Less than three months to the take-off of the new tax system, the Federal Government has activated a broad package of revenue optimization measures anchored on technology, institutional reform and fiscal transparency.

The series of fiscal reforms is aimed at weaning the economy off dependence on oil, reducing revenue leakages that have plagued public finance for decades and reducing the cost of revenue collection.

The new revenue management rides on a plan to streamline revenue collection processes, which would see the Federal Inland Revenue Service (FIRS) transition to the National Revenue Service (NRS) in January. The new tax behemoth will take the revenue collection responsibilities of the Nigerian Customs Service (NCS) and other institutions.

The reforms spearheaded by the Ministry of Finance are part of a larger move by President Bola Tinubu’s administration to strengthen fiscal resilience, expand the non-oil tax base and reposition the public sector for efficient service delivery.

At the centre of the new policy is an ambitious plan to grow Nigeria’s tax-to-GDP ratio from about 10 per cent to 18 per cent within three years to catch up with other African countries.

As of 2022, the average tax-to-revenue ratio of 36 major African economies stood at 16 per cent. An 18 per cent ratio would take Nigeria above the African average and potentially reduce the country’s dependence on debt.

Officials said the new revenue collection template is designed not only to increase collections but also to improve the quality of fiscal governance by ensuring every naira due to the Federation Account is captured, reconciled and transparently disbursed to the three tiers of government.

A key pillar of the reform agenda, according to the Ministry of Finance, is automation – a deliberate move to digitize public revenue inflow to reduce human interference, minimize errors and block leakages, a major setback to efforts to increase public earnings.

Last two weeks, the Ministry of Finance announced the launch of the Federal Treasury Receipt (FTR), an initiative it described as “a groundbreaking reform that provides a single, standardized, and digitally verifiable proof of all payments made into the Federal Government account”.

The FTR, according to the ministry, will ensure that every government-issued receipt directly corresponds to funds received into government accounts, thereby strengthening accountability, closing revenue leakages and improving public trust in the management of national resources.

The FTR is being deployed alongside the Central Billing System (CBS), which would help to standardize the pricing and billing of government services.

Both initiatives would form integral components of the Revenue Optimization and Assurance Project (REV-OP), unveiled in June to lead the revenue digitalization process.

A statement by the Director of Information and Public Relations at the ministry, Mohammed Manga, quoted the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, as describing the launch as the beginning of a new era of “transparency and accountability” in the country’s public finance.

“By ensuring that every kobo due to the government is digitally tracked and fully reconciled, we are safeguarding national resources. More importantly, we are creating the fiscal room to invest in priority sectors such as education, health, and infrastructure – investments that will directly improve the lives of Nigerians and secure a prosperous future for our country…The Federal Government remains committed to building a transparent, technology-driven, and efficient revenue system that underpins sustainable development and strengthens the social contract with the Nigerian people.” The minister was quoted.

The FTR and the CBS are currently undergoing a 30-day pilot programme across 10 federal agencies, during which performance, compliance and stakeholder adoption are being rigorously tested.

A nationwide rollout strategy is expected to follow, ensuring seamless integration across all revenue-generating institutions. These reforms also lay the groundwork for the operational take-off of the National Revenue Service (NRS) in January 2026 — a landmark institutional shift to consolidate and professionalize revenue administration under one unified structure, the statement by the ministry claimed.

In August, the Revenue Optimization and Assurance Project (REV-OP), a centralized digital system designed to track, monitor and reconcile all collectable revenues in real time, went live.

Edun had described REV-OP as a “transformational initiative that will integrate all revenue-generating agencies and create an unbroken chain of transparency from collection to remittance”.

“For the first time, the treasury will have a real-time view of the inflows across all agencies. It will enable us to plug leakages, reconcile revenues swiftly, and improve the predictability of public finance,” Edun said at the launch.

The platform is structured around three pillars — transparency, efficiency and digital transformation — and supported by a governance framework comprising a steering committee and a project management team, the Ministry of Finance said.

Through the REV-OP dashboard, the ministry could monitor performance by agencies, sector and region, helping the government to make data-driven decisions about tax enforcement and expenditure planning.

As the single largest revenue collection agency, the FIRS, in the past two years, has undergone major restructuring to align with the optimization plan.

Last year, it rolled out a new organizational structure that classifies taxpayers by size — large, medium, small and micro — to provide more tailored service and enhance compliance.

Chairman of FIRS, Dr. Zacch Adedeji, said the new structure was designed to “replace bureaucracy with efficiency, promote voluntary compliance and rebuild public trust in the tax system.”

Under the reorganization, FIRS set an ambitious target of N19.4 trillion for 2024 — a remarkable rise from the N12.3 trillion it collected in 2023. Eventually, the FIRS collected N21.6 trillion, over 111 per cent performance.

The FIRS has also expanded its digital platform, TaxPro Max, allowing individuals and businesses to register, file returns, make payments and obtain tax clearance certificates online.

It has also deployed artificial intelligence (AI) to analyze financial data from banks, telecoms, real estate and government contracts to identify discrepancies between declared and actual incomes.

According to the agency, early trials of AI-driven audits have helped to uncover significant underreporting in sectors such as construction, maritime and hospitality.

The NCS also joined the digital race, introducing an end-to-end e-Customs platform designed to improve trade facilitation and curb corruption at ports and border posts.

The system automates cargo tracking, manifests and payment processing, reducing physical contact between importers and officers, often described as a major source of revenue leakages.

Comptroller-General of Customs, Adewale Adeniyi, said: “Our goal is to build a transparent, technology-driven Customs system that leaves no room for manipulation or discretion.”

To increase efficiency, the agency is also collaborating with the Nigerian Ports Authority (NPA) and the Central Bank of Nigeria (CBN) to harmonize trade documentation and eliminate multiple clearance layers that increase costs and encourage evasion.

A long-standing fiscal concern has been the high cost of collection retained by some revenue-generating agencies before remitting funds to the Federation Account. Last year, the figure ballooned to about N924.7 billion, prompting calls for a policy overhaul.

Under the new fiscal framework, the Ministry of Finance has directed major agencies such as the FIRS, NCS and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to reduce or eliminate such deductions and remit gross revenues directly to the treasury.

This directive could free significant resources for infrastructure financing, as those familiar with the historical leakages have projected. The problem with Nigeria has never been about inadequate earnings, but that much of the value earned is lost to an opaque system and official graft. Plunging the holes, experts have said, is a critical step towards achieving fiscal discipline.

While much of the focus has been on taxes, the Federal Government is tightening control over non-tax revenues — including operating surpluses and service charges collected by ministries, departments and agencies (MDAs). (The Guardian)