Nigeria strengthens digital tax collection as fiscal reforms aim to ease burden on low- and middle-income earners
The Federal Government of Nigeria has announced that it has successfully collected more than ₦600 billion in Value Added Tax (VAT) from international digital service providers, including Facebook, Amazon, and Netflix.
The disclosure was made by Mr. Mathew Osanekwu, Special Adviser on Tax Policy to the Chairman of the Tax Reforms Committee, during a workshop for media practitioners in Abuja on Wednesday, September 10, 2025.
Osanekwu explained that recent amendments to the VAT Act have empowered the Federal Inland Revenue Service (FIRS) to bring non-resident companies providing services in Nigeria into the country’s tax net. “These are not Nigerian entities, but they are now paying VAT under Section 10 of the VAT Act. They are registered in Nigeria and also appointed as agents of collection,” he said.
He added that the move aligns with global best practices, ensuring that Nigeria benefits from taxes on services consumed domestically, even when delivered by foreign companies.
At the same event, the government sought to clarify widespread misconceptions about President Bola Tinubu’s fiscal and tax reforms. Professor Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, emphasized that no new taxes have been introduced under the current administration.
“The reforms are designed to ease the burden on low- and middle-income earners while ensuring fairness. Many of the levies being debated publicly, including the controversial five percent fuel surcharge, are not new but are provisions from longstanding laws predating this administration,” Oyedele stated.
He recalled that shortly after assuming office in May 2023, President Tinubu signed four executive orders suspending taxes that had been hurriedly introduced in the final days of the previous administration. These included excise duties on plastic items and vehicle imports. “Many of us are not even aware because these taxes never took effect—they were suspended and eventually removed,” Oyedele added.
He also clarified that the Cybersecurity Levy, which has been the subject of public debate, was enacted years ago and was not initiated by the current government.
Tax Reforms Set for January 2026: The upcoming tax reforms, scheduled to take effect in January 2026, aim to overhaul Nigeria’s weak tax system, broaden the revenue base, and improve compliance. Currently, Nigeria’s tax-to-GDP ratio stands at about 10.8 percent—far below the African average of 16 percent and the global benchmark of 30 percent.
Oyedele explained that the reforms will consolidate multiple taxes, eliminate overlapping charges, and link levies to transparent, project-specific spending. The framework is designed to be progressive, protecting vulnerable groups while ensuring higher earners contribute fairly.
Under the reforms: Personal income tax thresholds have been adjusted to exempt Nigerians earning less than ₦800,000 annually from taxation on that amount.
Small businesses earning less than ₦100 million per year will benefit from a 0 percent corporate tax rate.
“This reform is the most progressive Nigeria has ever seen. It eliminates taxes on the poor, reduces the burden on the middle class, and targets higher-income earners fairly,” Oyedele said.
Nigeria’s Economic Challenges: Oyedele also painted a stark picture of Nigeria’s economic situation as of May 2023, describing it as “on the verge of collapse.” He highlighted that foreign reserves were heavily encumbered by unpaid forward contracts and subsidy-induced debt from the Nigerian National Petroleum Company Limited (NNPCL). With only around 200,000 barrels of free crude available due to pre-sales, Nigeria’s fiscal system was “running on fumes.”
He warned that continuing to finance fuel subsidies through borrowed funds secured against future crude production could have led to a total shutdown of fuel imports, citing a scenario similar to the crisis in Sri Lanka.
“People may ask whether life is better now than it was two years ago. The right question is: would life have been better today if those reforms hadn’t happened?” Oyedele concluded.
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