FIR has begun a review of tax incentives.
Nigeria News Nalin The Federal Inland Tax Service (FIRS) has begun a comprehensive review of all tax benefits under its government, citing the need to increase transparency, eliminate inefficiency and ensure monetary value in the country’s tax expenditure system, the report said.
FIRS Executive Chairman Dr. Zacch Adedeji, who was represented by Mrs. Bolaji Akintola, Coordinator of the Company Services Group, at a tax expenditure workshop in Abuja on Tuesday.
Dr. Adidige said the service has identified many violations of tax incentives due to the ongoing monitoring and evaluation process.
He noted that the tax expenditure management department in the service has been asked to evaluate the essential elements of all incentives, and early discoveries revealed major issues that require urgent attention.
Some of the issues found include overlap, in some cases contradictory tax incentives; lack of coordination among key stakeholders; lack of central framework for managing incentives; and weak legislative oversight due to the absence of a specialized tax committee in the National Assembly.
Also cited is the tax on political intervention, concerns arising from the OECD’s Basic Erosion and Profit Transfer (BEPS) Pillar II framework, and ambiguity around reasons to grant certain exemptions.
According to Addeji, “The service strongly believes that data is the lifespan in tax expenditure reports. That’s why the tax expenditure management department will receive the necessary support from the service to leverage our integrated digital tax management system, tax management system, tax management and any other ICT tools and any other ICT tools needed to ensure accurate and effective data collection.”
Looking ahead, the FIRS Chairman said the agency is ready to work with regional and international organizations, including the Economic Circle of West Africa (ECOWAS), the International Monetary Fund (IMF), the World Bank and the ADDIS Tax Program (ATI), to build a strong tax expenditure value chain that supports responsibility and effectiveness.
He said that despite some abuses have been observed, there are broader concerns about the ongoing relevance of many of the current tax benefits. To address these issues, FIRS proposed several reforms, including revisions to legal instruments that enable tax expenditures. Addeji explained that these changes are crucial to addressing abuse, aligning the system with global tax reforms such as the BEPS Pillar II minimum tax law, and making the framework more adapted to changing economic realities.
FIR also advocates the establishment of a centralized mechanism for regulating and monitoring tax incentives. It believes that such an arrangement will enable a continuous cost-benefit analysis (CBA) to determine whether each tax incentive is still reasonable. This model will eliminate duplication and overlap between ministries, departments and agencies (MDAs).
The Executive Chairman stressed the urgent need for inter-agency cooperation to change the tax expenditure ecosystem, especially when the responsibility for impact assessment and assessment remains largely on MDAs such as the Nigerian Investment Promotion Commission (NIPC), the Nigerian Regional Agency for Export Treatment (NEPZA) (NEPZA) and the Oil and Gas Free Zones Authority (OGFFZA).
Dr. Addeji draws attention to the growing pressure on FIR to increase revenue from tax revenues, while direct donations from certain MDAs to federal accounts are declining.
Despite these challenges, FIRS maintains significant contributions through reforms and strategic plans, he said. In 2024, the agency collected a total of 21.6 trillion guilds of tax revenue in the current fiscal year, with a target of N25.2 trillion.
Prior to the event, Mr. Ikata John, head of the Tax Expenditure Management Department, stressed that while tax benefits play an important role in encouraging investment, supporting industries and achieving policy objectives, their fiscal impact must be carefully managed.
He noted that designing incentives for poor or under-monitoring could significantly reduce government revenue, thus defeating its original purpose. “The workshop provides a key platform for stakeholders to check whether tax expenditures are meeting their expected goals and whether relevant expenses are accurately measured,” he said.
Mr John added that FIRS remains committed to promoting a fair, efficient, transparent and responsible tax system.
