Over the past few years, Nigeria’s economy has witnessed lot of policy reforms, and tax policies are right at the center of it. However, misuse of Nigeria’s new tax policies has started raising serious concerns among business owners and citizens. While the government says the goal is simple: boost revenue, grow the economy, and reduce overdependence on oil.
But as with many policies in Nigeria, implementation is where the real story lies. Nigerians are raising eyebrows. Many are asking “Are these taxes being used properly, or misused?”
While the new tax policies are meant to improve transparency and fairness, there are growing concerns about misuse, overreach, and exploitation, especially by some officials and even private sectors hiding under the name of “government directives.”
Let’s take a look at what is going on, how it affects businesses and citizens and what every Nigerian should know about the misuse of these new tax policies.
Table of Contents
Understanding Nigeria’s New Tax Policies
Over the years, Nigeria has introduced and strengthened several tax measures.
- New compliance measure for SMEs
- Digital service taxes
- Expanded tax base
From the revised Value Added Tax (VAT) rate to new Electronic Money Transfer Levies (EMTL) and Excise Duties on digital and luxury goods. The Federal Inland Revenue Service (FIRS) has been working round the clock to expand the tax net and increase compliance.
On paper, these changes are meant to:
- Improve government revenue
- Fund essential public services
- Reduce over-dependence on oil income
- Reduce tax evasion
- Create a fairer system
But the reality on ground sometimes tells a different story, with both positive strides and glaring cases of misuse of Nigeria’s new tax policies.
For instance:
Where the Problem Starts: Misuse and Over-Collection
The intention behind these taxes might be good, but implementation has been another story. Several challenges have raised concerns about how the funds are being handled and whether the policies serve the public good.
Across different states, some businesses are reporting:
- Multiple taxation: Small businesses are being hit left and right by overlapping federal, state, and local government levies, leading to frustration and, in some cases, business closures.
- Unofficial levies
- Harassment by tax agents
- Lack of transparency: Many Nigerians don’t see the results of the taxes they pay. Roads remain bad, power is still going on and off, and healthcare systems stay underfunded.
- Assessment are being inflated
- Demand notices without clear breakdown: Many agencies fail to give a clear account of how collected taxes are spent, feeding public mistrust. I.e poor accountability
For small businesses already battling inflation, unstable power supply, and FX fluctuation, these practices feel less like reform, and more like pressure.
How Nigerian Businesses Are Affected
If you are a business owner in Nigeria, especially SMEs. You’ve probably felt the squeeze. Unstable regulations, high taxes and non-transparent enforcement can make running a business feel like climbing Olumo Rock without slippers.
Most common impacts include:
- Fear and Uncertainty – Instead of businesses focusing on growth, they spend more time focusing on tax compliance confusion.
- Increased cost of goods and services due to higher production costs
- Informal Economy Growth – When taxation feels unfair, some businesses move underground, which defeats the purpose of reform.
- Loss of competitiveness, especially for SMEs
- Investor Confidence Issues: Foreign and local investors want clarity. Misuse of policies discourages long-term investment.
- Tax evasion temptations, This pushes some businesses off the formal grid entirely.
Therefore, When tax policies are misused or poorly implemented, legitimate businesses suffer, and that ultimately hurts Nigeria’s economy.
What It Means For Ordinary Citizens
Let’s be real, anytime the government imposes a new tax, it eventually comes down to the average person. Citizens feel it in the cost of goods, rising transport fares, and smaller disposable income.
When tax money is misused or mismanaged, the citizens are essentially paying more but getting less in return:
- Higher unemployment rate
- Inadequate social services
- Poor infrastructure and bad roads
- Decline in government trust
It’s like paying your NEPA bill only for the lights to remain off, frustrating, right?
For instance: There’s a woman who owns a cold room shop in a certain area. “Ever since the government announced new tax policy, she has complained that traders are extorting her when she buys goods. Traders charge her an extra 10% on every transaction simply because she sometimes forgets to include narration.”
Another vivid example is POS merchants, adding extra charges on withdrawal fee for people that want to withdraw, using tax as an excuse.
How Citizens Are Affected by Misuse of New Tax Policies
Misuse of Nigeria’s new tax policies issue doesn’t only affect registered companies. Everyday Nigerians also feel the impact indirectly through:
- Increased cost of goods (as businesses transfer tax burdens)
- Reduced job creation
- Slower business expansion
If you’re a business owner or entrepreneur, here’s what you should do:
1. Always Ask for Official Documentation
Official assessment notices and payment channels always come with legitimate tax demands.
2. Verify Agents
Most of the state revenue services have verification portals or hotlines.
3. Avoid Cash Payments
Only Pay through approved government platforms or banks to avoid disputes.
4. Understand Your Tax Category
It is not every small business that qualifies for the same tax bracket. The government exempts many micro businesses from certain taxes.
5. Keep Proper Records
Keeping proper records is very essential. Documentation protects you during disputes.
The Way Forward: What Should Be Done
For Nigeria’s tax system to truly work, Nigeria must focus on transparency, accountability, and fairness. Here’s how we can move from misuse to proper use:
1. Simplify tax compliance
The government should simplify the tax structure and increase transparency. Digital platforms should make it easier for businesses to file taxes without fear of overcharging or duplication.
2. Strengthen tax accountability systems
FIRS and related agencies must publish periodic, accessible reports showing how taxes are spent.
3. Proper registration
Companies must register properly to protect their business and as well keep proper records.
Businesses must understand their obligations and seek professional assistance when needed.
4. Promote fiscal transparency laws:
The government must always follow the money and not just collect it alone.
5. Citizens must demand clarity, report extortions and stay well informed.
Nigeria’s new tax policies are not the enemy. The misuse of the policies is.
If implemented fairly, it will help national development but if exploited, it can suffocate or even destroy the very business meant to grow the economy.
The conversation now is not whether we should pay tax, it’s whether the system is transparent, fair, and accountable.
Because in Nigeria today, survival is already expensive. And policy should support growth, not punish effort.
Author: Adebukola Ogunremi
Adebukola Ogunremi is a Nigerian writer who creates content on personal finance, career growth, workplace trends, culture, lifestyle and money habits, helping readers make smarter financial and professional decisions. She is also a God-fearing Woman with brains🙂
