Despite the Federal Government’s sweeping tax reforms aimed at simplifying Nigeria’s tax system, businesses across the country say they continue to grapple with multiple taxes, levies and other government collections.
An investigation by Nairametrics, based on interviews with business owners, tax experts and revenue officials, as well as a review of tax laws, revenue schedules, payment receipts and regulatory directives, found that implementation remains uneven, particularly at the sub-national level.
While the Nigeria Tax Act has streamlined several aspects of tax administration, businesses say overlapping demands from federal, state and local government agencies, as well as contracted revenue collectors, continue to increase their operating costs.
What they are saying
The concerns are reflected in the Central Bank of Nigeria’s July 2026 Business Expectations Survey, where 70.8% of respondents identified high and multiple taxation as the biggest constraint to business operations, ahead of insecurity and high interest rates.
- Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, said, “Some components of it [tax reforms] need to be domesticated by the states. Not all states have domesticated those aspects of tax reforms that relates to the sub-nationals.”
- Yusuf said multiple taxes and levies, illegal checkpoints and market dues were still being experienced, adding that “unless they are fully on board, those nuisance taxes that you see will take time to disappear.”
Kuteyi Duro, President of the Association of Food and Agro-allied Processors of Nigeria, said several members of the association have had to endure up to 20 different taxes and levies.
However, Dare Adekanmbi, Special Adviser on Media to the Chairman of the Nigeria Revenue Service, said SMEs with annual turnover below N100 million are exempt from taxes collected by the NRS, including VAT, and urged businesses to identify whether the demands they face are coming from state authorities.
- He said, “Any business whose turnover are less than N100,000,000 has no business paying taxes to us as Nigeria Revenue Service, including VAT. So, ask them, what is their turnover let them be truthful. If you can tell me the states where those issues are, I can escalate it to the Joint Revenue Board which is in charge of state governments.”
Businesses interviewed said they support paying legitimate taxes but want greater clarity on which agencies are authorised to collect them and what payments are legally required.
A reform designed to simplify taxes
Nigeria’s tax reform programme, which came into effect in January 2026, represented one of the country’s most ambitious fiscal overhauls in decades.
The reforms introduced the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act, with the objectives of eliminating duplicate taxes, harmonising tax administration, improving compliance, expanding the tax base and reducing the burden on small businesses.
The Joint Revenue Board also prohibited the collection of road taxes and levies through checkpoints and banned the use of road stickers by state and non-state actors.
However, evidence gathered by Nairametrics suggests that many businesses have yet to experience the intended benefits of the reforms.
One business, multiple tax collectors
Across several states, SME operators described a system in which a registered business may pay corporate taxes, VAT, PAYE and statutory regulatory fees while also receiving separate demands for environmental levies, business premises permits, sanitation charges, signage fees, development levies, waste disposal charges, market fees, loading permits, fire service levies and local government operating permits.
- One manufacturing firm CEO in Ogun State said, “We don’t argue anymore. Once they come with receipts and threats of sealing our premises, we pay.”
Another manufacturing company in Ogun State told Nairametrics it paid more than 20 different statutory and administrative charges within a year, excluding utility bills.
Several businesses interviewed requested anonymity, citing fears of reprisals from revenue authorities.
Local governments remain the biggest concern
Tax practitioners say the proliferation of local government levies remains one of the major weaknesses in the system.
Although states publish approved revenue schedules, enforcement often involves contractors whose collection methods businesses say differ from official policy. Some businesses reported receiving payment demands from multiple local government task forces within weeks.
Others alleged that unofficial “development” and “security” levies had become routine costs of doing business despite having no clear statutory basis.
The burden is particularly significant for SMEs that lack in-house legal or tax advisers capable of challenging questionable assessments.
The CPPE had warned that Nigeria’s tax reforms must be carefully implemented to avoid placing excessive compliance burdens on the country’s large informal sector.
The grey area between taxes and levies
Tax experts note that businesses often describe every government payment as a tax, even though some collections are technically fees, permits or service charges.
However, where multiple agencies impose similar charges or collect outside their legal mandate, the economic burden remains the same for businesses.
A review of state revenue laws and approved schedules showed significant variations in the number and types of charges imposed across states. While some states have consolidated collections through their Internal Revenue Services, others continue to operate fragmented systems involving ministries, agencies, local governments and contracted consultants.
Joint Revenue Board directives face implementation hurdles
Earlier, the Joint Revenue Board prohibited the collection of road taxes, levies and related charges through checkpoints, including the use of road stickers by state and non-state actors, as part of efforts to curb multiple taxation.
However, field evidence shows that transport operators in several parts of the country still face unofficial collections, often imposed under different names or by individuals claiming to represent local authorities or transport unions.
Industry groups argue that inconsistent enforcement has allowed some of these practices to persist despite federal directives.
- “To the SMEs, the extent to which there is no serious commitment to the tax reforms implementation even in the states where it had been domesticated because if you have a law and its not implemented, it’s as good as the paper on which the law or policy is,” Dr. Yusuf told Nairametrics.
SMEs bear the greatest burden
Small businesses appear to be disproportionately affected because they often lack the resources to verify whether government demands are legitimate or challenge unlawful collections.
For many, paying disputed levies is viewed as less costly than prolonged disputes or the risk of business closure.
Business owners who spoke to Nairametrics say multiple collections also increase administrative costs, discourage formalisation and reduce the competitiveness of local enterprises.
Some entrepreneurs said they deliberately avoid registering additional branches to minimise exposure to multiple government agencies.
What you should know
Nigeria’s constitutional framework shares taxation powers among the Federal Government, state governments and local governments.
- Corporate Income Tax, Value Added Tax and Customs duties are federal taxes, while Personal Income Tax for individuals is administered by state governments.
- Local governments are authorised to collect specific rates and levies provided under existing laws, while disputes often arise when agencies exceed their statutory powers or overlapping mandates create confusion for taxpayers.
As Nigeria seeks to attract investment and improve its business climate, the effectiveness of the tax reforms may ultimately depend less on introducing new laws and more on ensuring that businesses face fewer overlapping demands from tax collectors and revenue agencies.
