FIRS: Zacch Adedeji Pioneering A New Era In Nigerian Tax Administration
By: Musa Kabiru
Since Nami, the immediate past head of the Federal Inland Revenue (FIRS) kick-started the shift in focus to non-oil revenue, Nigerians have watched as the FIRS’ influence as a crucial player in Nigeria’s economic development has expanded beyond its tax collection responsibility. But if Nami was the foundation layer, then Zacch Adedeji is the finisher. This is because, FIRS under the leadership of Adedeji has entered a transformative phase, driven by innovative policies, technological advancements, and a revamped legal framework that is redefining tax administration in the country.
One of the key initiatives under Adedeji’s leadership is the unification of taxes, a process aimed at simplifying tax administration across various tiers of government. Nigeria’s complex tax regime has historically been a burden for businesses and individuals, with numerous overlapping taxes imposed by federal, state, and local authorities. The lack of coordination has resulted in inefficiencies, including tax evasion, underpayment, and an over-reliance on oil revenues.
Adedeji’s FIRS has taken bold steps to harmonise tax codes and remove redundancies in the system, making it easier for taxpayers to understand their obligations and for the government to ensure compliance. The unification effort also involves close collaboration with state revenue boards to ensure that taxes are collected fairly and transparently, while avoiding double taxation.
This simplification is part of a broader strategy to increase the tax-to-GDP ratio, which remains low in comparison to other African economies. By reducing the tax burden on compliant businesses and ensuring that taxes are collected more efficiently, Adedeji aims to broaden the tax base and enhance revenue generation. This new approach aligns with the broader economic goals of President Bola Tinubu’s administration and aims to position Nigeria on a sustainable fiscal path, a position recently supported by Bill Gates.
A critical component of Adedeji’s vision for the FIRS is the integration of technology into tax collection and remittance. The agency has embraced digital tools to enhance efficiency and transparency in the system. One such innovation is the automation of tax filing and payment systems, which allows taxpayers to file returns and make payments online, reducing the need for physical interaction and minimising opportunities for corruption.
The FIRS has also introduced a centralised database to monitor tax compliance across sectors, making it easier to track payments and enforce penalties for non-compliance. This real-time data allows the agency to identify sectors and individuals who may be underreporting their income or avoiding taxes altogether.
Beyond adopting cutting-edge technology to streamline the tax collection process, technology has also improved the FIRS’ ability to detect and prevent tax fraud. The agency has partnered with banks and other financial institutions to ensure that tax remittances are automated and accurately reflected in government accounts. This partnership has led to a significant reduction in leakages, positioning FIRS as a technologically advanced revenue authority in Africa.
A key plank of Zacch’s transformation has been an improved legal framework. Adedeji’s leadership at the FIRS has coincided with significant improvements in the legal framework governing tax administration in Nigeria. Recognising that outdated laws were a hindrance to effective tax collection; he has championed reforms aimed at modernising the system to reflect contemporary realities.
These reforms include updates to tax laws that align with international best practices and the evolving global economy. For instance, provisions have been made for digital taxation, ensuring that multinational tech companies pay their fair share of taxes for the business they conduct within Nigeria. Additionally, the FIRS has made strides in strengthening legal frameworks to address base erosion and profit-shifting (BEPS), a practice used by some companies to shift profits to low-tax jurisdictions, thereby avoiding tax in Nigeria.
The improved legal framework under Adedeji’s leadership has created a more favourable environment for businesses, promoting voluntary tax compliance and reducing disputes between the FIRS and taxpayers.
Yet, one of the most innovative steps taken by the FIRS is the introduction of new tax mechanisms that tap into previously untaxed revenue streams. For example, following the unification of Nigeria’s exchange rate and the resulting windfall for banks and other financial institutions due to the foreign exchange (forex) policy change, the FIRS has implemented a windfall tax on banks profiting from these gains. This measure ensures that the government shares in the profits generated by forex fluctuations, adding a significant revenue stream to public coffers.
This innovative approach reflects Adedeji’s ability to adapt tax policy to current economic trends and capture additional revenue from sectors that have previously enjoyed tax exemptions or favourable treatment. In addition to the windfall tax, there have been discussions about introducing taxes on digital transactions and wealth taxes aimed at high-net-worth individuals, further expanding the government’s revenue sources.
But, besides his organisational tweaks, Adedeji’s competence and strategic thinking have become a great asset to President Tinubu, who has demonstrated his confidence in the FIRS boss by including him in all significant economic teams. Adedeji’s presence in these teams reflects his importance in shaping the country’s fiscal policy and ensuring that tax reforms are aligned with broader economic objectives. He has demonstrated a deep understanding of Nigeria’s financial landscape and his innovative approach to taxation makes him an invaluable asset in driving economic growth and financial stability.
The president’s trust in Adedeji also signals that the FIRS will continue to play a central role in the government’s economic agenda. Whether through tax policy adjustments or active participation in discussions on fiscal reforms, Adedeji has emerged as a rallying point of influence in the trajectory of Nigeria’s economy in many ways.
This influence is no doubt informed by trailblazing gains seeing as the FIRS has already smashed its tax revenue targets for 2023, exceeding projections by a significant margin. It goes without saying that this success is a testament to the effectiveness of the FIRS under Adedeji’s watch, as well as the increased professionalism among FIRS staff. Nigerians now expect the agency to surpass its ambitious 2024 targets once again, thanks to new taxes, expanded tax collection mechanisms and more robust enforcement strategies.
It is evident that the improved performance of the FIRS is driven by a combination of better tax collection methods, higher taxpayer compliance reflecting confidence on the part of taxpayers, and the implementation of innovative tax policies that have expanded the revenue base. Adedeji has also emphasised training and capacity building within the FIRS, leading to improved professionalism and a more efficient workforce.
The role of Adedeji in the landmark decision allowing local refineries like Dangote Refinery to purchase crude oil in Naira and sell refined products in the same currency only goes to show the man’s mounting influence. This policy shift reduces the pressure on Nigeria’s foreign exchange reserves while encouraging local production and refining. It’s a critical move for reducing the country’s reliance on imported petroleum products and aligning fiscal policies with the broader goals of domestic industrial growth.
One of the hallmarks of Adedeji’s tenure at the FIRS has been the improvement in professionalism among FIRS staff. Through continuous training, leadership development, and his insistence on integrity, the agency has become more efficient in its operations. This shift in culture has resulted in faster processing of tax returns, quicker dispute resolutions, and a more taxpayer-friendly approach that encourages voluntary compliance.
Nigerians are witnessing a remarkable transformation in FIRS under Zacch Adedeji. He is positioning the tax agency as a model for tax administration in Africa and he has relied on a combination of technology, legal reforms, innovative taxes, and a professional workforce to get it done. The FIRS is, today, better positioned to enhance Nigeria’s revenue generation capabilities while driving economic growth. With the continued support of President Tinubu, Adedeji’s FIRS is well on its way to setting new benchmarks for success in the years ahead.
Kabiru writes from Kaduna
