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The Federal Inland Revenue Service (FIRS) has commenced a comprehensive review of all tax incentives under its administration, citing the need to improve transparency, eliminate inefficiencies, and ensure value for money in the country’s tax expenditure system.
This move was disclosed by the Executive Chairman of the FIRS, Dr. Zacch Adedeji, who was represented by the Coordinating Director of the Corporate Services Group, Mrs. Bolaji Akintola, at the Tax Expenditure Workshop held in Abuja on Tuesday.
Dr. Adedeji said the Service had already identified a number of infractions in the administration of tax incentives, as a result of ongoing monitoring and evaluation processes.
He noted that the Tax Expenditure Management unit within the Service has been mandated to assess the foundational elements of all incentives, with early findings revealing major issues that require urgent attention.
Some of the problems uncovered include overlapping and, in some cases, contradictory tax incentives; lack of coordination among key stakeholders; absence of a central framework for managing incentives; and weak legislative oversight due to the non-existence of a dedicated tax committee in the National Assembly.
Also cited were political interference in tax matters, concerns arising from the OECD’s Base Erosion and Profit Shifting (BEPS) Pillar II framework, and ambiguity around the rationale for granting certain exemptions.
According to Adedeji, “The Service strongly believes that data is life in tax expenditure reporting. That is why the Tax Expenditure Management unit will receive the necessary support from the Service to harness our integrated digital tax administration system, TaxPro-Max, and any other ICT tools needed to ensure accurate and efficient data collection.”
Looking ahead, the FIRS Chairman expressed the agency’s readiness to collaborate with regional and international organizations, including the Economic Community of West African States (ECOWAS), the International Monetary Fund (IMF), the World Bank, and the Addis Tax Initiative (ATI), in building a robust tax expenditure value chain that supports accountability and effectiveness.
He said while some abuses have already been observed, there are broader concerns around the continued relevance of many tax incentives currently in place. To address these issues, the FIRS is proposing several reforms, including amendments to the legal instruments that enable tax expenditures. These changes, Adedeji explained, are critical to addressing misuse, aligning the system with global tax reforms like the BEPS Pillar II minimum tax rule, and making the framework more adaptive to changing economic realities.
The FIRS also advocates the establishment of a centralized mechanism for regulating and monitoring tax incentives. Such an arrangement, it argued, would be able to conduct continuous cost-benefit analyses (CBAs) to determine whether each tax incentive remains justifiable. Duplications and overlaps among Ministries, Departments, and Agencies (MDAs) would be eliminated under this model.
The Executive Chairman stressed the urgent need for inter-agency cooperation to transform the tax expenditure ecosystem, especially as the responsibility for impact assessments and evaluations still lies largely with MDAs such as the Nigerian Investment Promotion Commission (NIPC), the Nigeria Export Processing Zones Authority (NEPZA), and the Oil and Gas Free Zones Authority (OGFZA).
Dr. Adedeji drew attention to the growing pressure on FIRS to boost tax revenue collection at a time when direct contributions from some MDAs to the Federation Account are declining.
Despite these challenges, he said, the FIRS has managed to sustain significant contributions through reforms and strategic initiatives. In 2024, the agency collected a total of N21.6 trillion in tax revenue and is targeting N25.2 trillion in the current fiscal year.
Earlier at the event, Mr. Ikata John, Head of the Tax Expenditure Management unit, emphasized that while tax incentives play an important role in encouraging investments, supporting industries, and achieving policy objectives, their fiscal impact must be carefully managed.
He noted that poorly designed or inadequately monitored incentives can significantly reduce government revenue, defeating their original purpose. “This workshop provides a critical platform for stakeholders to examine whether the tax expenditures are achieving their intended goals and if the associated costs are being accurately measured,” he said.
Mr. John added that the FIRS remains committed to promoting a tax system that is fair, efficient, transparent, and accountable.
Governor Lucky Aiyedatiwa has said that Ondo State is exploring opportunities to leverage pension funds for infrastructural development in the state. The Governor made the revelation on Tuesday, 15 April 2025 when he received a delegation from the National Pension Commission (PenCom) led by the Director General, Ms. Omolola Oloworaran in Akure.
PenCom delegation visited the Governor to discuss critical pension reforms aimed at improving welfare for retirees and ensuring compliance with the Contributory Pension Scheme (CPS).
Speaking during the visit, Governor Aiyedatiwa extolled the critical role of pension funds in economic development and commended PenCom for its proactive engagement. He reaffirmed his administration’s commitment to the full implementation of the CPS in Ondo State.
The Ondo State Pension Commission (OSPEC) scored 72.44% in state pension compliance during the last Routine Inspection carried out by PenCom. The Governor expressed his aspiration to improve the State’s pension compliance rating from its current composite score of 72.44% to 95% by the next Inspection as challenged by the PenCom DG.
Also speaking, the PenCom DG proposed key amendments to the Ondo State Pension Law, including the introduction of a Minimum Pension Guarantee (MPG) to support indigent contributors and an Irrevocable Standing Payment Order (ISPO) to ensure consistent remittances by successive administrations.
Ms. Oloworaran also advocated for the integration of a Pension Compliance Certificate (PCC) as a mandatory requirement for business licensing, registration renewals, and contract awards within the State. This measure aims to enhance compliance and accountability in pension remittances by employers.
Additionally, the PenCom DG raised concerns identified during OSPEC’s last Routine Inspection, urging prompt resolution to improve the State’s pension compliance rating. Governor Aiyedatiwa promised that the state would address most of the concerns before the next inspection.
The Central Bank of Nigeria (CBN) is weighing the impact of the current protectionist development approach by the US and other big economies which has continued to pervade the global system.
The Bank said it is not compromising key indicators of regulatory reforms and in particular measures that will provide buffer to the national economy.
The Deputy Governor, Corporate Services, of the Bank, Ms. Emem Usoro, while speaking at the Seminar for Finance Correspondents and Business Editors, which began on April 14 to April 16, 2025, in Abuja, said the financial sector should particularly pay significant attention to bank recapitalisation to ensure that banks are strong, resilient and stable enough to carry out financial intermediation, and the much-needed financing of development projects and programmes.
Usoro, informed the audience that the current global system has manifested even more dynamic paradigms, with intense globalisation and guided protectionism, with countries favouring trade wars and retaliations.
This she said brings to the fore the readiness and preparedness of Nigeria and banking system to build a more sophisticated, vibrant economy.
Dwelling on the theme of the seminar, “Playing the Global Game: Banking Recapitalization Towards a One-Trillion Dollar Economy”, Usoro, described it apt at this time, and encouraged frank discussions with far-reaching recommendations that will enhance understanding of the workings of the global financial system and how to position the Nigerian Banks to take full advantage of the opportunities presented by the dynamics of these initiatives.
The Deputy Governor, noted that the global financial system and architecture have assumed a new dimension even before the new administration of Donald Trump in the United States of America.
Globalisation, she went on to stress, has broken the limits of financial flows, and investors have inadvertently taken full advantage of the opportunities. However, countries and their financial systems must be prepared and ready to utilise opportunities created by financial globalisation through appropriate policy support and actions.
“There is no gain saying that the financial system’s size and quality play critical roles in powering and financing an economy.
“Literature has established that financial resources, complimented by quality human capital and technology, remain the major driving forces of industrialisation since the emergence of the 4th industrial revolution.
“To play this critical role, the banking system must grow, expand and deepen through deliberate policy efforts. As you are aware, the Nigerian banking system has also undergone reforms, including bank recapitalisation and consolidation exercises.” she said.
Usoro, also recalled that the 2004 banking sector consolidation and recapitalisation exercise, which set a limit of N25 billion minimum capital base for banks, brought the Nigerian banks from 89 to 25, was a noble idea that the Central Bank of Nigeria implemented in line with emerging developments at that time.
“As we work towards building a One-Trillion Dollar Economy, we must consider the recapitalisation of our banks to be able to fund, finance and power the economy and favourably compete globally with its peers in other climes.”