technology and government has the data, but you have not adopted technology, the so-called compliant taxpayers could be exposed because you don’t have documentation,” Erikume warned.

The trust deficit between taxpayers and the authority also influences compliance behaviour. “Until that trust link is fixed, government will continue to look at audits, investigations into corporates,” he added.

Firms must adapt quickly to new reporting, e-invoicing, and digital reconciliation requirements, or risk penalties, interest, and additional assessments.

Other countries in Africa provide a roadmap:

South African Revenue Service (SARS) has raised compliance through risk-based audits and data integration, increasing the effective tax base without raising rates.

Rwanda has implemented full transaction visibility via electronic invoicing, allowing authorities to track corporate activity in near real-time.

Nigeria’s reforms borrow elements from these models, aiming to blend technology, risk profiling, and integrated IDs to expand the formal tax net.

Looking Ahead

The NRS’ 2026 target is ambitious, but the shift toward data-driven enforcement reflects a systemic transformation. By integrating multiple data streams, harmonising tax IDs, and focusing on risk-based profiling, the government is turning visibility into compliance.

If executed effectively, these reforms could reduce reliance on manual audits, uncover untapped economic activity, and make the additional N12.41 trillion more than a target on paper, a measurable outcome in practice.