The Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed that Nigeria’s tax-to-Gross Domestic Product (GDP) ratio remains significantly below the African average, raising concerns about the country’s fiscal sustainability.

The revelation is contained in a new policy brief titled “Beyond Assent: Pathways for Implementing Nigeria’s New Tax and Revenue Framework,” released exclusively to The Nation.

According to the report, Nigeria’s tax-to-GDP ratio currently ranges between 9.4 and 10.86 per cent, well below Africa’s average of 16.8 per cent and short of the 15 per cent minimum benchmark recommended by the African Union for sustainable development.

NEITI warned that the low ratio has resulted in persistent revenue shortfalls, limiting public investment, widening infrastructure deficits, worsening inequality, and increasing the country’s vulnerability to debt and external shocks.

The organisation noted that years of audits and sectoral analyses have consistently revealed systemic weaknesses in revenue assessment, collection, and remittance, particularly within the extractive industries. These challenges, NEITI said, are worsened by data opacity, failure to remit revenues, arbitrary tax waivers, and poor coordination among government agencies—leading to the loss of billions of naira annually.

Despite these challenges, NEITI stated that the newly introduced tax reform framework presents a critical opportunity to address structural inefficiencies, modernise tax administration, and strengthen Nigeria’s domestic revenue base.

However, the agency cautioned that the success of the reforms will depend largely on effective design and disciplined implementation.

The policy brief also highlighted provisions requiring revenue payments to be remitted into designated accounts for each revenue stream, or alternatively, clearly separated in bank statements to enable proper tracking, reconciliation, and accountability.

On enforcement, NEITI explained that penalties for non-compliance range from financial fines to the revocation of operating licences, depending on the severity of the offence.

The report further noted that under the Petroleum Profit Tax Act (PPTA), companies are required to file and pay taxes within five months of the end of their accounting year. Failure to comply attracts a 10 per cent penalty on the outstanding amount, in addition to interest charged at prevailing commercial rates.