TAX SERVICES

In a strategic move aimed at revitalizing Nigeria’s oil and gas industry, President Bola Tinubu has signed the Upstream Petroleum Operations Cost Efficiency Incentives Order, 2025, into law. Announced on June 2, 2025, this executive order introduces groundbreaking tax relief measures for upstream oil and gas companies that adopt cost-saving practices. What’s in the New Tax Incentive? The policy allows qualified companies in the upstream petroleum sector to retain up to 50% of the additional government revenue their cost-efficiency efforts generate. However, to benefit, these companies must meet strict performance standards set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). To ensure public revenues are protected, the value of the tax credit is capped at 20% of a company’s annual tax liability. This creates a balanced structure—rewarding efficient companies while safeguarding government income. Why This Matters for Nigeria’s Economy Nigeria’s economy is deeply tied to its oil and gas sector, which remains a key source of revenue and foreign exchange. By incentivizing operational efficiency, this order aims to: A Sign of Broader Tax Reform? This move comes amid widespread calls to reform Nigeria’s tax system, which critics argue places a heavy burden on small businesses and low-income earners. Social media conversations—especially on platforms like X—have been filled with frustration over high taxes on struggling companies. President Tinubu’s latest action suggests a willingness to rethink the country’s tax approach, at least starting with the oil and gas sector. It also hints at broader reforms on the horizon, especially as new tax legislation is currently under review in the National Assembly. What Comes Next? The success of this initiative will depend on the NUPRC’s enforcement of cost-efficiency standards and how effectively companies adapt to these new incentives. Industry experts are hopeful, with some predicting that this model could inspire similar reforms across other sectors of the economy. 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 Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adelabu Adedeji, officially welcomed the agency’s newly recruited staff during an induction programme held on Monday, June 2, 2025. Delivering his keynote address, Adedeji highlighted the critical responsibility the new employees carry in helping shape Nigeria’s economic future and ensuring long-term fiscal sustainability. “Today marks more than just your first day on the job — it’s the start of a transformative journey. Your skills and dedication will be instrumental in redefining Nigeria’s financial framework,” he said. In a press statement issued by Arabinrin Aderonke Atoyebi, Technical Assistant to the Executive Chairman, the FIRS reaffirmed its commitment to overhauling tax administration through a strategic focus on People, Processes, and Technology. This three-pillar strategy, the statement explained, is the foundation for driving institutional relevance, improving operational efficiency, and delivering measurable national impact. “Our people are our most valuable resource. The effectiveness and sustainability of our systems depend on your expertise, creativity, and integrity,” Adedeji stated. He also stressed the agency’s focus on continuous learning and capacity building, noting that empowered and well-trained staff are essential for building public confidence and enhancing revenue collection. As part of ongoing reforms, the FIRS is also streamlining internal processes to improve transparency and accountability, while investing in advanced technologies such as artificial intelligence and data analytics to drive smarter, faster service delivery. “Technology cannot replace competence — it enhances it. It’s a tool that helps us achieve precision and efficiency,” he added. Referencing a Yoruba proverb, the Chairman reminded the new employees that systems alone are not enough — success ultimately depends on the people behind them. “Without your commitment, creativity, and sense of ownership, even the best tools will remain idle,” he remarked. He closed with a call to action, urging the inductees to uphold the highest standards of professionalism and ethics.

The Nigerian Senate has passed all four tax reform bills proposed by President Bola Tinubu, marking a major step toward reshaping the country’s tax system. The new legislation is designed to modernise tax administration, boost revenue collection, and ensure a more balanced distribution of tax proceeds among the federal, state, and local governments. Highlights of the New Tax Reform Bills Key Changes from Earlier House Versions Compared to the versions passed by the House of Representatives, the Senate made several notable changes: With Senate approval secured, the harmonised tax bills are now awaiting President Tinubu’s assent, signaling a significant shift in Nigeria’s approach to taxation and public finance. While these reforms are a positive step, many observers argue that genuine transformation must go beyond legislation. For the treasury and other public institutions to function effectively and free from corruption, governance structures must be strengthened. This involves defining clear roles, aligning positions with relevant expertise, streamlining bureaucratic processes, and making merit-based appointments the norm. Such reforms are critical to building a transparent, efficient, and accountable public service system. 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 Federation Account recorded a total revenue inflow of N7.4 trillion in the first quarter of 2025, according to data from the Federation Account Allocation Committee (FAAC). This revenue was remitted by major government revenue-generating agencies, including the Federal Inland Revenue Service (FIRS), Nigeria Customs Service, and others. Of the total inflow, N4.96 trillion was distributed as statutory allocations among the Federal Government, 36 states, and 774 local government areas between January and March 2025. The FAAC, chaired by the Minister of Finance, Mr. Wale Edun, comprises finance commissioners from all 36 states, the Accountant General of the Federation, and representatives from the Nigerian National Petroleum Company Ltd (NNPC), FIRS, Customs, Revenue Mobilisation, Allocation and Fiscal Commission, and the Central Bank of Nigeria (CBN). Revenue Sharing Framework The Federation Account operates under a legal structure that divides funds into three primary components: Under statutory allocation: For VAT: Oil-producing states also receive an additional 13% derivation fund. Q1 Allocation Breakdown Of the N4.96 trillion disbursed: Monthly Breakdown Factors Behind Revenue Growth FAAC attributed the improved revenue performance to: Fiscal Outlook and Government Response Despite the improved revenue, economic analysts have urged all levels of government to manage the funds responsibly, especially amid: In response to declining global oil prices, which have fallen below the $75 per barrel benchmark in the 2025 budget, the Federal Government announced plans to: Finance Minister Wale Edun emphasized the need for fiscal discipline: “Our budget was based on 2 million barrels per day at $75 per barrel, and we are now underwater relative to those assumptions. When your budget revenue is below expectation, you have to hunker down, conserve, and prioritize.” To bridge the budget shortfall, the government plans to: Edun noted that the 2025 budget includes a provision for asset sales, which may exceed initial expectations due to rising investor interest. He concluded that President Bola Tinubu’s economic agenda aims to stabilize the economy and attract investments that promote job creation and poverty reduction. 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.

Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS), has revealed that only 19 percent of Nigerians pay taxes, based on findings from several studies. Adedeji made this known on Tuesday during the launch of a new book titled “Taxation: Essential Knowledge for Nigerian Children”, an initiative supported by the FIRS. He was represented at the event by his Special Adviser on Research and Statistics, Aisha Mahmoud. The book, authored by Aderonke Atoyebi and Ejura Haruna, is aimed at instilling tax awareness in children and educating them on the importance of tax compliance from a young age. “We’ve conducted several studies and found a strong link between tax education and tax compliance,” Adedeji said. “When children are properly educated, they grow into responsible adults who understand their civic duties, including paying taxes. Our findings show that only about 19 percent of Nigerians currently pay taxes.” He noted that some research even places the figure lower, between 10 to 15 percent. “Compared to other countries—even within Africa—this is extremely low,” he added. To address this gap, Adedeji emphasized the need for collaborative efforts with government institutions and private stakeholders to raise tax awareness among young Nigerians. “It’s easier to nurture tax-compliant individuals from childhood than to correct adults who habitually evade taxes,” he said. “That’s why we wholeheartedly support initiatives like today’s book launch.” According to Adedeji, fostering a generation that understands taxation will lead to greater public demand for transparency and accountability in government spending. “By introducing tax education at the primary and secondary school levels, children will develop an early understanding of their responsibilities as citizens,” he said. “It shouldn’t be limited to accounting students—everyone needs to understand the basics of taxation to avoid non-compliance.” 60,000 Free Copies to Be Distributed Across Nigeria Aderonke Atoyebi, co-author of the book and technical assistant on broadcast media to the FIRS chairman, announced that 60,000 copies will be distributed nationwide across the six geopolitical zones. The books were produced at no cost to recipients, thanks to the support of FIRS and Sprezzatura Publishing. Atoyebi said the goal is to demystify tax and make the topic relatable to children. “People often say nobody wants to pay tax. That’s why we’re starting early—to teach children that the amenities they enjoy, like roads and schools, are funded through taxes,” she explained. She emphasized the book’s focus on civic education, governance, and the role of responsible citizenship. “We want children to understand that tax revenue isn’t for private pockets—it funds infrastructure and public services for everyone’s benefit.” Touching on education-specific taxes, she pointed out that some of the revenue is channeled through TETFund to support educational development. The book uses simple language and engaging comic-style illustrations to make complex tax concepts more accessible and enjoyable for children. 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 strongly criticized the Federal Capital Territory Administration (FCTA) for shutting down one of its offices in Abuja. The agency described the move as both “malicious” and “unprofessional.” In a statement posted on X (formerly Twitter), Aderonke Atoyebi, Technical Assistant on Broadcast Media to the FIRS Executive Chairman, accused the FCTA of unfairly targeting the agency. “It is highly unprofessional of the Wike-led FCTA to shut down our office and disrupt our staff from carrying out their duties—especially during a pivotal week as we prepare to sign the Tax Reform Bills. FCTA, you’ve made a serious error. FIRS owes you nothing,” Atoyebi stated. She went further to accuse the FCTA of using FIRS as a scapegoat, saying: “If you’re looking for a fall guy, look elsewhere. We will not be your scapegoat, especially when you’re fully aware that your media-spread falsehoods and illegal actions jeopardize our operations.” Atoyebi emphasized that FIRS has no outstanding rent owed to the FCTA, claiming that all dues had been cleared through 2023. “We have the evidence,” she stressed in response to allegations of indebtedness. The timing of the incident is particularly concerning, Atoyebi noted, as it coincides with a critical moment for Nigeria’s tax system, with major reform legislation nearing finalization. She warned that such disruptions could erode public trust and delay the implementation of essential fiscal policies. Analysts have also expressed concern that rising tensions between federal institutions could impair service delivery and cause broader instability. Meanwhile, the National Assembly is moving forward with the harmonization of the Tax Reform Bills. The harmonized version may be passed as early as Tuesday, following a successful reconciliation of contentious sections. James Faleke, Chairman of the House Committee on Finance and head of the harmonization committee, confirmed the development on Sunday via X. He wrote: “The Conference Committee set up by the House and Senate on the Tax Reform Bills has completed its work. The joint team carefully reviewed all sections, resolved grey areas in the four Bills, and addressed all contentious clauses.” It was reported that the FCTA sealed the FIRS office in Abuja due to alleged non-payment of ground rent. Other properties affected by similar actions included an Access Bank branch and a Total filling station in Zone 6, Wuse, Abuja, reportedly over unpaid rent spanning 34 years.

The Federation Account Allocation Committee (FAAC) has released its Value Added Tax (VAT) report for the first quarter of 2025, revealing that Nigeria’s 36 states collectively generated ₦1.5 trillion in VAT revenue. Once again, Lagos State emerged as the top contributor by a wide margin. According to data obtained by Investors King, Lagos alone accounted for ₦819.62 billion—over 54% of the total VAT collected nationwide during Q1. The state’s dominant share reaffirms its status as Nigeria’s economic powerhouse, far outpacing all other states in tax remittances. Rivers State ranked a distant second with ₦278.23 billion, while Oyo State followed in third place, generating ₦79.78 billion during the same period. Top 10 VAT-Contributing States in Q1 2025: These figures highlight the stark disparities in economic activity and taxable transactions among the states, with southern and oil-producing states dominating the upper ranks. Regional Patterns and Observations In general, northern states reported lower VAT returns. Jigawa (₦11.22 billion), Sokoto (₦10.88 billion), and Anambra (₦10.73 billion) were the top contributors from that region. On the opposite end, Taraba (₦2.33 billion), Imo (₦2.34 billion), and Abia (₦2.92 billion) recorded the lowest collections, indicating limited consumption or a narrower tax base. Mid-tier states such as Kaduna (₦8.12 billion), Kogi (₦7.33 billion), and Ogun (₦7.20 billion) posted moderate figures, reflecting their industrial and commercial output. Economic Implications The Q1 data underscores the concentration of economic activity—and consequently, VAT generation—in a handful of states. Lagos and Rivers alone were responsible for over ₦1 trillion, nearly two-thirds of the national total. Fiscal experts warn that this level of revenue centralization raises concerns about equity under Nigeria’s fiscal federalism framework, where VAT collections are pooled and shared among all states regardless of contribution. While the Federal Inland Revenue Service (FIRS) continues its efforts to expand the VAT base, analysts have urged state governments to invest in formalizing their economies, improving tax collection systems, and enhancing compliance to boost their internally generated revenue (IGR). Full State-by-State VAT Breakdown for Q1 2025 (₦ Billion): State VAT Generated Lagos 819.62 Rivers 278.23 Oyo 79.78 Bayelsa 27.26 Kano 22.97 Edo 20.73 Delta 20.04 Akwa Ibom 16.08 Kwara 14.43 Benue 12.36 Jigawa 11.22 Sokoto 10.88 Anambra 10.73 Ekiti 10.17 Adamawa 9.12 Kaduna 8.12 Borno 7.87 Ebonyi 7.43 Kogi 7.33 Ogun 7.20 Ondo 7.14 Nasarawa 7.05 Bauchi 6.30 Niger 5.97 Katsina 5.96 Osun 5.95 Yobe 5.81 Plateau 5.55 Kebbi 5.13 Enugu 4.96 Gombe 4.61 Zamfara 3.77 Abia 2.92 Cross River 2.65 Imo 2.34 Taraba 2.33 Looking Ahead As Nigeria pursues ongoing tax reforms and aims to reduce reliance on oil revenue, state governments face increasing pressure to broaden their tax bases. Digitizing revenue systems and improving tax compliance will be essential for achieving sustainable growth in IGR. In this context, VAT performance continues to serve as a critical barometer of sub-national economic health and administrative capacity. 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 made a major move to improve tax compliance in Nigeria by launching a stakeholder engagement forum focused on its e-invoicing initiative. The forum, held in Lagos, brought together key players from the manufacturing and oil and gas industries to deliberate on the rollout and practical application of the new e-invoicing system. According to Sadiq Arogundade, the Lead Consultant for FIRS, the e-invoicing platform aims to streamline tax compliance by automating invoicing processes and simplifying bookkeeping efforts. “We’ve developed an electronic invoicing system to help taxpayers and businesses manage their invoicing more efficiently,” Arogundade said. “However, it’s critical that we incorporate all use cases, feedback, and concerns from stakeholders during the system’s development.” He explained that the main goal of engaging stakeholders is to collect input from businesses to fine-tune the platform. Highlighting its advantages, Arogundade noted, “Automating workflows significantly reduces the effort required for accurate bookkeeping. We want to integrate into that process so we can extract the tax elements directly from invoices and handle the tax calculations for businesses.” This approach, he added, would ease administrative burdens and enhance the accuracy and timeliness of tax compliance. Mike Adoga, Acting Director of Tax Automation at FIRS, emphasized the system’s potential to provide real-time visibility into transactions across sectors, thereby strengthening tax compliance. “This is about enabling the electronic, real-time exchange of invoices between businesses and their customers using FIRS technology,” Adoga said. He also highlighted key benefits such as increased transparency, improved accuracy, and enhanced efficiency. The e-invoicing platform is designed to automatically capture taxes such as Value Added Tax (VAT) at the 7.5% rate, as well as withholding tax, company income tax, and personal income tax. Adoga explained that this system would help close revenue gaps, reinforce compliance, and bring Nigeria’s tax processes in line with international standards. “Withholding tax functions as an advance payment towards tax liabilities,” he noted, adding that relevant transaction data would also flow through the e-invoicing ecosystem. While acknowledging some ongoing challenges, Adoga underscored the importance of continued engagement to dispel myths and improve understanding of e-invoicing. “Many have heard of electronic invoicing, but misconceptions persist,” he said. “These sessions are key to bridging that gap.” He encouraged businesses to adopt the system, highlighting its potential to foster better compliance and minimize tax-related disputes. 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.

“I also extend my heartfelt appreciation to my colleagues on the House Conference Committee, which I had the honour of leading, for their steadfast commitment to the Nigerian people. Your dedication and resilience in concluding this important task are truly commendable, and we remain deeply grateful.” It was reported that the four tax bills were submitted two weeks ago to the Joint Harmonisation Committee, comprising members of both the Senate and the House of Representatives, to reconcile differences in amendments before being forwarded to President Bola Tinubu for assent. Following a majority voice vote, the Senate President, Godswill Akpabio, announced the passage of the bills and lauded the lawmakers for their sacrifice in reforming Nigeria’s tax system to align with international standards. “These four executive bills aim to transform and modernise the tax framework in Nigeria,” he stated. The development comes just 24 hours after the Senate passed two of the bills, deferring the remaining ones for consideration on Thursday. Speaking to journalists after plenary, Senator Sani Musa, Chairman of the ad hoc committee on tax reform and representative of Niger East Senatorial District, affirmed that the committee worked diligently to ensure the proposed tax system meets global benchmarks. He further revealed that part of the revenue generated from the tax reforms will be allocated toward combating cybercrime, enhancing defence infrastructure, supporting TETFund, and providing assistance to military personnel engaged in peacekeeping efforts across the country. Senator Musa also emphasized the committee’s recommendation for the President to appoint a chairman and establish an ombudsman to arbitrate and resolve tax-related disputes. He stressed the critical importance of setting up a tax tribunal, noting:“It is not a court of record. We have carefully reviewed issues surrounding VAT, tax collection, development levies, and the previously expunged inheritance tax.” Expressing optimism, he added, “I believe Nigerians will witness tangible improvements as a result of these reforms. We also commend the President for ensuring a level playing field for all stakeholder 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 Chairman of the Nigeria Economic Summit Group (NESG), Mr. Niyi Yusuf, and the CEO of Emerging Africa Capital, Mrs. Toyin Sanni, have urged the federal government to curb its borrowing and enhance tax collection efforts. They made these remarks during the Vanguard Economic Discourse held yesterday, where key stakeholders gathered to deliberate on the theme, “Taming Inflation and Stimulating Growth.” Both Yusuf and Sanni acknowledged that inflation has become a serious challenge and proposed a range of policy measures including the elimination of fuel subsidies, stronger coordination between fiscal and monetary authorities, and reduced government expenditure to drive economic growth. Mr. Yusuf emphasized the need for the government to boost efficiency and transparency by reassessing untargeted subsidies, tax waivers, and incentives. He advocated for increased non-oil revenue through the expansion of the tax base and improved tax collection mechanisms. He further recommended a comprehensive fiscal management approach to diversify funding sources, including through public-private partnerships (PPP), innovative financing structures, and targeted intervention funds. “To rein in inflation,” he said, “the federal government must reduce its reliance on Central Bank financing. Additionally, the CBN should adopt a single, market-reflective exchange rate, and there must be alignment between fiscal and monetary policies to stabilize the economy.” Yusuf also called on the government to boost domestic trade and promote value addition by lifting forex and trade restrictions. He urged the CBN to establish a clear monetary policy framework that expands access to finance and mitigates risks stemming from the monetisation of Ways and Means advances. On her part, Mrs. Sanni cautioned that inflation may continue to rise in the short to medium term due to factors such as worsening fuel shortages, the lingering effects of flooding on agricultural output, and persistent foreign exchange constraints. She argued that cutting government subsidies and other forms of public support could reduce excess liquidity and inflationary pressure. Moreover, by increasing taxes, the government can moderate aggregate demand and further support inflation control efforts. Sanni also highlighted the importance of infrastructure development, noting that improved infrastructure could enhance productivity and boost economic growth while reducing inflation. She stressed the need for greater transparency in resource allocation and public financial management to improve economic efficiency. Furthermore, she urged the government to tackle corruption, which would not only enhance economic efficiency but also attract foreign investment. Sanni concluded by advocating for export diversification, especially in agriculture and non-oil sectors, as a means to lessen Nigeria’s reliance on oil and buffer the economy against global oil price volatility. 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.