IMF Calls on Nigeria to Broaden Tax Base, Crack Down on Tax Evaders

The International Monetary Fund (IMF) has issued a strong recommendation to the Nigerian government, urging it to significantly boost its tax revenue by expanding the tax base and intensifying efforts to curb tax evasion. The call comes amid growing concerns over Nigeria’s fiscal sustainability, widening budget deficits, and the need for greater financial resilience in the face of global economic uncertainties.

In a recent advisory, the IMF emphasized that Nigeria's tax-to-GDP ratio remains one of the lowest in the world, a situation that severely limits the government’s ability to fund critical infrastructure, health, and education sectors. The Fund noted that a broadened tax base—by ensuring more individuals and businesses contribute their fair share—would enhance revenue generation and reduce the country’s reliance on borrowing and oil-related income.

“Raising tax revenues in a fair and efficient manner is essential to finance development priorities, support macroeconomic stability, and promote inclusive growth,” the IMF stated. The organization also pointed out that while tax reforms have been introduced in recent years, the pace of implementation has been slow, and loopholes that enable widespread tax evasion still exist.

To address these issues, the IMF recommended several measures, including improved tax administration, digitization of the tax collection system, stricter enforcement of existing tax laws, and public awareness campaigns to promote voluntary compliance. It also encouraged the government to explore new revenue streams, such as property taxes and excise duties on luxury goods, while ensuring that the tax system remains progressive and does not disproportionately affect low-income earners.

This latest call reinforces ongoing dialogue between Nigeria and international financial institutions, as the West African country seeks to navigate its economic challenges and create a more stable and prosperous future. The government is yet to officially respond to the IMF's recommendations, but analysts believe that tax reform will remain a key policy area in the months ahead.