Evaluation of Tax Reforms in Nigeria: Pre-Colonial Era to Tax Act 2025

Abstract

The study evaluates tax reforms in Nigeria: their features, implementations, and limitations. Tax reform issues in Nigeria have been on the front burner from one successive government to another. The whole idea is to diversify the revenue from a non-oil-dependent, revenue-based economy to an oil revenue-based economy and also foster an efficient administrative tax system in Nigeria. The study employed the library research method in examining the trajectory of Nigeria’s tax system, commencing before the pre-colonial era through the landmark tax reform of 1978 to the recent tax reforms of 2025. The study highlights features, achievements, and comparisons of successive tax reforms in Nigeria to the 2025 tax reform. The study reveals that while successive tax reforms progressively made some impact in the Nigerian tax landscape by increasing tax revenue (Nigeria’s tax-to-GDP ratio from 10 percent to 13.5 percent in two years after the implementation of the 2020 tax reform). FIRS were able to achieve this milestone through the introduction of some form of taxes (VAT, education tax) and the use of self-assessment and digital tax filing. However, systemic challenges such as weak implementation, exclusion of the informal sector, and fragmented administration still persist. The 2025 tax reform may mark a huge turn in the Nigeria tax system by integrating technology-driven solutions, compulsory digital services, crypto-currency taxation, a unified tax collection system, and an interface with performance monitoring tools such as revenue efficiency and performance index, with a target of a tax-to-GDP ratio of 18 percent in 2027. The study concludes by predicting that the 2025 tax reforms will enhance digital capacity, while citizen engagement is crucial for Nigeria to achieve long-term revenue sustainability.