The Nigerian government’s recent tax reforms have begun to show positive results, with the country recording a substantial increase in tax revenues for 2023. The total Company Income Tax (CIT) revenue hit an impressive N4.9 trillion, a 73% growth from N2.83 trillion in 2022. This is seen as a confirmation that the government’s fiscal initiatives are yielding desired outcomes.
One of the driving forces behind this achievement is the establishment of the Presidential Committee on Fiscal Policy and Tax Reforms, led by renowned tax expert Taiwo Oyedele, a partner at PwC. The committee has focused on refining Nigeria’s tax structure to ensure greater efficiency and accountability in revenue collection.
On a quarterly basis, the country’s CIT revenues progressed as follows: N469 billion in Q1 2023, N1.55 trillion in Q2, N1.75 trillion in Q3, and N1.13 trillion in Q4.
In addition to CIT, the government also recorded significant progress in VAT collection, bringing in N3.64 trillion—an increase of nearly 45% over the previous year’s N2.51 trillion. This amount includes both local VAT, which totaled N2.1 trillion, and foreign VAT, which reached N1.54 trillion, according to the National Bureau of Statistics.
Key contributors to the rise in CIT came from sectors such as manufacturing, telecommunications, and financial services. The manufacturing sector alone contributed N626.42 billion in CIT, marking a 33.7% increase compared to 2022. The information and communications sector was another major contributor, with N466.56 billion in CIT revenue, reflecting a 28.8% rise.
The financial and insurance sectors saw a particularly notable jump in CIT collections, reaching N458.85 billion—an impressive 119.6% increase from the previous year. Similarly, the mining and quarrying sectors experienced a robust 66.1% growth, contributing N235.16 billion.
The public administration, defense, and social security sectors generated N130.59 billion, while wholesale and retail trade, including motor vehicle repairs, raised N114.97 billion. These contributions highlight the diverse sectors driving the nation’s tax revenue growth.
Moreover, the government has intensified efforts to tackle revenue leakages and combat tax evasion. These measures include not only reforming fiscal policies but also addressing the burden of excessive and often unauthorized taxes levied on small businesses and low-income earners.
Taiwo Oyedele, in recent statements, emphasized the importance of engaging the public in discussions about tax reforms. He underscored the government’s intention to balance revenue generation with reducing the financial burden on vulnerable groups, noting that there are currently over 60 different taxes, levies, and charges in the country, many of which disproportionately affect small traders and everyday citizens.
Despite the overall positive tax performance, the water supply, waste management, and remediation sectors reported a decline in CIT revenue. This subsector generated only N1.54 billion in CIT, a 15.2% decrease from the previous year.
In the area of VAT, the manufacturing sector emerged as the top contributor, generating N578.39 billion. Following closely were the information and communications sector with N412.30 billion and mining and quarrying with N260.04 billion. The financial and insurance sectors raised N215.78 billion, while public administration and defense contributed N180.91 billion to the total VAT revenue.
These tax reforms and initiatives signal a positive shift in Nigeria’s fiscal management, with the country positioning itself to enhance revenue generation while also addressing the financial needs of its growing population.
