Nigeria’s tax-to-Gross Domestic Product ratio, which in the last 12 years, hovered around five to six per cent, has risen to 10.86 per cent by the end of 2021.
The new ratio was communicated to the Federal Inland Revenue Service (FIRS), via a letter signed by the statistician-general of the federation, Prince Adeyemi Adeniran, on the 25th of May 2023, following a joint review by the Nigerian Bureau of Statistics (NBS), in collaboration with the Federal Ministry of Finance and the FIRS, using data from 2010 to 2021.
The revision took into account revenue items hitherto not previously included in the computations; particularly, relevant revenue collected by other agencies of government.
Tax-to-GDP ratio is a measure of a nation’s tax revenue relative to the size of her economy as measured by GDP. The ratio is a useful tool for assessing the “health” of a country’s tax system, and highlighting its tax potentials relative to the size of the economy. It is the ultimate measure of the effectiveness of a nation’s tax system compared to other countries. -LEADERSHIP
