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
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Company income tax collections declined across 13 sectors in Q1 2026
  • Thirteen of Nigeria’s 21 sectors recorded year-on-year declines in CIT collections.
  • Extraterritorial organisations recorded the steepest fall at 53.9%.
  • Construction collections fell by 52.4%, the second-largest decline.
  • Mining and agriculture declined by 39.4% and 40.8%, respectively.
  • Manufacturing still generated ₦74.5 billion despite a 31.0% decline.
Finance & Insurance now makes up 30% of Nigeria’s domestic company income tax, up from 12% in 2022
  • Company income tax collections rose from ₦1.7tn in 2022 to ₦5.0tn in 2025.
  • Finance & Insurance more than doubled its share, from 12.4% to 30.0%.
  • Finance became the largest single sector in the tax mix by 2025.
  • Manufacturing remained important, but its share fell from 27.9% to 17.7%.
  • ICT saw one of the sharpest declines, from 21.6% to 6.5%.
  • Mining & quarrying gained weight, rising from 8.4% to 14.5%.
  • Wholesale & retail also increased, from 3.6% to 7.0%.
  • The tax base became less evenly distributed across sectors.
Nigeria's VAT collections have more than tripled in three years
  • Nigeria’s total VAT rose from ₦2.5tn in 2022 to ₦8.6tn in 2025.
  • VAT collections more than tripled in four years.
  • Local VAT remained the largest source of VAT throughout the period.
  • Local VAT increased from ₦1.5tn to ₦4.5tn.
  • Local VAT averaged 54.4% of total VAT between 2022 and 2025.
  • Import VAT also grew strongly, from ₦521.5bn to ₦2.0tn.
  • Other payment channels rose from ₦510.8bn to ₦2.1tn.
  • VAT growth is increasingly being driven by non-import activity.
Local companies have consistently contributed most of Nigeria’s Company Income Tax payments since 2016
  • Local companies dominated CIT contributions in most years, accounting for over 50% of payments in 9 of 11 periods between 2015 and 2025 (Q1–Q3).
  • Foreign companies briefly closed the gap in 2023, contributing 49%, the closest they have come to matching local firms.
  • Local companies recorded their strongest share in 2021 at 65%, marking the widest gap between local and foreign contributors.
  • “Other payments” peaked during the pandemic, rising to 17% in 2020 before dropping to 0% from 2022 onward.
Local companies have consistently contributed most of Nigeria’s Company Income Tax payments since 2016
  • Local companies dominated CIT contributions in most years, accounting for over 50% of payments in 9 of 11 periods between 2015 and 2025 (Q1–Q3).
  • Foreign companies briefly closed the gap in 2023, contributing 49%, the closest they have come to matching local firms.p
  • Local companies recorded their strongest share in 2021 at 65%, marking the widest gap between local and foreign contributors.
  • “Other payments” peaked during the pandemic, rising to 17% in 2020 before dropping to 0% from 2022 onward.
97% of businesses in Kogi are aware of Nigeria's 2025 tax reform, while 99% in Abia are not
  • Kogi entrepreneurs have the highest tax policy awareness in Nigeria (96.8%) in 2025.
  • Abia has the lowest awareness nationwide at just 1.4%.
  • Fewer than one-third of Nigerian states have awareness levels above 60%.
  • Major economic hubs like Lagos and Rivers have awareness below 50%.
  • Northern states dominate the top awareness rankings more than southern states.
  • Several states cluster around the 40–50% range, indicating partial reach.
  • States with low awareness risk lower compliance and higher friction during enforcement.
  • The gap between the highest and lowest states exceeds 95 percentage points, showing extreme disparity.
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