Tax Reform Bills: Experts Warn Against Undermining Customs

As Nigeria pushes forward with its ambitious tax reform agenda, concerns are mounting that proposed legislative changes could inadvertently weaken the Nigeria Customs Service (NCS) to the point of redundancy.

At a public hearing organised by the House of Representatives special committee on Tax Reform Bills, stakeholders warned that shifting customs revenue collection to a new agency might erode the technical expertise essential for trade regulation and revenue generation.

Customs and tax expert, Okey Ibeke was one of the most vocal critics of the proposed reforms. Speaking to journalists in Abuja after the hearing, Ibeke emphasised that the NCS is far more than a revenue-collecting agency.

Its functions, he explained, require specialised skills in cargo classification, customs valuation, and tariff application—tasks that general tax administrators are ill-equipped to handle.

“Customs work is not just about revenue. It involves classifying cargo, understanding tariff classifications, and conducting customs valuations. Without proper expertise, there will be major challenges, including misclassification of goods and potential revenue loss,” Ibeke said.

The tax reform bills in question—the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill—aim to consolidate revenue collection under a single framework.

While comptroller general of Customs, Adewale Adeniyi, acknowledged the government’s intent to create a more efficient tax system, Ibeke warned that the restructuring could have unintended consequences.

A key concern raised was whether the designated revenue agencies have the technical capacity to handle customs operations effectively.

Member of the Association of Nigeria Licensed Customs Agents, Matthew Olawola warned that if customs officers are removed from the revenue collection process, there could be significant loopholes, allowing importers to exploit the system through undervaluation and misclassification of goods.

“Is the federal government planning to dismantle the Customs Service? If so, will customs officers be transferred to the new agency? Where will they operate from? This could create confusion and ultimately hurt revenue generation,” he cautioned.

Ibeke also noted that Rules of Origin (RoO)—a critical mechanism for determining the source of imported goods—could be compromised if handled by non-specialised personnel. He warned that without customs expertise, fraudulent trade practices could flourish, leading to massive revenue losses.

Rather than repealing the 2023 NCS Act, which took over eight years to pass, Ibeke urged the government to focus on strengthening the NCS through better funding and technological advancements. He highlighted the success of the Trade Modernisation Project, including the introduction of the B Odogwu software, which has already boosted revenue collection.

“The NCS has established infrastructure and is leveraging technology to enhance trade facilitation. Repealing the Act would undermine these efforts and hinder progress,” he argued.

At the public hearing, comptroller general, Adeniyi called for a balanced approach, ensuring that the proposed tax bills do not contradict the NCS’s mandate under the 2023 Act. He stressed the importance of preserving the agency’s core functions while working towards an improved tax system.

With the debate over tax reforms ongoing, stakeholders are urging lawmakers to tread carefully.

They say stripping the NCS of its revenue collection role without a clear transition plan could lead to inefficiencies, revenue shortfalls, and operational chaos. “Rather than dismantling a critical agency, experts suggest enhancing customs capabilities through investment in technology, training, and streamlined processes,” a trade expert Julius Ibe stated.

As Nigeria seeks to optimise its tax system, one thing is clear—any reform that sidelines the NCS could do more harm than good.