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The Federal Government’s decision to postpone an increase in the Value Added Tax (VAT) rate could lead to a revenue shortfall of up to 0.5% of Nigeria’s Gross Domestic Product (GDP), according to a new report by the International Monetary Fund (IMF). In its latest Article IV Consultation Report, the IMF acknowledged recent tax reforms endorsed by the National Assembly and approved by President Bola Tinubu, but highlighted that maintaining the current VAT rate amid economic strain comes at a fiscal cost. The IMF stated that while holding off on a VAT hike is understandable given widespread poverty and food insecurity, it is estimated to reduce consolidated government revenue by as much as half a percent of GDP. The report noted that although the Federal Government may partly offset this loss through improved Company Income Tax (CIT) compliance, subnational governments—who depend heavily on VAT allocations—could face tighter budgets. These states and local governments might have to cut back on public services or intensify efforts to boost internally generated revenue, which may result in increased tax pressure on small businesses. The decision to delay the VAT rate hike also reflects the slow progress in reaching vulnerable households. So far, only 5.5 million of the intended 15 million beneficiaries have been reached through the national cash transfer programme. The IMF cautioned that raising VAT at this point could worsen the financial burden on low-income Nigerians. Despite these concerns, the IMF praised the government’s broader fiscal reform agenda, led by the Presidential Committee on Fiscal Policy and Tax Reforms, as critical to improving Nigeria’s low revenue-to-GDP ratio. Key elements of the reforms include modernising VAT and CIT frameworks, reducing tax exemptions, and introducing digital tools to enhance compliance. These efforts helped increase Nigeria’s total revenue and grants from 9.8% of GDP in 2023 to 14.4% in 2024. However, public debt has also risen sharply, reaching 52.9% of GDP, with interest payments consuming over 41% of Federal Government revenue. To address fiscal sustainability, the IMF urged Nigerian authorities to present a clear, medium-term revenue strategy, complete with timelines for future reforms. This, the report stated, would provide businesses and investors with the certainty needed to plan and invest, while clarifying how much fiscal space is available for development and support for vulnerable groups. Echoing the IMF’s concerns, the Nigeria Economic Summit Group (NESG) also warned that avoiding a VAT rate increase could hamper government revenue. NESG CEO, Dr. Tayo Aduloju, stressed the need for a comprehensive and balanced tax reform approach that combines simplification with realistic rate adjustments. He noted that reducing the number of taxes alone, without improving VAT efficiency, could mean missing an opportunity to strengthen the nation’s revenue base. For small and medium enterprises (SMEs), the delay in raising VAT presents a mixed outcome. On one hand, it spares them from immediate cost increases and consumer backlash. On the other, the likelihood of stricter tax enforcement at the state level could grow, as governments seek alternative ways to plug revenue gaps. For Nigerian entrepreneurs, being tax-compliant and digitally visible to the authorities may soon become not just advisable, but essential. 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.

The Federal Inland Revenue Service (FIRS) has reaffirmed its commitment to fostering trust and promoting voluntary tax compliance among entrepreneurs, small businesses, and players in Nigeria’s informal sector. This renewed focus comes in preparation for the 2025 edition of its flagship outreach initiative, the Tax Clinic—a programme aimed at enhancing tax education and encouraging compliance across all segments of the Nigerian economy. Ahead of the event, FIRS Executive Chairman, Zacch Adedeji, described the clinic as a vital component of the agency’s broader push to embed transparency, accountability, and inclusiveness in the tax system. “The Tax Clinic is our way of bringing tax knowledge directly to the people. It plays a vital role in building trust and fostering a culture of voluntary compliance,” Adedeji said. He emphasized the importance of expanding the national tax base while empowering individuals and business owners to meet their civic responsibilities. “This is not just an event—it’s a movement. Our goal is to ensure every Nigerian understands their part in nation-building through voluntary tax compliance,” he added. Organised by the FIRS Emerging Taxpayers’ Group (ETG), the two-day event will feature panel discussions, expert-led workshops, interactive service desks, and live Q&A sessions covering topics such as business registration, tax filing, and dispute resolution. Participants will have the opportunity to engage directly with representatives from key institutions, including the Lagos State Internal Revenue Service (LIRS), Joint Tax Board (JTB), Corporate Affairs Commission (CAC), Tax Appeal Tribunal (TAT), National Identity Management Commission (NIMC), and the Nigerian Investment Promotion Commission (NIPC). Professional bodies expected at the event include the Chartered Institute of Taxation of Nigeria (CITN), Institute of Chartered Accountants of Nigeria (ICAN), Association of National Accountants of Nigeria (ANAN), Nigerian Bar Association (NBA), and Nigerian Medical Association (NMA). In addition to tax advisory services, the NMA will also provide free basic medical screenings during the event. The first 300 on-site registrants will receive branded souvenirs. Targeted at business owners, freelancers, trade associations, and professionals, the Tax Clinic will also be livestreamed to allow for remote participation. Scheduled to take place in Lagos on July 15 and 16, 2025, the event carries the theme “Tax Clinic for Tax Clarity.” FIRS described the initiative as a key element of its strategy to boost revenue collection, integrate the informal sector, and simplify Nigeria’s tax ecosystem, in alignment with the country’s broader economic development goals. 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.

As part of ongoing efforts to curb tax evasion and protect Nigeria’s financial integrity, the Federal Inland Revenue Service (FIRS) has announced a two-day national conference focused on tackling illicit financial flows (IFFs). The event will take place from July 22 to 23 at the Transcorp Hilton Hotel, Abuja. According to a statement from Dare Adekanmbi, Special Adviser on Media to the FIRS Executive Chairman, the conference is themed:“Combating Illicit Financial Flows: Strengthening Nigeria’s Domestic Resource Mobilisation.” The event is expected to convene key stakeholders including policymakers, tax administrators, law enforcement agencies, anti-corruption bodies, financial experts, and international development partners. Together, they will explore actionable strategies to combat IFFs and boost domestic revenue generation. The conference will be chaired by Dr. Doris Uzoka-Anite, Minister of State for Finance, while Irene Ovonji-Odida, a member of the United Nations High-Level Panel on Illicit Financial Flows, will deliver the keynote address. FIRS Stepping Up the Fight Against IFFs Speaking ahead of the conference, FIRS Executive Chairman, Zacch Adedeji, emphasized the agency’s intensified efforts in addressing illicit financial flows. These include: “We’ve already taken concrete steps by approving capacity-building programmes that equip FIRS staff to identify and curb illicit financial flows, particularly from multinational corporations,” Adedeji noted. He also highlighted the creation of a dedicated Proceeds of Crime Management and Illicit Financial Flows Coordinating Directorate within FIRS, marking a structural shift to institutionalize the agency’s anti-IFF initiatives. A Coordinated National Approach The statement also recalled the Federal Government’s formation of an Inter-Agency Committee on Stopping IFFs, which brings together multiple entities, including: In a pre-conference statement, Ovonji-Odida expressed optimism that the gathering will deepen national understanding of IFFs and reinforce commitment to eliminating them. FIRS stated that the outcome of the conference will support the Federal Government’s broader goals of promoting financial integrity and enhancing domestic resource mobilisation for sustainable national development. 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.

The Federal Inland Revenue Service (FIRS) is strengthening its engagement with media professionals as part of efforts to enhance public understanding of tax policies and reforms, ultimately encouraging voluntary tax compliance among Nigerians. At a recent media sensitisation programme in Abuja, Arabinrin Aderonke Atoyebi, Technical Assistant (Broadcast Media) to the FIRS Executive Chairman and convener of the session, emphasized that the initiative is not just about promoting the agency’s activities. Its main goal, she said, is to clarify tax policies and reform strategies, as well as the data behind them—empowering journalists to report tax-related issues in a more meaningful and impactful way. “The participation of the media highlights the need for ongoing collaboration between tax authorities and journalists to foster public engagement, transparency, and accountability,” Atoyebi stated. She further noted that while the North Central region is abundant in natural and human resources, it continues to face developmental challenges. An informed and proactive media, she stressed, can help spotlight policy impacts, build public trust, and support national growth. She encouraged journalists to embrace critical inquiry, open dialogue, and deeper collaboration, describing the media as a key link between citizens and policymakers. Also speaking at the event, Dr. Abdullahi Ismaila, Director of the FIRS Communication and Liaison Department, stressed the importance of data in enhancing the credibility of tax reporting. “Data should not just be seen as numbers. It represents both quantitative and qualitative insights that must be interpreted carefully and applied responsibly,” he said. He noted that in today’s digital world, data plays a pivotal role in shaping public perception and decision-making, making accuracy and proper analysis more crucial than ever. Recognizing that tax-related language can often be complex and technical, Dr. Ismaila advocated for simplifying tax terms into everyday language that resonates with ordinary Nigerians. Clear, relatable communication, he said, is key to improving tax literacy and compliance. Addressing the issue of trust between the public and government, he pointed out that while media reports rightly highlight inefficiencies, stories of positive reforms and progress are often underreported. He encouraged journalists to strike a balance by also covering the gains and improvements made, as this helps build credibility and public confidence. Dr. Ismaila concluded by reaffirming the shared responsibility between the media and tax authorities in driving national development. He urged journalists to rely on accurate data, ask critical questions, and maintain high ethical standards in their reporting—highlighting that a strong media-tax authority partnership can greatly advance tax awareness and foster a more compliant society. 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.

In a significant step toward enhancing financial transparency and increasing tax compliance, the Federal Inland Revenue Service (FIRS) has introduced a new regulation requiring banks to report monthly transactions exceeding ₦5 million for individuals and ₦10 million for corporate accounts. What the New Law Means Effective immediately, all Nigerian banks are mandated to submit monthly returns to the FIRS detailing: These reports will include key transaction details but do not authorize banks to deduct taxes directly. Instead, the data will be used by FIRS to identify possible tax evasion and ensure better compliance with existing tax laws. Why This Matters This new rule is part of the Nigerian government’s broader strategy to widen the tax net, monitor high-value financial activity, and curb illicit financial flows. Here’s how it could impact you: What You Should Do As a business or individual who makes high-volume transactions: 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.

In a bold call to strengthen tax enforcement, Justice Hakeem Oshodi of the Lagos State High Court has urged the full activation and use of designated revenue courts to prosecute tax-related offences in the state. Speaking at the recently held Revenue Recovery Summit organized by the Lagos State Ministry of Justice, Oshodi expressed concern over the underutilization of these courts. “I currently sit as a judge in a revenue criminal court, and I must confess, I have not conducted any trials. Yet, I’m fully ready to work,” Oshodi remarked. Why Revenue Courts Matter Justice Oshodi highlighted a troubling trend: many defaulting taxpayers rush to settle out of court once caught, fearing public prosecution and possible jail time. While this approach yields some revenue, it undermines the deterrent effect of the legal system. The summit, themed “Speedy Dispensation of Revenue Cases in Court,” focused on strategies to improve enforcement, reduce case backlogs, and strengthen collaboration between the judiciary and tax authorities. Key Takeaways from the Summit 1. Judicial Commitment Justice Oshodi and other legal experts emphasized that the judiciary is ready to support tax enforcement—what’s needed is activation of the tools already in place. 2. Learning from South Africa Oshodi cited South Africa’s aggressive stance on tax defaulters, where tax evaders are presumed guilty until proven innocent, urging Nigeria to adopt similarly firm measures. 3. Executive-Judicial Synergy The need for improved cooperation between government agencies and the courts was echoed by several speakers, including Attorney-General Mr. Lawal Pedro (SAN). “We have the tools. What we need is the will to use them effectively,” Pedro stated, referencing the Tax Administration Act 2025 and recent infrastructure improvements like the Tapa Commercial Courts. Legal Complexities & Jurisdictional Hurdles Former Lagos Attorney-General Mr. Ade Ipaye gave a deep dive into the legal and constitutional challenges surrounding tax enforcement: What This Means for Taxpayers & Businesses If you’re a high-net-worth individual, business owner, or taxpayer in Lagos, here’s what you should know: ✅ Enforcement is intensifying – with renewed political and judicial will, revenue courts may soon see more cases.✅ Out-of-court settlements won’t always be an option.✅ Documentation is key – ensure your records are complete and compliant.✅ Tax audits may increase – be proactive, not reactive. Our Perspective: Time to Prepare At [Your Tax Consulting Firm Name], we believe the activation of revenue courts marks a turning point in Nigeria’s tax enforcement landscape. With greater scrutiny and faster legal processes, individuals and businesses must prioritize tax compliance, documentation, and legal readiness. Need Guidance? We assist clients in: Book a consultation today to stay ahead of the curve. 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.

In a major development affecting both individuals and businesses, Nigerian banks are now required to report customer accounts with monthly transactions exceeding ₦5 million to the Federal Inland Revenue Service (FIRS). This directive, recently announced by the National Orientation Agency (NOA), forms part of the 2025 Tax Reform Act aimed at enhancing tax compliance and promoting fiscal transparency. Key Highlights of the Reform Under Section 30 of the Act, commercial banks must submit monthly reports of high-value transactions to FIRS and other relevant tax authorities. The objective is to strengthen oversight, reduce tax evasion, and align Nigeria’s tax system with global best practices. The NOA emphasized via its official social media channel that this measure is a strategic move to ensure all taxable income is accurately reported and accounted for—particularly from the informal and high-net-worth segments of the economy. Expanded Tax Relief for Low-Income Earners In addition to enhanced reporting requirements, the reform introduces several taxpayer-friendly provisions: Revised VAT Sharing Formula Starting 2026 From 2026, a new Value-Added Tax (VAT) revenue distribution model will take effect: This new model is designed to reward states that generate higher consumption levels, such as Lagos and Rivers, encouraging state governments to drive local economic activity and boost internally generated revenue. Implications for Taxpayers and Financial Institutions The dual focus on improved revenue collection and equitable redistribution signals a significant shift in Nigeria’s tax policy. Analysts suggest that these reforms could expand the country’s tax base without overburdening low-income earners. However, concerns around data privacy have also been raised. Financial institutions and privacy advocates are urging the government to issue clear guidelines to ensure customer data is protected and that the new reporting system is not misused. Looking Ahead With implementation set to begin in 2026, businesses and individuals are encouraged to review their financial activities and ensure full compliance. Our firm is closely monitoring developments and is available to support clients in understanding how these changes may affect their tax obligations and financial strategies. 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.

In a landmark move to modernize Nigeria’s tax system, President Bola Ahmed Tinubu signed a suite of tax reform bills into law on June 26, signaling a new era of simpler, fairer, and more efficient taxation in the country. These reforms aim to eliminate outdated and overlapping tax regulations, enhance compliance, and ease the burden on individuals and businesses. The reform package includes four key legislations: 1. Nigeria Tax Act: One Simplified Tax Code This Act merges multiple old tax laws into one streamlined framework. In the past, taxpayers faced confusion due to inconsistent and overlapping tax rules. Now: 2. VAT: Protection for Essentials While the VAT rate remains at 7.5%, essential goods and services such as food, education, healthcare, housing rent, and public transport are either exempt or zero-rated.This is intended to reduce the tax burden on average Nigerians while supporting business growth by: 3. Nigeria Revenue Service (NRS): A Modern Tax Authority The Nigeria Revenue Service replaces the Federal Inland Revenue Service (FIRS). The NRS will now: 4. Joint Revenue Board: Unified Tax Administration A new Joint Revenue Board will coordinate efforts among federal, state, and local tax authorities, ensuring: Tax Reliefs for Individuals and Businesses Effective Date and Next Steps These reforms will take effect from January 1, 2026. This grace period allows the government to: A New Chapter for Taxation in Nigeria The passing of these reform bills marks a significant shift in Nigeria’s tax philosophy—one that values clarity, fairness, and efficiency. For taxpayers, it means knowing your rights, fulfilling your responsibilities, and having clear channels for support and redress.

The Senate Committee on the Review of the 1999 Constitution has affirmed that it has taken note of the key issues raised by Nigerians during its recent series of public hearings and is committed to addressing them in the ongoing amendment process. Speaking at the conclusion of the South-West Public Hearing in Ikeja, Lagos, Deputy Senate President and Committee Chairman, Senator Jubrin Barau, represented by Vice Chairman and Senate Leader, Senator Opeyemi Bamidele, stated that all submissions received would be carefully reviewed and presented to the full Senate for deliberation. According to Senator Barau, the committee is working toward submitting a final draft of the constitutional amendment to the State Houses of Assembly before the end of 2025, in line with the legislative timetable. Major Issues Raised During the Hearings Senator Barau highlighted that stakeholders from the South-West and other regions voiced strong opinions on several critical national matters, including: He emphasized that the hearings were far from ceremonial and that the committee is determined to give all issues the thoughtful consideration they deserve to advance democratic governance and national development. Inclusive and Transparent Process “The whole essence is to ensure that the constitution is not changed without the popular consensus of Nigerians,” Barau said, assuring citizens that meaningful outcomes would emerge from the process, just as in previous amendments. He added that the committee has heard from a diverse cross-section of the population, including youth groups, women, professionals, and traditional rulers, and that their concerns will guide the final proposals. Barau noted that reforms achieved in past constitutional reviews—particularly in Nigeria’s electoral framework—are evidence that such engagements can produce tangible improvements. Focus Areas of the Constitutional Review According to the News Agency of Nigeria (NAN), the committee is prioritizing the following thematic areas in the current amendment process: Barau concluded by reaffirming the Senate’s commitment to participatory democracy, stating that Nigerians will continue to have a voice in shaping the laws that govern them.

Gombe State has solidified its position as a leader in digital tax administration by securing the 4th spot nationwide in the latest assessment of digital maturity in tax management. This achievement was announced during a high-level Validation Workshop on Digital Public Infrastructure and Intelligence Revenue Authority Index Tools, organized by the Nigeria Governors’ Forum in collaboration with the Bill and Melinda Gates Foundation in Abuja. The evaluation, which assessed all 36 states and the Federal Capital Territory, highlighted Gombe’s impressive score of 80.6%. The assessment criteria included digital onboarding of taxpayers, integration with national identity and payment systems, automation of compliance monitoring, data security, advanced analytics, and the digital proficiency of personnel. Gombe’s success is attributed to the strategic leadership of Governor Muhammadu Inuwa Yahaya and the transformative efforts of the Gombe State Internal Revenue Service (GIRS), led by Executive Chairman Hajiya Aisha Adamu. Under their guidance, the state has implemented a comprehensive digital tax platform, which has streamlined tax processes, enhanced transparency, and improved taxpayer compliance. This recognition underscores the importance of digital transformation in tax administration and serves as a model for other states aiming to enhance their tax systems. 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.