Nigeria Modernizes Tax Collection

Nigeria has signed a brand new memorandum of understanding (MoU) with France to rewrite its tax framework for the digital financial system, aiming to extend tax revenues past its borders.

Underneath the phrases of the MoU, France’s tax authority, the Path Générale des Funds Publiques (DGFiP), will help Nigeria’s Federal Inland Income Service (FIRS) in consolidating its capability to trace and tax on-line income in Africa’s main financial system.

The collaboration was signed earlier than January 2026, when Nigeria’s new tax system takes impact. Underneath the brand new tax regime, FIRS will transition into the Nigeria Income Service. The collaboration displays Nigeria’s push to modernize its income system as governments worldwide race to tax digital exercise that always escapes conventional guidelines tied to bodily presence.

“If the FIRS doesn’t apply what it’s doing now, the tech firms will proceed to evade tax in Nigeria,” stated Godwin Ukah, an Abuja-based economist and tax advisor, in an interview. He argues that if the native tax authority lacks high-tech capabilities, it is going to be unable to trace overseas firms that use superior strategies.

 “Something that may improve tax income assortment that this partnership can deliver is welcome. This partnership, coming concurrently with the brand new tax legal guidelines, will make it extra environment friendly, particularly by combining it with enhanced technological functionality,” he added. Ukah famous that DGFiP’s superior system makes it a alternative accomplice for the Nigerian company.

Some Nigerians have argued that the settlement may endanger Nigeria’s tax system. The partnership permits Nigeria to study from that have and is “advisory, non-intrusive, and completely underneath Nigeria’s management,” based on officers. The brand new tax system diminished the company tax price for medium and enormous corporations to 25% from 30% and exempted smaller corporations with earnings under a sure threshold from earnings tax, underneath 4 new legal guidelines signed by President Bola Tinubu in 2025. The reform goals to boost tax income in a rustic the place the tax-to-GDP ratio was estimated at 13.5% by Tinubu and 9.4% by the IMF in 2023.