Nigeria’s FIRS unveils revised SOP to boost tax transparency, consistency, and voluntary compliance 

In a pivotal stride towards redefining its role as a bedrock of national development, Nigeria’s Federal Inland Revenue Service (FIRS) has officially unveiled its revised Standard Operating Procedure (SOP). This comprehensive update, announced by FIRS officials on Monday, is far more than a bureaucratic adjustment; it is a strategic declaration designed to inject unprecedented levels of consistency, transparency, and efficiency into the nation’s tax administration, ultimately aiming to foster a culture of voluntary compliance and strengthen the very foundation of Nigeria’s economic future.

The revised SOP offers a unified framework for all core tax processes, from the initial stages of registration and payment to the complexities of audit and enforcement. As Collins Omokaro, Special Adviser on Communication Strategy and Advocacy to the FIRS Executive Chairman, eloquently put it, “This is about people, experience, and impact. It’s a step toward a tax system that supports voluntary compliance and national development.” This statement captures the human-centric philosophy underpinning the reform, recognizing that tax administration, at its core, is about the relationship between the government and its citizens.

For too long, Nigeria’s tax landscape has been a labyrinth of inconsistencies, where well-intentioned FIRS field offices across the nation often operated with varying methods. This inconsistency, as Omokaro highlighted, frequently led to confusion and frustration for taxpayers, eroding trust and hindering compliance. The new SOP is a direct response to this challenge, designed to eliminate such disparities by providing a single, clear roadmap for operations across all of the Service’s more than 300 offices nationwide. It’s a testament to FIRS’s commitment to building a tax system that is not just effective, but also fair, predictable, and genuinely supportive of the Nigerian people.

FIRS: A Cornerstone of Nigeria’s Economic Architecture

To fully grasp the magnitude of this SOP revision, it’s essential to understand the Federal Inland Revenue Service’s profound role in Nigeria’s economic narrative. Established in 1943 during the colonial era, evolving from the Inland Revenue Department of British West Africa, FIRS has grown into the primary agency responsible for assessing, collecting, and accounting for all federal taxes and other revenues accruing to the Federal Government of Nigeria. Its mandate covers a wide array of taxes, including Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Value Added Tax (VAT), and Withholding Tax (WHT), among others.

In essence, FIRS is the financial lifeblood of the nation. The revenues it collects are critical for funding the federal budget, enabling the government to invest in vital public services and infrastructure that drive national development. Without a robust and efficient tax administration, ambitions for improved education, healthcare, infrastructure development, and security remain largely aspirational.

Navigating a Complex Terrain: Challenges in Nigeria’s Tax Landscape

Despite its critical role, FIRS has historically grappled with a myriad of challenges that have hindered optimal tax collection and fostered a climate of non-compliance. These systemic issues are deeply intertwined with Nigeria’s socio-economic realities:

• Low Tax-to-GDP Ratio: Nigeria has one of the lowest tax-to-GDP ratios globally, hovering around 6-8%, significantly below the African average of over 15% and the OECD average of over 30%. This indicates a vast untapped revenue potential and a heavy reliance on volatile oil revenues.
• Multiplicity of Taxes and Complex Laws: For an ordinary Nigerian business owner or individual, navigating the country’s tax system can be a bewildering experience. The existence of numerous taxes and levies, often with complex, unclear, and sometimes overlapping laws across federal, state, and local government tiers, creates significant confusion. This complexity increases compliance costs for businesses, particularly Small and Medium Enterprises (SMEs), and can inadvertently lead to non-compliance due to lack of understanding rather than deliberate evasion.
• Challenges of the Informal Sector: A significant portion of Nigeria’s economy operates in the informal sector, characterized by cash-based transactions and minimal record-keeping. Taxing this vast segment of the economy is a monumental challenge, as income is difficult to track and obligations are hard to enforce, leading to a substantial “tax gap.”
• Erosion of Public Trust: Perhaps one of the most profound challenges has been the erosion of public trust in government institutions. Perception of corruption and mismanagement of public funds often leads citizens to question the judicious use of their tax contributions. This deficit of trust is a major driver of non-compliance, as taxpayers feel their hard-earned money might not be utilized for the collective good.
• Inconsistent Enforcement and Administration: As Omokaro pointed out, inconsistent methods across different FIRS offices created an uneven playing field for taxpayers. What might be permissible or handled in one state could be treated differently in another, leading to unfairness and undermining the principle of equity in taxation. This lack of uniformity also complicated taxpayer education and compliance efforts.
• Weak Enforcement Mechanisms and Inadequate Data: Historically, weak enforcement mechanisms, insufficient tax audits, and a lack of comprehensive taxpayer databases have further compounded the challenges. The absence of a robust, centralized data system makes it difficult to identify and track potential taxpayers, leading to significant revenue leakage.

These interwoven challenges underscore the urgent need for a fundamental overhaul of tax administration, moving beyond mere procedural tweaks to a holistic transformation aimed at building trust and efficiency.

Zacch Adedeji’s Leadership: Catalyzing a New Era of Tax Reform

The revised SOP is a direct manifestation of the transformative vision of the current Executive Chairman of FIRS, Dr. Zacch Adedeji. Appointed to lead FIRS by President Bola Ahmed Tinubu, Dr. Adedeji brings a formidable background in fiscal management and a clear strategic outlook to the agency. His impressive resume includes serving as Commissioner for Finance in Oyo State (2011-2015), where he notably spearheaded the implementation of the Treasury Single Account (TSA), consolidating thousands of state government accounts and demonstrating a commitment to fiscal discipline. He also served as Special Adviser on Revenue to the President, giving him a deep understanding of national fiscal strategy. Bolstered by a PhD in Accounting from Obafemi Awolowo University, Dr. Adedeji is widely seen as a technocrat with the intellectual prowess and practical experience to drive meaningful change.

Under his relatively short tenure, FIRS has already demonstrated remarkable progress. In 2024, the agency recorded an unprecedented 76% increase in tax collection, rising from ₦12.37 trillion in 2023 to a record-breaking ₦21.6 trillion. This achievement comfortably surpassed the ₦19.4 trillion target set for the year, signaling a strong start to his reform agenda.

At the heart of Dr. Adedeji’s vision for FIRS is the powerful and concise brand slogan: “Simplifying Tax, Maximising Revenue.” This dual-pronged philosophy aims to balance the needs of taxpayers with the imperative of national revenue mobilization. Simplifying tax processes is intended to ease the burden on citizens and businesses, encouraging voluntary compliance. Maximizing revenue, on the other hand, ensures that the government has the financial muscle to deliver on its development promises.

The SOP update is a critical component of a broader reform agenda that Dr. Adedeji is spearheading, aimed at transforming FIRS into a truly service-oriented institution. This agenda is deeply aligned with the present administration’s overarching Bottom-Up Economic Transformation Agenda (BETA), which seeks to lift Nigerians out of poverty and drive inclusive growth by empowering ordinary citizens and strengthening public institutions. The submission of four Executive Bills on Tax Reform to the National Assembly, developed by the Presidential Committee on Fiscal Policy and Tax Reforms, further underscores the comprehensive nature of these changes, positioning FIRS at the forefront of Nigeria’s fiscal renaissance.

The Revised SOP: A Blueprint for Consistency, Trust, and Empowerment

At its essence, a Standard Operating Procedure (SOP) is a set of step-by-step instructions compiled by an organization to help workers carry out routine operations. For a large, sprawling government agency like FIRS, with over 300 offices and thousands of staff, the importance of a unified SOP cannot be overstated.

The Multifaceted Benefits of Standardization

The newly revised SOP is designed to unlock a multitude of benefits for FIRS and, by extension, for Nigeria:

• Consistency and Uniformity: This is perhaps the most immediate and impactful benefit. By providing a “single, clear roadmap” for operations, the SOP eliminates the inconsistencies that previously plagued FIRS. Whether a taxpayer is in Lagos, Kano, or Port Harcourt, they should now experience the same procedures for registration, payment, or audit. This uniformity builds predictability and fairness, crucial ingredients for fostering trust.
• Enhanced Efficiency and Productivity: Clear, well-defined SOPs remove guesswork from day-to-day operations. They streamline processes, identifying the most efficient ways to complete tasks and reducing errors. For FIRS staff, this means clearer guidance, leading to faster and more reliable service delivery. For taxpayers, it translates to quicker processing times and fewer frustrating delays.
• Improved Training and Onboarding: The SOP serves as a foundational training tool. New employees can quickly grasp their responsibilities and the correct procedures, significantly reducing training time and costs. Existing staff can also refer to it for refreshers or to ensure adherence to updated protocols, leading to a more knowledgeable and capable workforce.
• Clear Accountability and Performance Measurement: When every FIRS employee has a “clear mandate” outlined in the SOP, it becomes easier to measure performance, identify areas for improvement, and ensure accountability. This strengthens internal governance and drives a culture of excellence.
• Knowledge Preservation: In any large organization, there’s a risk of losing institutional knowledge when experienced staff retire or move on. Documenting best practices within the SOP ensures that valuable operational insights are preserved and accessible, maintaining operational continuity and preventing the reinvention of the wheel.
• Regulatory Compliance: In a highly regulated sector like taxation, adherence to legal and regulatory standards is non-negotiable. The SOP acts as a living document that guides staff in ensuring full compliance with tax laws, reducing legal risks and upholding the integrity of the tax system.

A System for the People

Omokaro’s emphasis that “this is about people, experience, and impact” resonates deeply with the human dimension of tax administration. For the average Nigerian, the tax system has often been perceived as opaque, cumbersome, and at times, intimidating. The revised SOP aims to change this narrative fundamentally:

• For Taxpayers: The new SOP promises a more user-friendly and predictable experience. Imagine a small business owner in Enugu who previously faced different requirements than their counterpart in Abuja for the same tax payment. The SOP aims to eliminate this frustration, providing a single, clear path. This consistency builds confidence, making voluntary compliance less of a burden and more of a straightforward civic duty. When tax processes are clear and easy to follow, people are more likely to comply.
• For FIRS Staff: The SOP provides clarity, reducing ambiguity in their daily tasks. This can boost morale, empower staff to perform their duties more effectively, and foster a shared sense of purpose. When employees understand their roles clearly and are equipped with standardized tools, they can deliver better service, ultimately earning the trust of the citizens they serve. As Dr. Adedeji mandated, every FIRS staff member is expected to “study it, apply it, and embody it. That’s how we’ll earn the trust of Nigerians.” This isn’t just about procedures; it’s about embedding a service-oriented culture throughout the organization.

Digital Transformation: The Engine for a Modern Tax Authority

The SOP revision is intrinsically linked with FIRS’s ongoing push for digital transformation. In today’s interconnected world, technology is no longer a luxury but a necessity for efficient and transparent tax administration. Nigeria, like many developing countries, has recognized the immense potential of digitalization to overcome traditional hurdles in tax collection, particularly in reaching the informal sector.

FIRS has been steadily implementing digital tools to streamline its operations:

• E-Registration and E-Filing: Online platforms for registering taxpayers and filing returns simplify processes and reduce the need for physical visits, saving time and reducing opportunities for corruption.
• Digital Payment Platforms: Making tax payments easier and more accessible through various electronic channels encourages timely compliance.
• Data Analytics: Leveraging data to identify potential taxpayers, detect evasion, and tailor compliance strategies for different segments of the economy. This is crucial for expanding the tax base and improving enforcement.
• Harmonization of Systems: The new SOP aims to harmonize human processes with these technological advancements. This means ensuring that the technology is intuitive for both FIRS staff and taxpayers, and that data flows seamlessly across different digital platforms, leading to faster, more reliable, and ultimately, more taxpayer-friendly service delivery.

By embracing digital tax administration, FIRS is not only improving efficiency but also enhancing transparency, reducing manual errors, and creating a more robust and responsive tax system. This digital pivot is vital for unlocking the full revenue potential of Africa’s most populous nation.

Fostering Voluntary Compliance: The Cornerstone of Sustainable Revenue

At the heart of Dr. Adedeji’s and FIRS’s reform agenda is a fundamental shift in philosophy: moving from a primary focus on enforcement and punitive measures to actively fostering voluntary compliance. This is a global best practice in modern tax administration, recognizing that a willing taxpayer base is more sustainable and cost-effective than one driven solely by fear of penalties.

Strategies for cultivating voluntary compliance in Nigeria include:

• Taxpayer Education and Awareness: Simplifying complex tax laws and making information readily available through various channels is paramount. When taxpayers understand their obligations and the benefits of compliance, they are more likely to participate. FIRS’s commitment to educating taxpayers is a key component of this.
• Transparency and Accountability in Revenue Utilization: A critical barrier to compliance in Nigeria has been the perception that collected taxes are not used judiciously for public good. By demonstrating tangible improvements in public services and infrastructure funded by tax revenues, FIRS, in collaboration with the government, can rebuild public trust. This transparent accountability is a powerful incentive for voluntary compliance.
• Customer-Centric Service Delivery: Making it convenient and easy to comply is key. The revised SOP, coupled with digital tools, is designed to reduce the friction points in tax interactions, turning the FIRS into a service provider rather than just a collector. When taxpayers feel respected and supported, they are more likely to fulfill their obligations.
• Fairness and Equity: Ensuring that the tax burden is perceived as fair and that all individuals and businesses, regardless of their size or political connections, are held accountable. The consistent application of the new SOP across all offices will be crucial in demonstrating this commitment to equity.
• Engagement and Collaboration: Modern tax authorities engage with professional bodies, business associations, and civil society to gather feedback and jointly improve the tax system. This collaborative approach can help address specific industry challenges and build consensus around tax reforms.

By repositioning itself as a “modern tax authority grounded in accountability, consistency, and a shared sense of national purpose,” FIRS is not just streamlining its operations; it’s embarking on a mission to win the trust of the Nigerian people.

Strengthening Revenue Mobilization for Nigeria’s Development Agenda

The ultimate goal of all these reforms is to significantly strengthen revenue mobilization, which is the bedrock of Nigeria’s ambitious development agenda. The Nigerian government’s commitment to the Bottom-Up Economic Transformation Agenda (BETA) hinges heavily on its ability to generate sufficient domestic revenue to fund critical sectors.

Increased tax revenue will allow Nigeria to:

• Invest in Infrastructure: From roads and power supply to digital connectivity, robust infrastructure is essential for economic growth and attracting foreign investment.
• Improve Social Services: Enhanced funding for education, healthcare, and social welfare programs directly impacts the quality of life for ordinary Nigerians and fosters human capital development.
• Diversify the Economy: Reducing reliance on oil revenues requires strategic investments in non-oil sectors like agriculture, manufacturing, and technology, all of which can be bolstered by consistent tax income.
• Strengthen Security: A well-funded government can better address internal security challenges and protect its citizens and assets.
• Reduce Debt Burden: Increased domestic revenue can lessen the need for external borrowing, improving Nigeria’s fiscal stability and sovereignty.

FIRS’s efforts to modernize its processes, improve tax collection efficiency, and foster a culture of voluntary compliance are directly aimed at achieving these overarching national goals. The revised SOP is not just a document; it is a declaration of FIRS’s commitment to becoming a more effective and trusted institution, one that empowers Nigeria to build a more prosperous and equitable future for all its citizens.

Conclusion: A Clearer Path to Prosperity

The Federal Inland Revenue Service’s unveiling of its revised Standard Operating Procedure marks a significant milestone in Nigeria’s ongoing journey towards fiscal independence and sustainable development. By providing a unified, transparent, and service-oriented framework for tax administration, FIRS is directly addressing long-standing challenges of inconsistency and public mistrust.

Under the visionary leadership of Dr. Zacch Adedeji, and leveraging the power of digital transformation, FIRS is not just streamlining its internal operations but actively fostering an environment where voluntary compliance becomes the norm. This commitment to “Simplifying Tax, Maximising Revenue” is a carefully balanced act that prioritizes the taxpayer’s experience while ensuring the nation has the necessary resources to fund its ambitious development agenda. The impact of these reforms will extend far beyond the confines of tax offices, touching the lives of every Nigerian by building a clearer, more predictable, and ultimately more prosperous path forward for the nation.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

11th June, 2025