Published by The Tax Club, University of Lagos. on

The very essence of the National Tax Policy is that it provides a direction for Nigeria’s tax system and administration and establishes a framework that all stakeholders would subscribe to and which they would be held accountable. This implies that whatever tax-related strategies to be adopted must be reflective of the spirit of the NTP.

It is a clear statement on the principles governing tax administration and revenue collection; it provides a set of guidelines, rules and modus operandi that would regulate taxation in Nigeria which all stakeholders in the tax system must subscribe to.
The National Tax Policy is an initiative of the Federal Government of Nigeria. It is being driven by the Federal Ministry of Finance on the basis of the report from a Study Group in July 2003. The Study Group was inaugurated on 6th August, 2002 to examine the tax system and make appropriate recommendations towards entrenching a better tax policy and improved tax administration in the country.

In January 2004, a private sector-driven Working Group was constituted to review the recommendations of the Study Group. Both groups (The Study and Working) addressed macro and micro issues in tax policy and administration. Among the macro issues discussed were the drafting of a National Tax Policy, Taxation and Federalism, Tax Incentives and Tax Administration generally. Their recommendations were further reviewed and commented upon by various stakeholders.
The reasons for reform and the decision to develop a National Tax Policy could therefore be traced back to the structure of the existing tax system and some of its inherent problems such as;

i. The increased demand to grow internally generated revenue, which has led to the exercise of the powers of taxation to the detriment of the taxpayers who suffer multiple taxation and bear a higher tax burden than anticipated;

ii. Insufficient information available to taxpayers on tax compliance requirements, which created uncertainty and room for leakages in the tax system;

iii. Multiple taxation by Government at all levels, which impacted negatively on the investment climate in Nigeria. Elimination of multiple taxation is therefore of major concern at all levels of Government; lack of accountability for tax revenue and its expenditure, among others.

The National Tax Policy is a deliberate effort towards entrenching a robust and efficient tax system. In terms of its objectives, one of the major drivers of the NTP is the need to increase Nigeria’s non-oil tax-revenue-to-GDP ratio – currently one of the lowest in the world.
Some of the pivotal provisions of the NTP include a gradual shift towards indirect taxation, a deliberate desire to move up in the ease of paying taxes rankings by 2020, widening of the tax base, and deployment of technology, intelligence and inter-agency collaboration. Various measures aimed at institutionalizing taxation cut across the three tiers of government, and include setting up an office of tax simplification and tax policy implementation committee by the Federal Ministry of Finance, establishment of taxation committees by the federal and state parliaments, and creation of special tax courts. The National Tax Policy seeks to create awareness on the importance of the role which taxation can play in securing a stable flow of revenue for the Government and encourages a shift in focus from non-tax revenue to tax revenue by Governments at all levels of the Nigerian economy.

In putting together a National Tax Policy, it is paramount to uphold the concept of Federalism, as entrenched in the Nigerian Constitution. The present structure of taxation as stipulated by the Constitution of the Federal Republic of Nigeria reflects the three-tier system of Government at the Federal, State and Local Government levels. Under the Constitution, each tier of Government has been granted powers and responsibility in respect of the imposition and collection of taxes.

The 1999 Constitution of the Federal Republic of Nigeria places the responsibility for legislating on taxation on Income, Capital Gains and Stamp duty on the Federal Government. It also places collection of taxes on the concurrent legislative list, enabling the Federal Government to delegate administration or collection of taxes as it pertains to taxation or duty on a) capital gains, incomes or profits of persons other than companies; and b) documents or transactions by way of stamp duties, to the State Government.
At the same time, the constitution places the responsibility for legislating on the collection of taxes, fees and charges that can be collected by the Local Government on the State Governments. The exclusive legislative list provides for activities that would ordinarily attract taxes, fees and charges (forms of levies) are placed squarely as part of the responsibilities of the Local Government Council – in the 4th schedule.
Thus, why should Nigeria as a nation with 36 states and a Federal Capital Territory with different economic needs and revenue generation capacity, have a National Tax Plan knowing that different states of the federation have their idiosyncrasies.
Flowing from this, it is submitted that the policy is not sustainable and incompatible with the Nigerian federal system and the federal structure of the country. It is thus my recommendation, that the in creating a National Tax Policy for Nigeria, the idiosyncrasies and economic needs of the different tiers of government are taken into consideration in a bid to generating revenue for the country.


By Chinaza Okafor. Chinaza is a 400 level law student with a budding interest in commercial law, taxation and finance. She is passionate about human rights, gender equality and helping others.

You can reach her via:


Twitter: @nazaokafor_

Categories: National Tax

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