In a significant step toward strengthening tax administration across Africa, Dr. Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS) of Nigeria, has underscored the critical need for continental cooperation to address the pervasive challenges of narrow tax bases and the dominance of informal economies that hinder effective revenue collection in many African nations. Speaking during a high-level meeting at the FIRS Headquarters in Abuja on Tuesday, October 01, 2025, Dr. Adedeji hosted a delegation from the African Tax Administration Forum (ATAF), led by its Executive Secretary, Mary Baine. The meeting provided a platform to discuss Nigeria’s ongoing tax reforms, ATAF’s mission to foster Africa-specific solutions for revenue mobilization, and the broader challenges facing tax administrations across the continent.
The Imperative of Continental Collaboration
Dr. Adedeji emphasized that no single African nation can tackle the complexities of modern tax administration in isolation. The challenges of narrow tax bases—where only a small portion of the population or economy is captured in the tax net—and the prevalence of informal economies, which often operate outside formal regulatory frameworks, require a coordinated approach. Informal economies, which account for a significant portion of economic activity in many African countries, pose a unique challenge to revenue authorities. These economies, characterized by cash-based transactions and unregistered businesses, often evade taxation, leading to substantial revenue losses for governments.
“Continental cooperation is not just desirable; it is essential,” Dr. Adedeji stated. “By working together, African nations can share knowledge, harmonize policies, and develop strategies that address the unique challenges of our economies. This collaboration will enable us to expand our tax bases, bring more economic actors into the formal sector, and ultimately enhance revenue mobilization to fund critical development projects.”
The FIRS Chairman highlighted that the informal economy, while a driver of economic activity in many African states, remains a significant barrier to achieving fiscal stability. Informal businesses, ranging from small-scale traders to unregistered service providers, often operate outside the tax system, limiting governments’ ability to generate revenue for public services such as healthcare, education, and infrastructure. By fostering cooperation through platforms like ATAF, African countries can develop innovative solutions to integrate these informal actors into the formal economy, ensuring fair contributions to national development.
Nigeria’s Tax Reforms and ATAF’s Commendation
The ATAF delegation, led by Mary Baine, commended Nigeria’s ongoing tax reforms, noting that they align closely with ATAF’s mission to develop tailored solutions for African tax administrations. Nigeria, as one of Africa’s largest economies, has been undertaking significant reforms to modernize its tax system, enhance compliance, and broaden its revenue base. These reforms include simplifying tax processes, leveraging technology for efficient tax collection, and improving transparency to build public trust in the tax system.
Mary Baine praised Nigeria’s efforts, stating, “Nigeria’s tax reforms are a model for other African nations. The focus on creating a transparent, efficient, and people-centered tax system is in line with ATAF’s vision of fostering sustainable revenue mobilization across the continent. We are particularly impressed with Nigeria’s commitment to addressing challenges such as illicit financial flows and the taxation of the digital economy.”
ATAF, established in 2009, is a pan-African organization that supports tax administrations across the continent by promoting best practices, providing technical assistance, and fostering collaboration. With 38 member countries, ATAF plays a pivotal role in addressing the unique challenges faced by African tax authorities, including low tax-to-GDP ratios, weak compliance mechanisms, and the complexities of taxing multinational corporations and digital platforms.
Nigeria’s Commitment to ATAF’s Mission
In response to the delegation’s commendation, Dr. Adedeji reaffirmed Nigeria’s unwavering support for ATAF’s initiatives. He emphasized that Nigeria, as a leading member of the organization, is committed to contributing to its programs, including policy harmonization, capacity building, and research to address pressing tax administration challenges. “Nigeria is proud to be a part of ATAF, and we will continue to support its efforts to strengthen tax systems across Africa,” he said. “Through collaboration, we can develop solutions that are not only effective but also sustainable in addressing the unique challenges of our continent.”
Dr. Adedeji highlighted the importance of policy harmonization in creating a cohesive approach to tax administration. By aligning tax policies across African nations, countries can reduce disparities that lead to tax avoidance and profit shifting by multinational corporations. Harmonized policies also facilitate cross-border trade and investment, which are critical for economic growth in the region. Additionally, Dr. Adedeji stressed the need for continuous training and capacity building for tax officials to keep pace with evolving global tax practices, particularly in areas such as transfer pricing and digital taxation.
Addressing Base Erosion and Profit Shifting (BEPS)
A significant portion of the discussions between the FIRS and ATAF focused on combating Base Erosion and Profit Shifting (BEPS), a practice where multinational corporations exploit gaps in tax rules to shift profits to low-tax jurisdictions, thereby eroding the tax bases of higher-tax countries. BEPS is a global challenge, but it has a particularly detrimental impact on African economies, which rely heavily on corporate taxes to fund public services. According to estimates by the Organisation for Economic Co-operation and Development (OECD), BEPS practices cost governments worldwide between $100 billion and $240 billion annually in lost revenue, with African countries disproportionately affected due to their limited resources to combat such practices.
ATAF has been at the forefront of developing frameworks to address BEPS in an African context. The organization has advocated for simplified and transparent transfer pricing rules, which govern how multinational corporations allocate profits across their operations in different countries. Dr. Adedeji noted that Nigeria has made significant strides in strengthening its transfer pricing framework, with the FIRS implementing regulations to ensure that multinational corporations operating in Nigeria pay their fair share of taxes. “By working with ATAF, we can refine these frameworks and share our experiences with other African nations to create a unified approach to tackling BEPS,” he said.
Taxation of the Digital Economy
Another critical area of discussion was the taxation of the digital economy, which has become increasingly important as digital platforms and e-commerce continue to grow in Africa. The rise of digital giants such as Google, Amazon, and Facebook, which generate significant revenue in African markets without a physical presence, has created challenges for tax authorities. These companies often operate in jurisdictions with favorable tax regimes, making it difficult for African governments to tax their profits.
ATAF has been advocating for fair and equitable taxation of the digital economy, including the adoption of measures such as digital services taxes and significant economic presence rules. These measures aim to ensure that digital companies contribute to the tax revenues of the countries where they generate income. Dr. Adedeji emphasized that Nigeria is actively working on policies to tax digital transactions and ensure that digital economy players contribute to the nation’s fiscal resources. “The digital economy is a reality we cannot ignore,” he said. “By collaborating with ATAF, we can develop robust frameworks to ensure that digital companies are taxed fairly, which will boost revenue for African governments.”
Building Transparent and People-Centered Tax Systems
Both the FIRS and ATAF agreed that building transparent and people-centered tax systems is essential for fostering trust and compliance among taxpayers. A transparent tax system ensures that taxpayers understand how their contributions are used to fund public services, which in turn encourages voluntary compliance. Dr. Adedeji noted that Nigeria has been working to simplify tax processes and improve communication with taxpayers to build trust. “A people-centered tax system is one that is fair, transparent, and responsive to the needs of citizens,” he said. “When taxpayers see the direct benefits of their contributions, they are more likely to comply.”
ATAF’s Executive Secretary echoed this sentiment, emphasizing that trust is the foundation of effective tax administration. “Across Africa, we need tax systems that are not only efficient but also equitable,” Baine said. “By working together, we can share best practices and develop systems that prioritize the needs of citizens while ensuring fiscal sustainability.”
The Broader Implications for Africa’s Development
The discussions between the FIRS and ATAF underscored the critical link between effective tax administration and sustainable development. Tax revenue is a vital source of funding for public services such as healthcare, education, infrastructure, and social welfare programs. However, many African countries struggle with low tax-to-GDP ratios, which limit their ability to finance development goals. According to the African Development Bank, the average tax-to-GDP ratio in Africa is around 16%, significantly lower than the global average of 24%. This gap highlights the need for innovative approaches to revenue mobilization.
By addressing challenges such as narrow tax bases, informal economies, and illicit financial flows, African countries can unlock significant revenue potential. For example, integrating informal businesses into the formal economy through simplified registration processes and incentives can expand the tax base and increase revenue. Similarly, combating illicit financial flows, which drain billions of dollars from African economies annually, can ensure that resources remain within the continent to fund development.
Dr. Adedeji emphasized that effective tax administration is not just about revenue collection but also about promoting economic equity and social justice. “A strong tax system ensures that the benefits of economic growth are shared equitably across society,” he said. “By working with organizations like ATAF, we can create tax systems that support inclusive growth and empower African nations to achieve their development aspirations.”
The Role of Technology in Tax Administration
A key theme that emerged from the discussions was the role of technology in modernizing tax administration. Digital tools, such as online tax filing systems, data analytics, and artificial intelligence, have the potential to enhance efficiency, reduce compliance costs, and improve transparency. Nigeria has been at the forefront of leveraging technology to streamline tax processes, with the FIRS implementing digital platforms to simplify tax filing and payment for individuals and businesses.
ATAF has also been promoting the use of technology in tax administration across Africa. The organization has developed tools and training programs to help member countries adopt digital solutions for tax collection and compliance. By sharing best practices and providing technical assistance, ATAF is helping African tax authorities build resilient and future-ready systems.
Dr. Adedeji highlighted the importance of technology in addressing the challenges of the informal economy. “Digital tools can help us track economic activities that were previously outside the tax net,” he said. “For example, by using data analytics, we can identify unregistered businesses and bring them into the formal sector, ensuring that they contribute to national development.”
Strengthening Capacity Building and Research
Another key area of focus during the meeting was the need for continuous capacity building and research to address emerging challenges in tax administration. ATAF has been instrumental in providing training programs for tax officials across Africa, covering areas such as transfer pricing, tax treaty negotiations, and digital taxation. These programs equip tax authorities with the skills and knowledge needed to navigate complex global tax issues.
Dr. Adedeji emphasized that Nigeria is committed to supporting ATAF’s capacity-building initiatives. “By investing in the training of our tax officials, we can build a cadre of professionals who are equipped to tackle the challenges of modern tax administration,” he said. “This investment will yield long-term benefits for Nigeria and the broader African continent.”
Research is another critical component of effective tax administration. ATAF’s research initiatives provide valuable insights into the unique challenges faced by African tax authorities, enabling the development of evidence-based policies. For example, ATAF’s research on the informal economy has highlighted the need for tailored approaches to integrate informal businesses into the tax system, such as offering simplified tax regimes and incentives for compliance.
The Path Forward
The meeting between the FIRS and ATAF marks a significant step toward strengthening tax administration in Nigeria and across Africa. By fostering collaboration, sharing knowledge, and developing innovative solutions, African nations can overcome the challenges of narrow tax bases, informal economies, and illicit financial flows. The commitment of leaders like Dr. Adedeji and organizations like ATAF is crucial to building transparent, equitable, and efficient tax systems that support sustainable development.
As African economies continue to grow and evolve, the importance of effective tax administration cannot be overstated. By working together, African nations can unlock their revenue potential, reduce dependence on external financing, and create a brighter future for their citizens. The partnership between Nigeria and ATAF serves as a model for continental cooperation, demonstrating the power of collective action in addressing shared challenges.
In conclusion, the discussions between the FIRS and ATAF highlight the transformative potential of collaboration in tax administration. By addressing the challenges of narrow tax bases, informal economies, and illicit financial flows, African countries can build resilient tax systems that drive economic growth and social development. Nigeria’s leadership in this area, coupled with ATAF’s expertise and support, sets the stage for a new era of fiscal stability and prosperity across the continent.
