May 20, 2025

Change is a constant feature of national development, and reforms—whether in taxation, fiscal policy, monetary systems, banking, agriculture, healthcare, education, or information and communication technology—are essential components of progress. What remains crucial is our collective ability to evaluate these reforms with objectivity and optimism. This article, in that light, explores Nigeria’s tax reform system from the perspective of students and practitioners, shedding light on both the potential benefits and the challenges that inevitably accompany transformative change. Nigeria’s history of tax reform can be broadly divided into two phases: the pre-independence and post-independence eras. Prior to 1960, revenue collection was largely handled by local institutions on behalf of governing authorities. The colonial administration began formalising these processes through laws such as the Native Revenue Ordinance of 1917 and the Direct Taxation Ordinance of 1940. These early initiatives laid the foundation for a more organized taxation system. Following independence in 1960, Nigeria embarked on a series of tax reforms aimed at modernizing and strengthening the tax structure. The 1978 reform introduced withholding tax and restructured income tax, enhancing the reliability of revenue collection. In 1993, the Value Added Tax (VAT) replaced the outdated Sales Tax Act of 1986, marking a shift towards consumption-based taxation. The National Tax Policy introduced in 2012 focused on creating a unified tax administration, while the 2017 review aimed to encourage voluntary compliance, widen the tax base, and address revenue leakages. A significant advancement came with the 2020 Finance Act, which raised VAT from 5% to 7.5% and introduced incentives for small businesses. Most notably, the 2023 establishment of the Presidential Fiscal Policy and Tax Reform Committee marked a bold step toward overhauling the nation’s fiscal system. The committee focused on harmonizing multiple levies, improving tax collection efficiency, and developing a unified revenue framework. This led to the formulation of four pivotal bills: the Nigerian Tax Bill, Nigerian Tax Administration Bill, Nigerian Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. At its core, tax reform involves the strategic restructuring of tax laws, collection methods, and administrative frameworks. The primary goals include enhancing administrative efficiency, broadening the revenue base without overburdening taxpayers, updating outdated regulations, simplifying compliance, promoting economic growth, and aligning with global best practices. Effective reform strategies include improving tax administration, making prudent adjustments to tax rates, enacting taxpayer-friendly laws, and expanding the tax net. For both students and professionals, tax reforms present numerous opportunities. Increased government revenue can enhance the operational capabilities and payroll structures of public institutions where many professionals are employed. Moreover, reforms create demand for skilled tax administrators and analysts, offering employment opportunities to students and professionals alike. A more transparent and efficient tax system also fosters investor confidence, driving foreign direct investment and stimulating economic growth that benefits the wider population. Reforms also promote academic and professional development. Students and researchers gain new areas for inquiry, while practitioners must continually update their skills to keep pace with evolving tax policies. The 2023 reform, for instance, included a provision mandating the Tertiary Education Trust Fund (TETFund) to allocate 30% of its revenue to the Nigerian Education Loan Fund (NELFUND). Established under the Student Loans Act signed on June 12, 2023, by President Bola Ahmed Tinubu, NELFUND is tasked with administering student loans in Nigeria and is a direct product of recent tax policy changes. Beyond individual benefits, tax reform contributes to broader national objectives such as fiscal stability, equitable wealth distribution, and sustainable economic development. However, these reforms are not without obstacles. One major concern is the potential increase in tax rates, which may reduce disposable income for individuals, including students and professionals. Resistance to change, driven by limited understanding or fear of complexity, is another challenge. A shortage of qualified personnel to implement reforms effectively, combined with low public awareness, can hinder the process. Without adequate training and communication, both students and practitioners may struggle to engage with the new tax landscape. Additionally, legal and administrative complexities may delay implementation or create confusion, thereby affecting compliance. Despite these challenges, the importance of tax reform cannot be overstated. For Nigerian students and professionals, it represents both a challenge and an opportunity—a call to become more informed, engaged, and forward-thinking. With proper education, increased awareness, and robust institutional support, the long-term advantages of tax reform can significantly outweigh the difficulties. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.