FIRS Chairman Reveals 90% of Tax Revenue Goes to State Governments

The Federal Inland Revenue Service (FIRS) chairman, Dr. Zacch Adedeji, has disclosed that nearly 70% of the tax revenue collected by FIRS is shared among the three tiers of government, with about 90% of the revenue going to state governments. This development highlights the significant role state governments play in Nigeria’s fiscal landscape.

The three tiers of government recently shared a record monthly allocation of over N2 trillion, thanks to the reforms spearheaded by President Bola Ahmed Tinubu.
The new tax laws, set to take effect in January 2026, aim to eliminate multiple taxes and create a more business-friendly environment. Key highlights include:
Food, education, shared transportation, and agriculture will be VAT-free, benefiting over 80% of Nigerians.
Small businesses with a turnover of N50 million will not pay tax.
All tax types can now be paid at a one-stop shop, reducing compliance costs and bureaucracy.
FIRS has grown in leaps and bounds under Adedeji’s leadership, with a customer-centric approach and digital platforms enhancing tax collection efficiency .

The removal of petrol subsidy has led to increased revenue, which has been channeled towards critical projects and debt repayment.
This initiative has helped local refiners access crude oil in naira, reducing forex dependence and stabilizing the naira.
President Tinubu has cleared $7 billion debt owed to foreign airlines and others, improving Nigeria’s credit rating.
Nigeria’s external reserves have climbed to $41 billion from $4 billion, thanks to improved revenue collection and economic reforms .

The FIRS aims to achieve a tax-to-GDP ratio of 18% by 2027, surpassing the current average of 13.5%. With the ongoing reforms and improved revenue collection, Nigeria is poised for economic growth and development.