Despite the Federal Government’s wide ranging tax reforms aimed at simplifying Nigeria’s tax system, businesses across the country continue to complain about multiple taxes, levies and other government charges.
An investigation by Nairametrics, based on interviews with business owners, tax experts and revenue officials, alongside a review of tax laws, revenue schedules, payment receipts and regulatory directives, found that implementation of the reforms remains uneven, particularly at the state and local government levels.
Although the Nigeria Tax Act has streamlined several areas of tax administration, businesses say demands from federal, state and local government agencies, as well as contracted revenue collectors, continue to raise their operating costs.
What Businesses And Experts Are Saying
The concerns are reflected in the Central Bank of Nigeria’s July 2026 Business Expectations Survey, in which 70.8% of respondents identified high and multiple taxation as the biggest obstacle to business operations, ahead of insecurity and high interest rates.
Dr. Muda Yusuf, Chief Executive Officer 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 noted that businesses were still dealing with multiple taxes, levies, illegal checkpoints and market dues. He added 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 some members of the association had been subjected to as many as 20 different taxes and levies.
However, Dare Adekanmbi, Special Adviser on Media to the Chairman of the Nigeria Revenue Service, said small and medium sized enterprises with annual turnovers below N100 million are exempt from taxes collected by the NRS, including VAT.
He urged affected businesses to establish whether the demands they receive originate 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.”
Business owners interviewed said they were willing to pay legitimate taxes but wanted clearer information on which government agencies have the legal authority to collect them and which payments are actually required by law.
Reforms Designed To Simplify The Tax System
Nigeria’s tax reform programme, which took effect in January 2026, marked one of the country’s most significant 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.
The laws were designed to eliminate duplicate taxation, harmonise tax administration, improve compliance, expand the tax base and reduce 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, findings by Nairametrics indicate that many businesses have yet to experience the expected benefits of the reforms.
One Business, Multiple Collectors
Across several states, SME operators described a system where registered businesses 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.
A 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 that it paid more than 20 statutory and administrative charges within a year, excluding utility bills.
Several other businesses declined to disclose their identities, citing concerns about possible reprisals from revenue authorities.
Confusion Over Taxes And Levies
Tax experts point out that businesses frequently refer to every government payment as a tax, even though some charges are technically fees, permits or payments for services.
However, they noted that the economic impact remains significant where different agencies impose similar charges or collect fees beyond their legal mandates.
A review of state revenue laws and approved schedules also showed considerable differences in the number and types of charges imposed across states.
While some states have consolidated revenue collections through their Internal Revenue Services, others still operate fragmented systems involving ministries, agencies, local governments and contracted consultants.
Joint Revenue Board Directives Face Implementation Challenges
The Joint Revenue Board had earlier 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 tackle multiple taxation.
Despite the directive, evidence gathered on the ground indicates that transport operators in several parts of the country continue to encounter unofficial collections.
These payments are often imposed under different descriptions or collected by individuals claiming to represent local authorities or transport unions.
Industry groups argue that weak and inconsistent enforcement has allowed some of the practices to continue 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 Carry The Heaviest Burden
Small businesses appear to face a disproportionate share of the burden because many lack the resources needed to determine whether government demands are legitimate or challenge unlawful collections.
For many operators, paying disputed levies is considered cheaper than engaging in prolonged disputes or risking the closure of their businesses.
Business owners who spoke to Nairametrics said multiple collections also increase administrative expenses, discourage formalisation and weaken the competitiveness of local businesses.
Some entrepreneurs said they intentionally avoid opening additional branches because of the increased exposure to multiple government agencies and revenue demands.
What You Should Know
Nigeria’s constitutional framework distributes 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 empowered to collect specific rates and levies provided for under existing laws. However, disputes often arise when agencies exceed their statutory powers or when overlapping mandates create uncertainty for taxpayers.
As Nigeria seeks to attract investment and improve the business environment, the success of its tax reforms may depend not only on introducing new legislation but also on ensuring that businesses face fewer overlapping demands from tax collectors and revenue agencies.
