Nigeria’s tax-to-GDP ratio increased from 10 percent to over 13.5 percent in 2024, according to President Bola Ahmed Tinubu.
The development reflects early gains from the administration’s ongoing fiscal and structural reforms targeted at widening the tax base, improving compliance and enhancing the overall efficiency of tax administration.
President Tinubu disclosed this in his second-year anniversary address delivered on Thursday, noting that the shift was the result of deliberate adjustments to tax policy, not a product of increased burden on low-income earners.
“This was not by accident. It results from deliberate improvement in our tax administration and policies designed to make our tax system fairer, more efficient and more growth-oriented,” Tinubu said.
The president highlighted key initiatives under the fiscal reform programme, including the streamlining of multiple taxation systems across federal and subnational levels, targeted reliefs for low-income households and VAT exemptions for essential goods and services.
“Essential goods and services such as food, education, and healthcare will now attract 0% VAT. Rent, public transportation, and renewable energy will be fully exempted from VAT to reduce household costs further,” he added.
According to him, these measures were designed to eliminate structural inefficiencies in the tax system and drive inclusive growth by formalising more businesses and protecting the most vulnerable Nigerians.
The administration also introduced new digital compliance tools within the Federal Inland Revenue Service (FIRS) and other tax agencies to tackle leakages and improve real-time revenue tracking.
In addition, the president noted that the fiscal adjustments formed part of a broader macroeconomic strategy that includes fuel subsidy removal, foreign exchange liberalisation, and rationalisation of government expenditure.
“With these reforms, we are creating an environment where businesses can thrive, where workers can earn more and keep more, and where the government can sustainably finance development priorities without resorting to excessive borrowing,” Tinubu stated.
Nigeria’s tax-to-GDP ratio remains one of the lowest in Africa despite the latest increase, compared to countries such as South Africa and Kenya, which record over 20 percent. However, the administration believes the upward trend signals progress in building a more sustainable and accountable fiscal framework.
Tinubu reaffirmed his administration’s commitment to achieving a 15 percent tax-to-GDP target in the medium term, as outlined by the Presidential Fiscal Policy and Tax Reforms Committee chaired by Taiwo Oyedele.
The committee has been tasked with aligning Nigeria’s tax regime with global best practices while simplifying the process for businesses and individuals to meet their obligations.
Meanwhile, recent data from the Budget Office and the FIRS suggest that tax revenue in 2024 reached new highs, supported by improved collection from the non-oil sector and expanded compliance enforcement.
Analysts say the increase in tax-to-GDP ratio, if sustained, will reduce Nigeria’s dependence on oil revenue and external borrowing while enhancing budget implementation and capital spending capacity.
The government’s broader reform agenda also includes fiscal federalism discussions to grant states greater autonomy in tax collection and utilisation, as well as the expansion of digital payment systems for easier taxpayer engagement.
With inflationary pressures and household income challenges persisting, stakeholders have advised that future tax reforms continue to prioritise equity, transparency, and economic stimulation to maintain public confidence and compliance levels.
President Tinubu concluded his address by stating that the country’s economic recovery plan remains on course and that 2025 will focus on consolidating fiscal discipline, unlocking private sector growth, and accelerating infrastructure delivery.
