Nigeria is once again turning to institutional collaboration to address one of its most pressing fiscal challenges: how to mobilise sufficient revenue to meet the demands of governance in a resource-constrained environment. And that is being done by the Federal Inland Revenue Service (FIRS) in unison with the relevant stakeholders, including government institutions.
One of such moves is the renewal of partnership between the FIRS and the Economic and Financial Crimes Commission (EFCC) that was entered into in Abuja. The hope is that such a strategic partnership would not only curb corruption in the tax system, it will help to plug leaks and recover more funds for government expenditures.
Industry watchers have said the coming together between FIRS and EFCC is more than an administrative agreement. For them, it represents a potential turning point in Nigeria’s tax compliance framework, and by extension, in the government’s capacity to fund critical development programmes.
During a visit to the EFCC headquarters in Abuja, the FIRS Chairman, Dr. Zacch Adedeji, made it clear that the tax authority cannot chase over 200 million Nigerians individually to pay taxes. What is required, he argued, is a system that compels compliance, with EFCC serving as an essential enforcement partner. “You can help us by letting people know that when they violate the law, there is a place you can keep them,” he told EFCC officials.
In his response, EFCC Chairman Ola Olukoyede stressed that once taxpayers see the anti-graft agency working hand-in-hand with FIRS, the deterrent effect will be immediate. “Collaboration is very key. When they see EFCC beside FIRS, that will send a signal to the public that it is no longer business as usual,” he said.
Both leaders echoed the same reality: without strong deterrence, Nigeria’s tax system will continue to underperform. The partnership also gains legitimacy from a recent Court of Appeal judgment affirming EFCC’s authority to investigate tax-related fraud. While FIRS retains sole responsibility for assessing liabilities, EFCC’s investigative and prosecutorial powers add weight to compliance efforts, ensuring that offenders face consequences.
The timing of the collaboration could not be more crucial. Nigeria’s tax-to-GDP ratio—slightly below 10 percent as of 2024—is one of the lowest in Africa, compared to the continental average of 18 percent.
In practical terms, this means the country is leaving trillions of naira on the table annually, money that could otherwise be channeled into infrastructure, healthcare, education, and social welfare.
By bringing EFCC into the fold, FIRS is not only boosting enforcement capacity but also sending a strong signal that evasion will no longer be tolerated. Studies have consistently shown that when taxpayers believe enforcement is credible, their willingness to comply increases—even among those who might otherwise try to avoid their obligations.
A stronger enforcement regime promises several economic benefits. First, higher revenues reduce the government’s reliance on borrowing. Currently, debt service consumes more than 70 percent of federal revenues, crowding out spending on development priorities.
By raising more non-oil taxes, Nigeria can reduce its debt burden, strengthen macroeconomic stability, and invest more sustainably in public services.
Second, a more transparent and credible tax system boosts investor confidence. Both local and foreign investors value predictability in tax administration. The perception that everyone—whether individual or corporation—must play by the rules reassures investors that Nigeria is serious about fairness and accountability.
Third, the partnership will help close leakages that weaken government capacity. Tax fraud, underreporting, and illicit financial flows have long robbed Nigeria of needed resources. EFCC’s investigative reach, combined with FIRS’s technical expertise, could make a real difference in plugging these gaps.
The synergy also has social implications. Tax compliance is part of the social contract between citizens and the state.
For too long, many Nigerians have perceived taxes as unfair or irrelevant, partly because elites and corporations often escape their obligations while the burden falls disproportionately on the middle class and small businesses. Joint enforcement promises to rebalance this equation by holding high-net-worth individuals and politically connected entities accountable.
Moreover, visible evidence of how taxes are used will reinforce compliance. As Dr. Adedeji observed, the most effective “advertisement” for voluntary compliance is when taxpayers see tangible benefits—roads constructed, hospitals equipped, schools rehabilitated—with revenues they have contributed. In this sense, enforcement must be complemented by transparency and accountability in government spending.
Nigeria is not charting new territory in pursuing enforcement partnerships. In the United States, the Internal Revenue Service (IRS) collaborates with the Federal Bureau of Investigation (FBI) and the Department of Justice to prosecute tax evasion and fraud, particularly cases involving offshore accounts and corporate malfeasance. These collaborations have led to high-profile convictions that serve as powerful deterrents.
In the United Kingdom, Her Majesty’s Revenue and Customs (HMRC) partners with the Serious Fraud Office (SFO) to pursue corporate tax crimes. Their coordinated efforts have improved compliance, especially among multinational corporations operating in complex industries.
South Africa also offers valuable lessons. The South African Revenue Service (SARS), at its most effective, partnered with law enforcement agencies to expose large-scale tax fraud linked to state capture. By combining technical expertise with investigative authority, SARS not only recovered funds but also re-established credibility in the tax system.
For Nigeria, the challenge lies in adapting these lessons to its unique context, which is shaped by a large informal economy, weak enforcement culture, and limited institutional capacity. Effective collaboration will require more than agreements; it will demand robust data sharing, coordinated investigations, and capacity-building across both agencies.
Despite the potential, experts have warned that several obstacles could hinder the partnership.
Those who belong to that class say first, there must be clarity of roles. While EFCC can investigate and prosecute, tax assessment is strictly the domain of FIRS. Any blurring of responsibilities could lead to duplication or even legal challenges that slow down enforcement.
Second, both institutions face capacity constraints. FIRS may therefore need advanced data analytics to track compliance, especially within the vast informal sector, while EFCC requires specialized forensic expertise to handle complex tax-related crimes. Without significant investment in capacity, the partnership risks being more symbolic than transformative.
Third, Nigeria’s judicial system poses another hurdle. Tax cases that linger in the courts for years undermine deterrence, as offenders may calculate that the cost of delay outweighs the risk of conviction. Fast-tracking tax-related cases will therefore be essential to maintaining credibility.
Finally, there is a delicate balance to strike between enforcement and the business environment. While strict compliance is non-negotiable, enforcement must not degenerate into harassment that discourages investment or cripples legitimate businesses. The emphasis should be on systemic reform that makes compliance easier and evasion riskier.
The FIRS–EFCC partnership should be seen as part of a larger reform agenda. The government has repeatedly pledged to raise the country’s tax-to-GDP ratio to at least 18 percent in line with African averages. Achieving this will require not only enforcement but also tax simplification, public education, and institutional transparency.
Equally, the partnership offers an opportunity to reset Nigeria’s tax culture. For decades, weak enforcement, mistrust of government, and widespread informality have shaped a culture where tax evasion is often rationalized or even celebrated. By combining deterrence with visible accountability in public spending, FIRS and EFCC can help replace this culture of evasion with one of responsibility.
If effectively implemented, the collaboration could unlock billions of naira annually, reduce the country’s dependence on volatile oil receipts, and provide stable funding for national development. Beyond fiscal numbers, it could also strengthen the social contract, deepen trust in government, and affirm the principle that everyone—rich or poor, powerful or ordinary—must contribute their fair share to the nation’s progress.
The renewed cooperation between FIRS and EFCC signals a stronger institutional front against tax evasion and financial crimes. While challenges remain, the potential economic and social benefits are immense. More revenue for government, reduced debt pressure, greater equity in the tax system, improved business confidence, and enhanced public trust are all within reach if the collaboration is sustained and backed by visible accountability.
Nigeria’s fiscal future depends not only on raising taxes but on building a tax system that is credible, transparent, and fair. The FIRS–EFCC synergy, if nurtured carefully, could be the cornerstone of such a system—transforming not just how much Nigeria collects, but how citizens relate to their government and how the state delivers on its promises.
