Nigeria's N3.87 Trillion Tax Breaks Under Review

Nigeria's tax incentives, amounting to N3.87 trillion projected for 2026, are facing increased scrutiny as the government aims to enhance domestic revenue without imposing further pressure on households and businesses. The tax-to-GDP ratio was recorded at 8.2% in 2023, significantly lower than the African average of 16.1%, indicating challenges in converting economic activity into government revenue.

There is no official aggregate figure for tax incentives aimed at attracting foreign direct investment since President Bola Tinubu took office in May 2023. The Medium Term Expenditure Framework (MTEF) 2024–2026 estimates various tax expenditures, including the Road Infrastructure Tax Credit Scheme, which is expected to cost N45.26 billion in 2023 and increase annually.

The MTEF defines tax expenditure broadly, encompassing exemptions and credits. Despite the scrutiny, tax collection has improved, with the Nigeria Revenue Service collecting N22.59 trillion from January to September 2025 and a total of N28 trillion in 2025 against a target of N25 trillion.