Dr. Zacch Adedeji, the chairman of the Nigeria Revenue Service (NRS), stated Wednesday that the nation does not yet have a system in place to tax business owners in the unorganized sector of the economy.
According to Adedeji, the current tax laws were created to tax the formal economy.
The NRS chairman discussed the new tax laws’ application with the Editorial Board in Abuja.
He claimed that encouraging informal firms to formalize their activities was the only way to impose taxes on them.
“You cannot tax what is informal on the informal sector,” stated Adedeji. They are referred to as informal because of this. You have to formalize them before you can tax them. Urge them to sign up and develop. They can be taxed appropriately after they are formalized and fall into the appropriate categories.
“Education and participation will go on. In order to customize solutions, we have departments for media, engagement, and stakeholder relations. Our mission is to assist small businesses in expanding or, at the very least, surviving.
Adedeji went on to clarify that impoverished Nigerians were not subject to the Value Added Tax (VAT), despite rumors to the contrary. Instead, he said, it was a consumption tax with exemptions.
He stated that the Nigeria Tax Administration Act (NTAA) 2025 was designed to alleviate the tax burden on the impoverished and that the new tax system has made sure that only profits or income are taxed, not capital or investments.
He said that although the new tax changes had improved accountability, capability, and clarity in tax administration, technology and procedure had also made sure that revenue collection was more closely monitored.
He claims that less than 10% of people worldwide pay taxes. “VAT is not imposed on the poor,” he continued.
He declared that no company will be shut down for violation during his government.
“I have to help you grow if I want revenue to grow,” Adedeji stated. I’m not here to stifle companies. I am neither a police officer nor a bandit hunter. I am like to a farmer who prunes a tree to increase fruit production.
For this reason, audits are now a component of operations. Tax officials and auditors collaborate. I’ve advised them to never close a business because today’s lost revenues are irreversible. There is nothing to tax if a company is not profitable.
“To help, explain, and guide businesses, we now have tax service partners in every operation.”
He went on to explain that the tax credit program was discontinued by his government because it was abused and “turned tax authorities into project supervisors, which we are not equipped to be.”
He claimed that tax credits were outside the purview of NRS and that the agency lacked the necessary expertise to evaluate the projects.
Additionally, he stated that although the federal government had provided states with additional funding, tax reforms pertaining to VAT continued to be among the most important of the initiatives.
The head of NRS further clarified that the federal government chose not to impose VAT on food and agricultural products in order to control food inflation and lower food prices.
According to Adedeji, knowledge is still the largest obstacle to implementing tax reforms, but the government will keep listening and addressing new issues.
“Trust is crucial,” he stated. First, people need to think that the government is not attempting to make life more difficult. The basis is that comprehension.
“We don’t think we’re flawless. The largest obstacle at the moment is information, particularly in a setting like ours.
“We’re paying attention. We will make adjustments where anything is not functioning. We are here for that reason.
The head of the NRS stated, “Tax compliance is the law,” on tax accountability and compliance. It is not a choice. People in the other nations you cited pay taxes that can reach 40% of their income. Benefits are not prioritized over compliance.
“We need to consider whether we are prepared for the Nigeria we discuss. To help graduates find employment, we have made significant investments in education and skill development during the past three years. Being accountable is a must.
“The use of tax money is the responsibility of government representatives. It’s understandable that people are now inquiring. Citizens are no longer taken for granted.
“Trust takes time everywhere, not just in Nigeria,” Adedeji continued. For this reason, we prioritized practical application over justifications. People can clearly see that we are fulfilling our commitment.
“We welcome comments. We will continue to make adjustments even if this procedure won’t be flawless. The rule of law and transparency cannot be compromised. I’ve advised my employees that everything needs to be transparent.
Adedeji also talked about tax deductions and non-remittance.
He revealed that revenue agencies will now claim costs of operation rather than costs of collection under the consolidated law, emphasizing that the government should be able to finance its agencies.
He stated that individual bank account balances could not be taxed, among other reasons.
“Let me explain why it is hard to do that now,” he continued. Pay is a deductible expense. Evidence of tax remittance is the sole way to demonstrate that salary was paid. The system is hence self-regulatory.
Agencies were collecting taxes on their own, which is one of the reasons we harmonized the law regarding the expense of collection. These expenses turned into operating costs when we consolidated. The government has an obligation to finance its agencies.
“I merely collect money; I don’t produce it. Making ensuring people and businesses succeed is my responsibility. When they perform well, money flows in.
“Creating a favorable environment increases revenue, not harassment.” For this reason, we prioritize economic prosperity.
“Your asset is your bank account. Your bank balance cannot be taxed by anyone. Having money in your account does not guarantee profit.
