Wanderlust World Wanderlust World Nigeria's federal government relies on a mix of hydrocarbon receipts and non-oil revenues to fund its budget. While oil remains dominant, ongoing reforms aim to broaden the revenue base for greater fiscal resilience.
As an OPEC member with a production quota, Nigeria derives the bulk of federal revenue from crude oil sales—typically 60-80% of total receipts. Volatility in global prices makes this stream unpredictable, prompting diversification drives.
Levied at 7.5% on goods and services, VAT is collected by the Federal Inland Revenue Service (FIRS) and shared among federal, state, and local governments. It has become the leading non-oil revenue source.
Companies pay 30% on worldwide income (20% for small firms in manufacturing/agriculture). CIT contributes significantly to non-oil collections, though compliance remains a challenge.
The Nigeria Customs Service collects tariffs on imports and excise on specific local products (alcohol, tobacco), serving both revenue and industrial protection goals.
Progressive rates (7–24%) apply to residents' worldwide income. Collection is largely via PAYE (Pay As You Earn) for formal employees; the vast informal sector remains hard to tax.
The Medium-Term Expenditure Framework (MTEF) and annual Finance Acts target higher non-oil revenue ratios. Key levers include tax administration modernization (TaxPro-Max), broadening the VAT base, improving customs valuation, and formalizing the informal sector. Success would reduce vulnerability to oil shocks and create a more stable fiscal foundation for development.