…Expresses assurance of passage of bill
…as Lawmakers set N25trn 2025 revenue target for FIRS
By Seun Ibiyemi
The Executive chairman, Federal Inland Revenue Service (FIRS), Dr Zacch Adedeji has stated that the passage of the tax reform bills into law by the National Assembly will position Nigeria to reap more benefits from the digital economy.
The FIRS Chief Executive made this position known when he appeared before the Joint Finance Committees of the Senate and House of Representatives while expressing optimism that the tax bills will be passed by the National Assembly.
Speaking, Dr Adedeji emphasised the need for a robust and streamlined tax system, particularly in the digital economy, to align with global economic realities.
He said “a stark comparison between South Africa’s tax-to-GDP ratio of over 18% and Nigeria’s significantly lower figure. It attributed this disparity to fundamental issues within Nigeria’s tax infrastructure, including the absence of effective frameworks for taxing the growing digital economy.”
“Today, we lack the systems to effectively tax our digital economy,” the FIRS Chairman stated.
“This is unlike South Africa and other advanced economies, where taxation systems are centralized and efficient, avoiding the revenue leakages caused by multiple agencies collecting taxes,” He continued.
The FIRS Chairman proposed the consolidation of tax agencies to eliminate duplication and inefficiencies while calling for the support of the Lawmakers.
Responding to an inquiry on increased tax net, the FIRS Chairman noted that the tax bills do not aim to increase taxes but increase the number of taxpayers.
He noted that he believes that only the top 5 percent should be taxed and not the informal sector.
The FIRS Chairman further added that SMEDAN (another government agency) is working assiduously to translate informal sector players to the formal sector to bring them under the tax net.
He noted that the FIRS has properly classified tax administration into various cadres such that small companies won’t have to pay a lot.
Dr Adedeji seized the occasion to champion the implementation of a progressive tax regime and reforms aimed at expanding the tax net while reducing the tax burden on Nigeria’s informal sector.
“The informal sector, such as small businesses like shoemakers, should not be burdened with complex tax systems,” he explained.
“Instead, we must create an enabling environment for them to transition into the formal economy, where they can register and thrive without excessive taxation.”
Speaking on the untapped potential of Nigeria’s youthful population, Dr Adedeji pointed out that Africa is projected to become a major supplier of global labor by 2030.
He stressed the importance of leveraging technology and fostering a conducive environment for innovation to position Nigeria as a key player in this transition.
“Current laws require foreign companies employing Nigerians to pay corporate taxes locally, which deters investment. We need to modernize these laws to encourage investment in technology and create jobs.” He noted.
The FIRS Chairman further reaffirmed his commitment to making FIRS a world-class revenue service through the pillars of people, technology, and process.
He called on lawmakers to support the proposed tax bill as a critical step toward achieving fiscal sustainability and economic growth.
“The path forward is clear: we must reform, simplify, and modernize our tax system to harness the potential of our economy and our people. With your support, we can achieve this transformation.”
“The proposed tax reforms, currently under review, are expected to have far-reaching implications for Nigeria’s economic landscape, particularly in promoting transparency, attracting investment, and enhancing revenue collection,” He noted.
In the same vein, the Lawmakers set a bold new target of N25 trillion for 2025 for the Federal Inland Revenue Service (FIRS) after commending it for exceeding its 2024 revenue target.
The FIRS reported a record-breaking revenue collection of N21.6 trillion in 2024, surpassing its target of N19.4 trillion outlined in the 2024 Appropriation Act. This achievement drew widespread commendation from members of the Joint Finance Committee of the National Assembly.
Deputy Chairman of the House Committee on Finance, Saidu Musa Abdullahi, described the FIRS performance as “unprecedented” and a “very wonderful achievement.”
“Surpassing the revenue collection target from N19.4 trillion to N21.6 trillion in 2024 is a feat worthy of commendation,” he stated.
Abdullahi also urged the FIRS to explore South Africa’s tax collection model, noting that despite its smaller population of about 54 million, it generates more tax revenue than Nigeria, which boasts a population of over 200 million.
He emphasised the need to widen the tax net by including more individuals and businesses from the informal sector, a sentiment echoed by several lawmakers.
While praising the FIRS’s 2024 accomplishments, Senator Joel-Onowakpo Thomas (Delta South) advocated for an even more ambitious target for 2025.
“Taxes are the way to go globally. We must deepen the tax collection process through planned reforms,” he said while suggesting an N30 trillion revenue target.
Similarly, Etanabene Benedict suggested a bold leap to N60 trillion, arguing that robust tax collection would reduce Nigeria’s reliance on borrowing to fund the budget.
However, the committee settled on a more realistic but ambitious target of N25 trillion for the 2025 fiscal year.
Lawmakers pledged their full support for FIRS’s tax reform initiatives, noting the importance of innovative strategies to sustain and exceed current revenue levels.
Senator Binos Yeroe (Adamawa South) commended Adedeji for his leadership and innovative approach, urging him to maintain the momentum.
“Your performance in 2024 was highly commendable. I urge you to keep it up,” Yeroe said.
In their final remarks, committee chairpersons Senator Sani Musa and Hon. James Faleke urged the FIRS to treat the N25 trillion target as achievable and potentially surpassable.
“Work with the N25 trillion projected revenue set for 2025. It is achievable and even surpassable,” Senator Musa stated.