Nigeria’s evolving tax reform framework may receive a compliance boost if authorities adopt a targeted penalty waiver strategy, according to a leading tax practitioner who argues that accumulated sanctions are discouraging voluntary disclosures.
With new fiscal legislation now in force and revenue mobilisation high on the policy agenda, experts say pragmatic incentives could accelerate backlog clearance without undermining statutory obligations.
Expert seeks waiver to boost voluntary tax compliance
Dr Ernest Abegbe, an economist and tax consultant, has proposed a temporary waiver on Late Returns Penalty and accrued interest to enhance voluntary tax compliance among corporate taxpayers.
Speaking in an interview, Abegbe said the recommendation is grounded in Section 66 of the Nigerian Tax Administration Act 2025, which empowers authorities to grant reliefs under defined circumstances.
According to him, the measure should be structured, transparent and strictly time-bound to avoid moral hazard.
He emphasised that the proposed intervention would not erase principal tax liabilities but would apply exclusively to penalties and accumulated interest.
“This is not an amnesty on the core tax obligation,” he explained. “It is a calibrated compliance enhancement mechanism designed to accelerate revenue collection while restoring trust between taxpayers and the authorities.”
Reform momentum creates policy window
The call comes at a time when Nigeria’s new tax reform laws, which took effect on January 1, 2026, are reshaping compliance architecture and enforcement processes. Digitalisation of tax administration systems has improved monitoring capacity but also generated automated penalties that have compounded liabilities for firms with historic filing gaps.
Abegbe noted that many companies willing to regularise their positions are constrained by the cumulative weight of penalties and interest, which in some cases exceed the principal tax due.
Under the current framework, delayed filings trigger automatic sanctions through integrated tax management platforms. While these systems improve transparency and reduce discretion, they also create rigid enforcement outcomes that may discourage voluntary disclosure.
In that context, the expert seeks waiver to boost voluntary tax compliance by creating a temporary reset mechanism that encourages taxpayers to come forward without fear of punitive financial escalation.
Backlog clearance and revenue acceleration
Industry analysts say legacy compliance backlogs remain a significant drag on Nigeria’s tax base expansion objectives. A waiver window could incentivise dormant or partially compliant firms to regularise filings and payments, thereby widening the net in practice rather than theory.
Abegbe outlined potential macroeconomic benefits of the approach, including increased short-term revenue inflows, reduced enforcement costs, and lower litigation exposure for both taxpayers and authorities.
He argued that enforcement-driven compliance models often result in protracted disputes, tying up revenue in administrative appeals or court proceedings. By contrast, a structured waiver period could convert disputed liabilities into immediate cash inflows.
“Governments globally deploy compliance incentives during reform transitions,” he said. “The objective is to stabilise the system, deepen trust and build a sustainable compliance culture.”
Balancing equity and fiscal discipline
Critics of penalty waivers often warn that such measures could reward non-compliance and undermine fairness. However, Abegbe countered that limiting relief strictly to penalties and interest preserves the integrity of the principal tax obligation.
He stressed that any waiver programme must be accompanied by strict eligibility criteria, clear timelines and post-window enforcement rigor to prevent abuse.
Policy observers say the credibility of such a scheme would depend on transparent communication and data-driven evaluation. Clear metrics on revenue recovered, compliance rates and post-waiver adherence would be essential to justify the intervention.
The expert seeks waiver to boost voluntary tax compliance in a way that aligns with broader fiscal sustainability goals rather than short-term populism.
Expanding the tax base sustainably
Nigeria’s fiscal authorities have repeatedly emphasised the need to expand the tax base rather than increase rates. However, structural constraints—including informality, documentation gaps and limited taxpayer education—have slowed progress.
Abegbe believes a compliance-friendly reset could complement digital enforcement reforms by lowering entry barriers for businesses previously discouraged by accumulated liabilities.
He also pointed out that improved compliance culture has long-term multiplier effects. Once companies regularise their filings and integrate structured accounting processes, they are more likely to maintain compliance continuity.
“Trust is an economic variable,” he noted. “When taxpayers perceive fairness and procedural clarity, voluntary compliance improves organically.”
International precedents
Several jurisdictions have implemented time-bound penalty relief programmes during major tax system transitions. These initiatives often yield substantial revenue gains within short windows while strengthening medium-term compliance frameworks.
While Nigeria’s fiscal context is distinct, analysts say adapting global best practices to local realities could help reconcile revenue urgency with private sector sustainability concerns.
The expert seeks waiver to boost voluntary tax compliance not as a permanent concession but as a transitional instrument within a broader reform architecture.
Constructive engagement urged
Abegbe called for structured dialogue between policymakers, regulators and private sector stakeholders to refine implementation modalities. He reiterated that policy certainty and collaborative engagement are critical to achieving durable outcomes.
He further emphasised that strengthening voluntary compliance ultimately reduces the need for aggressive enforcement, allowing tax authorities to allocate resources more efficiently.
As Nigeria continues recalibrating its tax ecosystem under the new legal framework, the debate over incentive-based compliance versus strict enforcement is likely to intensify.
For businesses navigating reform-driven adjustments, clarity on penalty treatment could influence financial planning and risk assessment decisions in the months ahead.
Whether authorities will adopt the proposed waiver remains uncertain.
However, the recommendation adds a strategic dimension to ongoing discussions on how best to optimise revenue mobilisation without stifling economic activity.
