Adedeji: Nigeria Lacks Provision to Tax the Informal Economy

Dr. Zacch Adedeji, the chairman of the Nigeria Revenue Service (NRS), stated Wednesday that the nation does not yet have a system in place to tax businesses in the unorganized sector of the economy.

According to Adedeji, the formal economy was intended to be taxed under the current tax laws.

The chairman of the NRS addressed the Editorial Board in Abuja regarding the new tax laws’ implementation.

According to him, encouraging informal firms to formalize their activities is the only way to tax them.

“You cannot tax what is informal,” stated Adedeji regarding the informal sector. They are hence referred to as informal. They must first be formalized in order to be taxed. Urge them to register so they can develop. They can be taxed appropriately after they are formally classified.

Engagement and education will go on. Our media, engagement, and stakeholder relations teams allow us to customize solutions. Our objective is to assist small enterprises in expanding or, at the very least, maintaining their operations.

Adedeji went on to say that, in contrast to rumors, poor Nigerians were not subject to the Value Added Tax (VAT). He said it was actually a consumption tax with exemptions.

He stated that the Nigeria Tax Administration Act (NTAA) 2025 was designed to alleviate the tax burden on the impoverished and that the new tax system has made sure that only earnings or income are taxed, not investments or capital.

He said that while the new tax changes had improved accountability, capability, and clarity in tax administration, technology and procedure had also made sure that revenue collection was more closely monitored.

Less than 10% of people worldwide pay taxes, he claims. “VAT is not imposed on the poor,” he continued.

He declared that no company would be shut down for violation during his administration.

Adedeji stated, “I have to support your growth if I want revenue to increase.” My purpose is not to stifle enterprises. I do not work as a police officer or pursue bandits. I think of myself as a farmer pruning a tree to increase its yield.

Audits are becoming a part of operations because of this. Together with tax officials are auditors. I’ve advised them to never close a business because it is impossible to make up for lost sales nowadays. If a company doesn’t turn a profit, there is nothing to tax.

“For this reason, we now have tax service partners in every operation—to help, guide, and explain businesses.”

He went on to explain that the tax credit program was discontinued by his administration because of its misuse and “because it turned tax authorities into project supervisors, which we are not equipped to be.”

He stated that tax credit was outside the purview of NRS and that the agency lacked the necessary expertise to evaluate the projects.

Additionally, he stated that although the federal government had provided states with more financial resources, tax reforms pertaining to VAT continued to be among the most important of the measures.

The head of NRS added that the federal government chose not to impose VAT on food and agricultural products in order to control food inflation and lower the cost of food.

The largest obstacle to the implementation of tax reforms, according to Adedeji, is still information. He added that the administration will keep listening and addressing new issues.

“Trust is important,” he remarked. First, people need to think that the government isn’t attempting to make life more difficult. That comprehension serves as the basis.

We don’t promise to be flawless. Right now, information is the largest obstacle, particularly in a setting like ours.

“We hear you. If something isn’t working, we’ll make adjustments. That’s the reason we are here.

“Tax compliance is the law,” the head of the NRS stated regarding tax accountability and compliance. It is mandatory. People pay up to 40% of their income in taxes in the other nations you named. Benefits don’t come before adherence.

We need to consider whether we are prepared for the Nigeria we discuss. We have made significant investments in education and skill development over the past three years to help graduates find employment. It is not optional to be accountable.

“Government representatives are responsible for the use of tax money. Nowadays, people are asking questions, and for good reason. The days of undervaluing folks are passed.

“Trust takes time everywhere, not just in Nigeria,” continued Adedeji. For this reason, we concentrated more on practical execution than on justifications. People are now witnessing the reality of what we said.

Feedback is welcome. We will continue to make adjustments even though this procedure will not be flawless. The rule of law and transparency are non-negotiable. I’ve instructed my employees to keep everything open.

Adedeji also talked about non-remittance of taxes and deductions.

He revealed that revenue agencies will now claim costs of operation rather than collection costs under the consolidated law, emphasizing that the government should be able to finance its agencies.

He stated, among other things, that individual bank account balances were not subject to taxation.

“Let me explain why it is difficult to do that now,” he continued. Pay is an expense that can be deducted. Evidence of tax remittances is the only way to demonstrate that salaries were paid. Thus, the system operates on its own.

Agencies were collecting taxes separately, which is one of the reasons we consolidated the law regarding the cost of collection. These expenses became operational costs when we integrated. Funding its agencies is the government’s responsibility.

“I just collect money; I don’t create it. Ensuring the success of both individuals and corporations is my job. They automatically generate income when they perform successfully.

“Creating a favorable atmosphere increases revenue rather than harassing people. For this reason, economic success is our main concern.

“A bank account is a valuable asset. No one is allowed to tax your bank account. Profit does not always follow from having money in your account.