Nigeria's tax-to-GDP ratio has consistently lagged behind compared to regional averages

Nigeria's tax-to-GDP ratio remains significantly lower than regional averages, showing a gap in revenue mobilisation. While OECD countries reached a tax-to-GDP ratio of 34.2% in 2021, and even the African regional average stood at 18.8%, Nigeria's tax revenue represented only 6.7% of its GDP. This disparity emphasises the need for strategic tax policy reforms to strengthen Nigeria’s fiscal capacity.

Source:
OECD
Period:
2013 - 2021
HTML code to embed chart
Want a bespoke report?
Reach out

Click to copy HTML embed code

Tags
Related Insights
Nigeria relies significantly on corporate income tax for its tax revenue compared to Africa and OECD countries
Nigeria's tax revenue structure relies heavily on corporate income tax, which constitutes 35% of the total revenue, surpassing personal income tax and social security contributions. In contrast, the rest of Africa and OECD countries demonstrate a more balanced tax composition, with significant shares from personal income tax, VAT, and other tax categories. This heavy reliance on corporate income tax highlights the unique fiscal structure in Nigeria, where other forms of tax contributions are less prominent.
Kenya doubled its tax revenue in less than a decade
Kenya's Revenue Authority has doubled its revenue, growing from KSh 1.1 trillion in the 2014/15 financial year to KSh 2.2 trillion in 2022/23. The most significant annual growth occurred in 2021/22, with a 21.7% increase. Over nine years, tax revenue grew by an average of 9.4%, demonstrating consistent progress in Kenya's fiscal management.
Lagos, Rivers, and the FCT collected over half of Nigeria's PAYE in 2022
In 2022, employees in Lagos, Rivers, and the FCT contributed ₦558.7 billion in PAYE tax, representing over half of the nation's total. Lagos State alone accounted for ₦360.9 billion. These figures underscore the tax contributions from Nigeria's key economic regions.
Lagos led 2022 PAYE collections with ₦361 billion
Lagos State led Nigeria’s 2022 PAYE tax collections, surpassing the total of 32 other states combined. PAYE, a tax on employees’ income, saw Lagos contributing 36%, far ahead of Rivers State (11%) and the FCT (∼9%). This highlights the economic disparity across states.
Foreign companies contributed almost 50% of Nigeria’s company income tax payments in 2023
Over the years, local companies have contributed more than foreign companies to Nigeria’s total company income tax revenue. In 2023, local CIT payments accounted for 51% of the total, with foreign payments at 49%. Local CIT payments saw the highest share in 2021 (65%), while foreign CIT's highest was in 2015 at 52%.
Nigeria’s finance and insurance sector paid 119.6% more tax to the government in 2023
In 2023, businesses in Nigeria's finance and insurance sector paid ₦458.8 billion as taxes to the government, 119.6% more than in 2022. Those in the manufacturing sector also increased their payments and remain the top tax-paying sector in the country. Here are the top five sectors where businesses paid the most tax in 2023.
POPULAR TOPICS
SIGN UP TO OUR NEWSLETTER
Get periodic updates about the African startup space, access to our reports, among others.
Subscribe Here
Subscription Form
A product of Techpoint Africa. All rights reserved