Nigeria pushes regional tax reform to boost domestic revenue

Nigeria is pushing for stronger regional tax cooperation across West Africa to reduce revenue losses and improve domestic revenue mobilisation.

Nigeria’s tax reform agenda has moved beyond its borders. Abuja is now looking to its West African neighbours for help in strengthening domestic revenue mobilisation, arguing that closer regional coordination can reduce tax evasion, improve collection efficiency and make it harder for businesses to exploit differences in national tax systems.

The strategy reflects a broader reality facing African governments. Businesses, capital and digital services are increasingly moving across borders, yet tax administration remains largely national. As trade expands under the African Continental Free Trade Area (AfCFTA), gaps between tax systems make profit shifting, tax avoidance and weak enforcement easier, limiting government revenues.

For Nigeria, this is no longer just an administrative issue. Despite two years of comprehensive tax reforms, the country’s tax-to-GDP ratio remains among the lowest in the world. Weak collection continues to constrain spending on infrastructure, healthcare and education, forcing the government to rely heavily on borrowing to finance public expenditure.

Speaking at a meeting with the West African Tax Administration Forum (WATAF) in Abuja on July 14, Finance Minister Taiwo Oyedele said regional tax cooperation must move beyond technical dialogue towards measurable implementation. He urged WATAF to develop benchmarking tools and performance dashboards to assess how member states implement ECOWAS tax directives, enabling governments to compare performance, identify weaknesses, and encourage compliance across the region.

Oyedele also called on the forum to document and publish best practices in digital tax administration, informal-sector taxation, and broader tax reform, so that successful policies can spread more quickly across West Africa.

The proposal marks a significant shift in how governments think about tax reform. For decades, improving tax collection meant rewriting domestic laws, expanding tax agencies and strengthening domestic compliance. But as businesses increasingly operate across multiple jurisdictions, that approach is becoming less effective. Multinational firms often earn profits in several countries, while digital businesses can generate substantial revenue without maintaining a significant physical presence. Without coordinated rules and stronger information sharing, tax authorities struggle to determine where profits should be taxed, allowing revenue to slip through gaps between jurisdictions.

Better regional coordination would also benefit businesses. Companies operating across ECOWAS markets continue to navigate different filing procedures, administrative requirements and enforcement practices, despite years of regional integration efforts. Greater harmonisation would lower compliance costs, reduce regulatory uncertainty and make cross-border investment more attractive.

For Nigeria, the bigger prize is stronger domestic revenue. Every additional naira collected through taxation reduces the government’s dependence on borrowing and creates more fiscal space for investment in electricity, transport infrastructure, healthcare and education. At a time when debt servicing continues to consume a significant share of public revenue, improving tax collection has become as important as controlling expenditure.

Nigeria has largely completed the legislative phase of its tax reforms, introducing measures designed to simplify tax administration, broaden the tax base and reduce dependence on oil revenues. The harder task now is ensuring those reforms remain effective in an economy where trade, investment and digital commerce increasingly extend beyond national borders.

That is also where regional cooperation has historically struggled. West Africa has no shortage of integration agreements. ECOWAS has adopted numerous protocols intended to facilitate trade and economic cooperation, but implementation has often lagged behind ambition. Uneven compliance has limited many of the benefits those agreements were designed to deliver.

Oyedele’s proposal therefore goes beyond tax administration. Performance scorecards and regional benchmarking are ultimately accountability tools, intended to measure whether member states are implementing the commitments they have already made.

WATAF Executive Secretary Jules Tapsoba Sulio reaffirmed the forum’s commitment to supporting Nigeria and other member states in strengthening their tax systems, pledging continued capacity building, technical assistance, research and digital transformation initiatives.

This echoes the 2015 ECOWAS trade integration push, which also sought to harmonise policies across the region but struggled with uneven implementation. The mechanism then was different, but the result was the same: ambitious agreements, limited enforcement. The question is whether this push for regional tax cooperation will be different.

The winners: the Nigerian government, which stands to gain from improved revenue collection; businesses operating across the region, which face lower compliance costs; and West African economies, which benefit from stronger tax systems. The losers: companies that exploit differences in national tax systems, and national tax authorities that resist regional coordination.

Bottom Line: Nigeria is betting that regional tax cooperation can boost domestic revenue. The logic is sound. The challenge is implementation. West Africa has a long history of ambitious agreements and uneven enforcement. This time, the stakes are higher.