The Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, has raised serious concerns over Nigeria’s ballooning losses from tax incentives, stating that poor data tracking and lack of accountability make it nearly impossible to assess the true cost to the nation.
Delivering a keynote at the 2025 Tax Expenditure Workshop in Abuja, Adedeji, represented by FIRS Coordinating Director Bolaji Akintola, stressed that revenue losses through tax expenditures are largely unverifiable, owing to fragmented data and disjointed oversight across multiple government agencies.
“Tax incentives are often granted without clear insight into their actual economic benefits,” he said. “This makes it difficult to determine whether these incentives are helping or hurting our economy.”
Trillions in Revenue Lost Annually
Experts say Nigeria may be forfeiting up to ₦8 trillion every year through various tax waivers, most notably via the Pioneer Status Incentive scheme. The scheme, originally designed to boost critical sectors like industrialization, job creation, infrastructure, and innovation, has come under fire for its vague cost-benefit outcomes.
The FIRS chairman noted that, despite the noble intentions behind tax incentives, the absence of a unified tracking framework has led to abuses, redundancies, and politically driven policies that do more harm than good.
Data is Life in Tax Reporting
Adedeji didn’t mince words about the urgent need for reform. According to him, the Fiscal Responsibility Act of 2007, which mandates annual evaluations of tax expenditures by government agencies, is poorly enforced.
“We need to move beyond guesswork. Without proper data, it’s impossible to determine whether these incentives are creating value or simply draining public funds.”
To tackle this, the FIRS has empowered its Tax Expenditure Management Unit, now backed by the TaxPro Max digital platform, to monitor and evaluate all tax relief programs actively. Still, the real challenge lies in interagency cooperation and policy consistency.
Stakeholders Operating in Silos
Adedeji decried the lack of a central committee within the National Assembly to oversee tax incentives. Instead, multiple agencies, including the Nigerian Investment Promotion Commission (NIPC), the Oil and Gas Free Zones Authority, and others, administer benefits without unified oversight.
The result? Conflicting tax schemes, Base Erosion and Profit Shifting (BEPS) practices, and a serious gap in performance assessment.
The Bigger Picture: Reform Is Non-Negotiable
To address these inefficiencies, the FIRS boss called for
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Comprehensive legislative reforms to tighten and modernize tax incentive laws
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Centralized oversight to eliminate duplication across MDAs
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Consistent cost-benefit analyses to justify future incentives
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Global compliance, especially with the OECD’s Pillar II minimum tax rule
“Without strategic reforms, Nigeria will continue to lose billions without tangible returns,” Adedeji warned.
National Bureau of Statistics Weighs In
Also speaking at the workshop, the Statistician-General of the Federation, Adeniran Adeyemi, emphasized the crucial role of tax data in national economic planning. He highlighted how the inland revenue figures directly impact Nigeria’s quarterly GDP calculations, influencing policies on everything from inflation to employment.
“We can’t build solid fiscal policies without reliable tax and revenue data,” Adeyemi stated. “As tax laws evolve, so must our data-driven approach.”
FIRS Revenue Milestones & Challenges
Despite these setbacks, the FIRS has made strides. In 2024, the agency reported a whopping ₦21.6 trillion in tax revenue, with a ₦25.2 trillion target for 2025. Currently, the FIRS contributes over 60% of monthly inflows to the Federation Account.
Still, with increased pressure for higher tax revenues and declining direct contributions from various ministries, departments, and agencies (MDAs), the service is under immense pressure to close revenue leaks fast.
