Fresh data from the Budget Office of the Federation reveals a ₦1.90 trillion budget overrun on debt servicing during the first nine months of the 2025 fiscal year, underscoring a severe squeeze on the country’s available fiscal space.

According to the 2025 Third Quarter Budget Implementation Report, total debt-related obligations, encompassing domestic debt, foreign debt, and sinking fund allocations, surged to ₦12.63 trillion between January and September.

This represents a 17.65% deviation from the prorated budgetary provision of ₦10.74 trillion allocated for the period.

Key Debt Metrics (January – September 2025)

The primary driver of this fiscal expansion was core debt servicing, which recorded an excess expenditure of ₦2.07 trillion (a 19.8% overrun) against its initial ₦10.45 trillion allocation.

• Foreign Debt Servicing: Witnessed the sharpest upward pressure, climbing to ₦6.30 trillion against a projected ₦5.06 trillion allocation. This ₦1.24 trillion deviation highlights the persistent impact of currency depreciation on external dollar-denominated obligations.
• Domestic Debt Servicing: Totaled ₦6.23 trillion, exceeding its pro-rata provision of ₦5.39 trillion by ₦832.42 billion, driven by higher interest rates in the local fixed-income market.
• The Retained Revenue Metric: Debt servicing alone absorbed 2% of the Federal Government’s ₦18.63 trillion retained revenue. When factoring in the sinking fund, total debt payments consumed 67.8% of total revenue.

The Macro Implication:

For every ₦100 retained by the federal government during this nine-month window, approximately ₦67.80 went directly into servicing creditors, leaving just ₦32.20 to fund public sector salaries, ministerial overheads, statutory transfers, and capital development.

Revenue Shortfalls and the Crowding Out of Infrastructure

The debt service spike occurred alongside a substantial revenue underperformance. Aggregate federal revenues missed targets by 39.24%, bringing in just ₦18.63 trillion against a projected pro-rata target of ₦30.67 trillion.

The Budget Office pointed to consistent oil revenue deficits as the primary culprit, which overshadowed modest gains in non-oil tax collection.

This structural revenue deficit, combined with mandatory debt commitments, severely choked capital expenditure.

With actual capital spending plunging to ₦3.10 trillion against a target of ₦17.58 trillion, the data confirms that actual debt obligations outpaced infrastructure development by a ratio of more than four to one.

Strategic Outlook and Policy Response

To bridge the wider-than-expected fiscal deficit, the government relied heavily on alternative financing mechanisms. Total financing inflows reached ₦12.07 trillion, led by ₦7.08 trillion in domestic borrowing and ₦4.81 trillion in multilateral and bilateral project-tied loans.

Speaking on the structural strategy, Taiwo Oyedele, finance minister, indicated that the government plans to leverage shifting market windows to manage the profile of these obligations moving forward.

“We think that this timing is good for us to be able to maybe even refinance some of our expensive past debts, but also to raise more funding for our development at this critical time,” Oyedele noted in an interview with Bloomberg TV.

Independent economists and policy analysts warn that long-term fiscal sustainability will require aggressive domestic revenue mobilization, strategic asset optimization, and a heavier reliance on private sector capital for large-scale infrastructure projects to prevent debt service costs from completely neutralizing future economic growth.

Speaking at the 2026 Tax Conference with the theme, “Tax Reforms and Global Relevance: Positioning Nigeria’s Tax System for a Sustainable Future” which is organized by the Chartered Institute of Taxation of Nigeria (CITN), in Abuja, he said the reforms were aimed at building a stronger fiscal foundation for long-term national development rather than increasing taxation.

Oyedele said the country’s previous tax system had been weakened by fragmented administration, multiple taxation, weak compliance and unstable revenues.

According to him,

“Countries that fail to modernise their fiscal frameworks risk losing competitiveness, discouraging investment, widening inequality, and weakening economic resilience. These are risks Nigeria cannot afford to take, and opportunities we cannot afford to lose.”

The minister pointed out that the reforms were designed to simplify taxation, reduce compliance burden, encourage investment and strengthen public trust in government.

He disclosed that minimum wage earners had been exempted from personal income tax, while measures were also being implemented to reduce the burden on low-income earners and improve business competitiveness, among others.

He said,

“Our tax reforms became necessary because, for many years, Nigeria’s tax system suffered from structural weaknesses, from non-harmonised taxes to fragmented administration, scarce and unstable revenues, weak compliance, and high levels of informality.

“Businesses faced numerous impediments from inefficient enforcement and rising compliance costs. Citizens often perceived the tax system as unfair because the burden was unevenly distributed. At the same time, revenues remained insufficient relative to our development targets.

“This model became untenable, and the system was simply unsustainable. The reforms we are implementing are therefore not about additional points of taxation. They are about building a stronger fiscal foundation for long-term national development.”

Oyedele stressed that the government’s approach was guided by a simple conviction that a good tax system should enrich the real economy, support economic growth, protect vulnerable demographics, and strengthen trust between government and citizens.

According to him, the reforms seek to simplify the tax system, improve coordination, reduce disruptions, encourage investment, promote voluntary compliance, and align taxation with productivity.

He said,

“We are moving from a framework driven by discretion and fragmentation to one anchored on clarity, certainty, and fairness.

“We do not operate in isolation. We must remain competitive, and competitiveness today depends significantly on the quality of a country’s fiscal architecture.

This is why our reforms incorporate internationally recognised best practices while remaining sensitive to Nigeria’s realities.”

According to the minister, one of the strongest complaints from businesses had been multiple taxation across different levels of government, adding that the government is working to modernise tax administration, improve coordination, and reduce the burden on taxpayers, especially low-income earners.

He said,

“If our tax system and laws are to facilitate a globally competitive economy, we must continue strengthening implementation across the federation.

“We are grateful to the states that have adopted tax modernisation laws in their various jurisdictions, and we encourage others to do the same sooner rather than later.”

Also, speaking at the conference, Mr. Innocent Ohagwa, president/ chairman of Council, Chartered Institute of Taxation of Nigeria (CITN), described taxation as a central pillar of Nigeria’s transition away from oil dependence.

Ohagwa commended the Tinubu administration, the National Assembly and other stakeholders for delivering the new tax laws, saying the reforms reflected a firm and collective commitment to sustainable economic development.

He urged tax professionals to support implementation of the reforms by promoting transparency, accountability and compliance across the system.

He said,

“As Nigeria shifts from a long-standing dependence on oil toward a more sustainable fiscal model, taxation has rightly emerged as a central pillar of our national revenue strategy.

“CITN has convened this 28th ATC under the theme to provide a critical platform for tax professionals, policy makers, administrators, members of the academia, business leaders and stakeholders-alike to rigorously interrogate the ongoing reforms, evaluate the challenges and identify how best they can strengthen our tax system for long-term sustainability, global competitiveness and enduring fiscal relevance.”

Ohagwa said,

“As tax professionals, our contributions have never been more crucial than now, particularly with reference to Sections Section 33(1) and Section 147 of the Nigeria Tax Administration Act (NTAA) 2025.

“As President of CITN, I call on all members across the public and private sectors to rise to the demands of this moment and support the implementation of the reforms.

“Every CITN member must become a stakeholder of the reform agenda by deepening their technical knowledge, upholding the highest ethical standards and providing sound, objective guidance to taxpayers, institutions, employers and government.”

He said,

“We must firmly reject practices that undermine compliance and instead uphold the principles of transparency, fairness, and accountability in all our engagements. As professionals, we must lead by example by ensuring full compliance with our own tax obligations before encouraging others to do the same.

“CITN stands ready to support the government, including the NRS, State Internal Revenue Services, the JRB, National Tax Policy Implementation Committee, office of the Tax Ombuds and all stakeholders, in achieving the objectives of these reforms.”

Speaking at the official handover ceremony from his predecessor, Wale Edun, the Minister expressed appreciation for the groundwork laid in stabilising the nation’s economy.

“I formally assumed office yesterday as the Minister of Finance and Coordinating Minister of the Economy, following a handover from my predecessor, Mr. Wale Edun. I sincerely appreciate him for his service to our country and the foundation he has laid,” Oyedele stated.

He noted that Nigeria stands at a critical turning point, emphasizing the need to transition from stabilisation to sustainable growth and inclusive prosperity.

“Nigeria is at a critical juncture. Having taken important steps to stabilise the economy, our immediate task is to consolidate these gains, deepen ongoing reforms, and ensure they translate into tangible benefits for all Nigerians.”

Strategic Priorities

Outlining his policy direction, Oyedele highlighted five core priorities that will shape the ministry’s agenda:

Productivity & Growth: Creating a predictable, investor-friendly environment anchored on policy coherence, consistency, and clarity.

Fiscal Discipline & Sustainability: Ensuring transparent and prudent management of public resources.

Revenue Optimisation & Fair Taxation: Harmonising revenue administration, broadening the tax base, reducing pressure on vulnerable populations, and supporting economic growth.

Stronger Government Coordination: Aligning efforts across all tiers of government and institutions to maximise policy impact.

Public Policy Private Partnership (PPPP): Deepening collaboration with the private sector and stakeholders for data-driven policy design, co-implementation, and continuous feedback.

The Minister stressed that policy success will ultimately be judged by execution and outcomes.

“Good policy design alone is not enough; success will be defined by execution. We are committed to disciplined implementation, accountability, and measurable results.”

Oyedele reaffirmed his commitment to working collaboratively across government, the private sector, and with citizens to accelerate economic growth and build a more stable, inclusive, and prosperous Nigeria.

“I look forward to working with colleagues across government, the private sector, and all Nigerians as we move from reform to result, accelerate growth and build a more stable, inclusive, and prosperous economy.”

President Tinubu emphasised that the new tax system is designed to be people-centred and investment-friendly, thereby advancing the nation’s development goals.

The President made these remarks at the commissioning of the 16-storey Nigeria Revenue Service (NRS) Headquarters. Senate President Godswill Akpabio and the Speaker of the House of Representatives, Tajudeen Abbas, were in attendance, along with ministers, senators, members of the House of Representatives, private-sector leaders, and the governors of Kwara, Imo, Borno, Kogi, Plateau, and Anambra States.

President Tinubu explained that the new tax laws, which became fully operational in January, are intended to liberate the economy from the constraints of archaic laws and make it more globally competitive.

“On my inauguration day, I made a solemn pledge that we will move Nigerians from the dimness of uncertainty into the clear light of renewed hope. I committed to confronting structural weaknesses, restoring financial stability, and building an economy anchored in discipline, equity, and opportunity. Today, I stand before you to reaffirm that these words were not rhetoric; they were a covenant with the Nigerian people”.

The President commended the Executive Chairman of the NRS, Dr Zacch Adedeji, for his exceptional performance and the successful completion of the edifice, which provides a conducive working environment for 3,000 staff, along with a data processing centre, clinic, auditorium, training facilities, a gym, and a library.

He expressed delight that the NRS headquarters was completed in 30 months, after more than two decades since the foundation was laid.

“We are not gathered here merely to commission an edifice. We are here to mark a milestone in a larger national journey: the deliberate strengthening of our fiscal foundation and rebuilding of confidence in public institutions. No serious nation can achieve lasting prosperity on a weak and fragmented revenue system. No government can demand trust from its citizens when taxation is opaque, inefficient or unjust.

“That is why this administration took the bold decision to embark on far-reaching tax and fiscal reforms,’’ he said.

President Tinubu also thanked the Minister of State for Finance, Taiwo Oyedele, for his leadership in modernising colonial-era tax laws into “manageable, realisable, and understandable levels.”

Addressing concerns about the new tax reforms, President Tinubu assured that the NRS has repositioned itself as a revenue hub, equipped with capacity and technology, backed by research and data-driven policies, and sensitive to the needs of the people, particularly the vulnerable.

“The reforms are designed to simplify our system, eliminate distortions and create a fair, transparent and investment-friendly environment. Our direction is clear: to have a revenue system that rewards enterprise, supports growth, and ensures that every contribution to the national cause is matched by feasible value for the people.

“The early results are encouraging and fantastic. Mr Adedeji, thank you very much. We are witnessing improved fiscal stability, strength, stronger foreign reserves, a more efficient trade ecosystem and increased investor confidence in Nigeria’s economic direction,’’ the President added.

“These gains are not incidental. They are the products of deliberate policy, sustained effort, and a commitment to doing what is right for the long-term prosperity of our nation. It is within this context that we commission the headquarters of the Nigerian Revenue Service.

“The building is more than concrete and steel. It is a symbol of a new standard of professionalism, transparency, efficiency and service. It reflects our resolve that institutions must rise to meet the demand of reforms and the expectations of the Nigerian people. We must thank all Nigerian people for enduring and persevering,’’ he stated.

The President urged the Executive Chairman of the NRS to ensure that the institution upholds the highest standards. “It must not only collect revenue, but it must also build trust, ensure fairness, and demonstrate that government can be accountable, efficient, and responsible.

“It must become a model institution that earns confidence at home and respect abroad. Let the future be better than the past. Let’s make and keep that promise sincerely for the future. Let those who will come after us, politics apart, be ready to build on history that is greater than the achievements of their forbears,’’ the President said.

Senate President Godswill Akpabio urged Nigerians to be patient with the Tinubu administration, noting that the economic reforms are already yielding results.

“Nobody has noticed that since we came on board, we have not had 3-5 km of vehicles lined up at fuel stations to buy petrol. There was a time that we were prepared to pay even N10,000 per litre for fuel, but they could not see the fuel. But today, there is no single fuel queue in Nigeria.

“Nobody is saying that because we encouraged and partnered with the private sector for the first time, we are now producing what we consume and consuming what we produce. We even go to the extent of sending it to other countries,’’ the Senate President noted.

The Speaker of the House of Representatives, Tajudeen Abbas, commended the President for strengthening the economy with new reforms.

“For many years, our revenue system struggled less from a lack of effort than from a lack of coherence. We operated multiple regimes, overlapping mandates and fragmented legal frameworks. The result was predictable—high effort, low yields, limited public confidence.

“What has come under your administration is not only the policy directive, but also the underlying logic of the system. The reforms have sought to align rules, institutions and incentives within a single framework”, Abbas said.

In his welcome address, the Executive Chairman of the NRS, Dr Zacch Adedeji, described the commissioning of the headquarters building as “the culmination of a defining institutional journey.”

“When this administration assumed office, Nigeria faced a critical inflexion point marked by fiscal constraints, weakened investor confidence and structural distortion across key sectors. What followed was not an incremental adjustment but a comprehensive concept of the nation’s economic and financial architecture.

“Through your decisive actions, you restored microeconomic credibility, unified foreign exchange markets, cleared long-standing backlogs and re-established confidence in Nigeria’s ability to operate a transparent and market-driven system,’’ he added.

Adedeji thanked the President for providing visionary leadership and support to the NRS.

“These were not easy decisions, but they were necessary. History will recognise and be kind to you for them. Building on this foundation, your administration undertook one of the most significant revenue reforms in Nigeria’s history.

“To put this in perspective, the first tax laws in this country were enacted in 1903, 133 years ago. We changed that. Over 60 fragmented tax laws were streamlined into a simplified and more coherent framework, strengthening compliance, improving predictability, and enabling efficient administration,” Adedeji noted.

He emphasised that the new tax laws are not “driven by a higher tax burden, but by a better system with broadened coverage and improved structural governance.”

According to Adedeji, “Five years ago, the total collection for Nigeria’s revenue was N6.8 trillion, and by 2025, we ended the year with N28.7 trillion.

He added that, beyond taxation, fiscal governance has been strengthened to improve remittances, enhance transparency, and tighten control over public finance flows.

“To put this in perspective, Mr President, in May 2023, when you assumed office, the total money available for the federation was N711 billion. By September 2025, it was N3.6 trillion, which is 400% above what we inherited, and you can see that from the commissioning you’ve done in the states. They allude to the fact that you’ve given them what no government in the history of Nigeria has given to them.

“Trade has been modernised through the recently launched National Single Window (NSW), reducing inefficiency and boosting revenue. Ten years ago, we tried to implement the National Single Window six times. In less than three years under your leadership, in collaboration with the Nigeria Customs Service, we launched the National Single Window on March 27th,” Adedeji stated.

Guan Shuai, the Managing Director of China Civil Engineering and Construction Company (CECC), which completed the edifice, delivered a goodwill message.

He stated that President Tinubu has demonstrated visionary leadership within less than three years in office, by taking tough decisions that will benefit the nation and posterity.

Shuai noted that the Renewed Hope Agenda has repositioned the economy for foreign direct investment, with the President consistently commissioning infrastructure projects across states.

“When I was a young man, I saw him use his leadership and visionary planning to achieve so much in Lagos, and now he has established a party and united many people,’’ he stated.

The disagreement highlights a growing tension between the government’s aggressive reform agenda and the interpretations of top-tier professional service firms.

Just days after Nigeria’s ambitious new tax framework came into force on 1 January 2026, global advisory firm KPMG raised serious concerns that the very laws designed to simplify and modernise the country’s tax system may instead be sowing confusion and risk, potentially undermining investor confidence and economic growth.

But, Oyedele dismissed claims made in the KPMG publication that suggested “gaps” and “errors” existed in the legislation.

According to the Committee Chairman, many of the provisions KPMG labeled as “errors” were actually deliberate strategic shifts designed to simplify the tax code and eliminate regressive taxes.

Oyedele emphasized that the reforms, specifically the Nigeria Tax Act 2026, are aimed at creating a predictable environment for investors, contrary to the “uncertainty” suggested by the firm’s report.

He cautioned that analyzing the law in isolation without understanding the broader 2030 digital economy goals leads to “invalid conclusions” that could cause unnecessary panic among corporate taxpayers.

What This Means for Businesses

Despite the critique from KPMG, the government has signaled that it will not back down on the implementation timeline.

This development coincides with a high-stakes legal battle at the Federal Capital Territory (FCT) High Court, which is set to hold an accelerated hearing on Wednesday, December 31, just 24 hours before the planned January 1 implementation date.

Allegations of “Fake Laws” and Alterations

The opposition, led by Minority Leader Kingsley Chinda, raised the alarm over what they described as “unlawful alterations” to the tax laws.

According to a joint statement from the caucus, the versions of the Tax Acts gazetted by the Federal Government materially differ from the harmonized bills passed by both chambers of the National Assembly and signed by President Bola Tinubu.

“Any attempt to foist altered laws on Nigerians is an attack on the independence and constitutional role of the National Assembly,” the statement read.

The caucus urged the business community and citizens to disregard any version of the tax laws that lacks the authentic signatures of the Clerk to the National Assembly (CNA) and the President.

The “January 1” Deadlock

The controversy stems from claims made on the floor of the House by Rep. Abdussamad Dasuki, who alleged that the gazetted version of the Tax Acts contains provisions that were never debated or approved by lawmakers.

In response, Speaker Tajudeen Abbas has already inaugurated a “high-powered” seven-man ad-hoc committee to investigate the alleged discrepancies.

Despite the ongoing probe, the Federal Government had remained committed to the January 1 rollout.

However, NANS has warned that if the laws are not suspended by January 14, 2026, it will trigger coordinated nationwide student protests.

The students’ body cited a “glaring failure in public education” regarding the scope and long-term implications of the reforms.

The Judicial Battle: Wednesday’s Showdown

As political pressure mounts, the focus has shifted to the FCT High Court. On Monday, Justice Kawu granted an accelerated hearing in a suit filed by the Incorporated Trustees of African Initiative for Abuse Public Trustees.

While the court declined to grant an immediate interim injunction to restrain the Federal Government from enforcing the laws on January 1, it ordered that all defendants, including the President, the Attorney-General, and the National Assembly, be put on notice for a definitive hearing on Wednesday, December 31.

Key Acts under Legal Challenge:

• Nigeria Tax Act, 2025
• Nigeria Tax Administration Act, 2025
• Joint Revenue Board of Nigeria (Establishment) Act, 2025
• Nigeria Revenue Service (Establishment) Act, 2025

The Government’s Defense

Amidst the friction, the Presidency and the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Taiwo Oyedele, have continued to defend the reforms.

The government maintains that the laws are essential for consolidating existing tax legislation and reducing the burden of multiple taxation, which currently affects an estimated 98% of Nigerian workers.

With the court’s ruling expected just hours before the New Year, the Nigerian business community remains in a state of flux, waiting to see if they will be governed by a new tax regime on January 1 or if the status quo will prevail pending the outcome of the legislative and judicial inquiries.

He also disclosed that large businesses will benefit from reduced tax obligations under the new reforms. Oyedele made this known on Friday, December 26, 2025, in Lagos, after briefing President Bola Tinubu on the committee’s progress.

According to him, the overarching goal of the tax reforms is to drive economic growth, promote inclusivity, and ensure shared prosperity for Nigerians.

“Small businesses, 97% of them, will be exempt from corporate income tax, VAT, and withholding tax, while large businesses will see a reduction in the taxes they pay.

“The whole idea is to promote economic growth, inclusivity, and shared prosperity for our people. We are excited about the progress made so far and are looking forward to January 1, 2026,” Oyedele said.

Responding to calls for the suspension of the reforms following claims that the gazetted laws differ from the bills passed by the National Assembly, Oyedele clarified that the tax reform bills spent nine months at the National Assembly before being signed into law.

He noted that since President Bola Tinubu assented to the bills, the committee has been actively engaging in public sensitisation, capacity building, system upgrades, and stakeholder consultations ahead of implementation.

“As you know, the tax reform bills were at the National Assembly for nine months, from October 2024 to June 2025. Preparation started from day one. Since the laws were signed, we’ve had about six months of preparation, system upgrades, capacity building, and sensitisation.

“This type of reform is a work in progress. You don’t get perfection immediately; you improve as you go. We believe we are ready to commence,” he said.

Oyedele explained that the reason two of the tax laws took effect about six months earlier was to allow key institutions to prepare adequately.

“For instance, you cannot set up the office of the tax board and expect it to function fully from day one. These things take time,” he added.

He further emphasised that continuous engagement with professionals and organised private sector groups remains a priority as implementation approaches.

On revenue expectations, Oyedele stressed that the reforms are not designed for immediate revenue generation but to promote fairness and expand the tax base.

“The intention is not instant revenue. Over time, revenue comes from growth. When the economy grows, people pay taxes not because rates have increased, but because the tax base has expanded. These reforms also eliminate wasteful and distortionary incentives, encourage a stronger tax culture, and improve compliance.

“When people who were previously not paying taxes begin to do so, and they are not low-income earners, society becomes fairer, and government revenue improves naturally,” he concluded.

Demystifying the New Nigeria Tax Act (NTA 2026): Ujoatuonu Nkwachi Highlights What Individuals, Businesses Need to Know

Recall that Abdussamad Dasuki, a member of Nigeria’s House of Representatives, alleged that multiple versions of the new tax laws are in circulation, and that the officially gazetted copies differ from the versions actually passed by the National Assembly.

Taiwo Oyedele, chairman, Presidential Committee on Fiscal Policy and Tax Reforms, joined Channels TV to discuss the issue on ground.

He clarified that the matter is not a legislative versus executive blame game, nor a political contest, but a critical governance issue centered on process integrity.

Oyedele emphasized that tax policy directly affects citizens and lies at the heart of the social contract.

He cautioned against misinformation, noting that a viral document claiming specific alterations to the tax laws surfaced before the committee set up to investigate the matter had even convened.

He stressed that reforms must be anchored in trust and facts, not fear or speculation, which only create uncertainty and undermine public confidence.

“Rather than spreading misinformation, this moment should be seized to strengthen our processes, deepen accountability, and build a tax system that moves Nigeria forward,” Oyedele stated.

He further warned that rejecting or stalling reform is not a neutral choice, as it perpetuates a broken system that overtaxes workers, hurts small businesses, sustains multiple nuisance taxes, and distorts economic growth.

He also encouraged Nigerians to embrace reform, safeguard integrity in governance, and ensure that tax systems serve as a foundation for inclusive and sustainable economic progress.

The initiative, unveiled on November 6 and 7, 2025, aims to bolster economic growth by easing the tax burden on a sector vital to Nigeria’s economy.

Women, who play major roles in Small and Medium-sized businesses (SMEs) and the informal sector, contributing over 40% to Nigeria’s GDP according to a 2024 World Bank report, have long faced multiple taxation, overregulation, and harassment.

In his address, Oyedele emphasized that the new tax framework is designed to support them by introducing exemptions from Corporate Income Tax, VAT, Withholding Tax, and PAYE for small businesses and low-income employees.

Larger firms will benefit from harmonized taxes, expanded input VAT credits, and economic incentives, all aimed at reducing production costs and improving profitability starting January 1, 2026.

Speaking at the event, Taiwo Oyedele explained that the government’s tax reforms are meant to “reward compliance” and allow businesses to grow before being taxed.

“We started the tax and fiscal reform with how people do business, how those businesses grow, and how finance is placed,” he explained. “You can’t knock on the door and say, ‘Tax me.’ Let’s have a conversation on how to create a business that can pay corporate tax. So, the reforms are people-centric.

He added, “If you run a small company where your annual turnover, that’s the income you get, is N100m or less, your corporate tax rate will be zero per cent. What is even more interesting is that the Corporate Affairs Commission has announced that it will register 250,000 small companies free of charge.”

Meanwhile, in a post on X (formerly Twitter), Taiwo Oyedele, highlighted the vital roles that women play in SMEs and their contributions to Nigeria’s GDP.

He wrote, “Women play a vital role in financing families, supporting communities, and driving economic growth. They dominate the small business space and the informal sector, including the small-scale exports, and contribute significantly to GDP and employment.

“In addition, the newly established Office of the Tax Ombud (OTO) will safeguard women and other taxpayers’ rights and curb harassment in the tax system.”

The announcement was made during the launch of the Lagos Economic Development Update (LEDU) 2025, where officials provided an in-depth analysis of the state’s economic growth and future projections. 

The report revealed that Lagos’ economy grew commendably in the first half of 2024, expanding to ₦27.38 trillion from ₦19.65 trillion in 2023.

Even with this expansion, there are still issues over the state’s low tax-to-GDP ratio, which stands at just 2.3%. Experts stressed the need for improved revenue mobilisation strategies to sustain growth and fund critical infrastructure projects.

Economic Outlook for 2025

The Lagos State Government has outlined economic projections for the 2025 fiscal year, with expectations for sustained growth and stability. Key highlights include:

• GDP Growth: Lagos state’s economy is projected to grow from ₦54.77 trillion in 2024 to ₦66.47 trillion in 2025, with real GDP growth estimated between 5.02% and 6.49%.
• Sectoral Performance: The service industry is expected to maintain its upward trajectory, supported by gains in agriculture and industrial production.
• Inflation Forecast: Overall inflation is projected at 34.2%, while food inflation is expected to be slightly higher at 34.9%.
• Revenue Projections: The government aims to generate ₦2.79 trillion in 2025, reinforcing the need for fiscal discipline and diversification of revenue sources.

Revenue Mobilisation Challenges and Reforms

Addressing the revenue gap was a key focus at the LEDU 2025 presentation. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, highlighted the disparity between Lagos’ economic size and its revenue generation.

“Lagos is big, but its revenue is small, collecting less than 2% of GDP,” Oyedele noted. “While some progress has been made, we still have a big room for improvement, and the time to change this narrative is now.”

He proposed three major strategies to enhance revenue collection:

1. Property Taxation – Lagos, with its booming real estate sector, could generate substantial revenue if inefficiencies in land titling and valuation are addressed. Oyedele pointed out that cities like Bogotá earn over $1 billion annually from property taxes, a benchmark Lagos should aim for.
2. Personal Income Tax Expansion – The government must leverage technology to capture high-income earners and the informal sector without stifling businesses. “A better approach to taxation is not to tax the seed, but the fruit. Let businesses grow, and tax them fairly on their successes,” he advised.
3. Tax Harmonisation – The state needs to simplify its tax system to reduce redundancy and improve compliance. “A fragmented tax system breeds confusion and inefficiencies,” Oyedele said, stressing the need for a streamlined approach that fosters transparency and investor confidence.

According to him, with the right reforms, Lagos could generate up to ₦5 trillion annually in Internally Generated Revenue (IGR), enabling the government to fund infrastructure, education, and healthcare effectively.

The Bigger Picture

The LEDU 2025 report also aligns with Governor Babajide Sanwo-Olu’s ‘Budget of Sustainability,’ which prioritises economic diversification, social inclusion, and infrastructural development. Commissioner for Economic Planning and Budget, Ope George, underscored the importance of evidence-based policymaking in shaping Lagos’ future.

“Themed ‘Lagos Economic Outlook: Charting a Resilient Path Towards a Sustainable Future,’ this year’s LEDU underscores our commitment to fiscal sustainability and inclusive development,” George stated.

Meanwhile, Olayinka Ojo, Permanent Secretary of the Ministry of Economic Planning and Budget, acknowledged the need to address macroeconomic challenges such as inflation and revenue constraints.

“As the economic nerve centre of Nigeria, Lagos continues to set the pace… However, we must address macroeconomic uncertainties, inflationary pressures, fiscal constraints, and global economic headwinds,” she stated.

Lagos is an attractive destination for investors, with continued growth in infrastructure, technology, real estate, and manufacturing. However, economic stability will depend on addressing inflation, exchange rate volatility, and infrastructural challenges.

The State needs to balance economic expansion with sustainable revenue strategies to secure its long-term growth.