Nigeria’s 10x taxpayer surge faces unproven compliance test

The expansion of Nigeria’s taxpayer base from 10-million to 100-million marks a significant structural shift. However, the critical question is whether this surge will translate into real revenue or remain largely a paper exercise. Analysts argue that the success of the drive rests not on the size of the register, but on the ability of the system to convert expansion into actual payments.

Taiwo Oyedele, the presidential tax committee chairman, noted that the number of individuals registered for tax purposes has increased tenfold. Thousands of informal businesses are now seeking registration daily as reforms drive increased formalisation across the economy. Yet, tax partner at Forvis Mazars Ajibola Sogunro cautioned that an increase in registered taxpayers does not necessarily translate to a proportional rise in income tax revenue.

​Digital infrastructure and the 2026 reforms

​The sharp increase follows the rollout of the Nigeria Tax Act (NTA) 2025 and related reforms, which took effect from January 2026. This data-driven system aims to widen the net while shielding low-income earners. Under the new framework, the state captures all individuals and businesses within a unified database linked to national identity numbers (NIN) and corporate registrations.

​Compliance is now enforced through mandatory e-invoicing and real-time transaction validation. These reforms extend visibility to previously under-taxed segments, including freelancers, digital content creators, and Nigerians earning income from foreign platforms. Despite the technology, Sogunro questioned the metrics used to derive the 100-million figure, noting that the link between a larger register and higher revenue is often overstated for direct income tax.

​Closing the gap on the African average

​Nigeria generated N28,3-trillion in tax revenue in 2025, exceeding its target of N25,2-trillion. Non-oil taxes contributed N21,5-trillion to this total. Company income tax accounted for N7,72-trillion in the first nine months of that year, while value-added tax (VAT) reached N6,4-trillion. Despite these gains, Nigeria’s tax-to-GDP ratio of about 13,5% remains below the African average of 16,1%.

Government is targeting an 18% ratio by 2027. If 20% to 30% of the 100-million registered individuals begin paying even modest taxes, the impact could be substantial. In theory, this could triple the personal income tax base and push total collections closer to the N40,7-trillion revenue target for 2026.

​Compliance challenges in the informal sector

Chartered Institute of Taxation of Nigeria fellow Idi Ivo stated that the objective at this stage is to improve compliance rather than seek immediate revenue jumps. The real challenge lies in getting people to file returns and meet obligations consistently. This is particularly difficult in the informal economy, which accounts for about 55% to 58% of GDP and employs over 90% of the workforce.

While the law exempts most low-income informal workers, it targets higher-earning individuals within that segment. It introduces a flat 1% turnover tax for larger informal businesses. Bringing these groups into sustained compliance will test the capacity of tax authorities, as administrative pressure has already forced some states to extend filing deadlines.