The Federal Inland Revenue Service (FIRS) in Nigeria announced updates to the Office of the Tax Ombudsman (OTO) in early October, marking a new era for accountability. The OTO is designed to mediate disputes and address grievances between taxpayers and revenue authorities, and it will officially roll out alongside the new tax regime on January 1, 2026.
In a country where reform has mostly been more talk than action, this development could mark one of the most significant changes in Nigeria’s fiscal governance.
A Tale of Missed Opportunities
Nigeria’s tax journey has been a cycle of reforms and frustrations. Since independence, various governments have introduced policies to diversify revenue sources, cut oil dependency, and improve tax administration. However, persistent corruption, political turmoil, and a large informal sector have hindered progress, keeping the country’s tax-to-GDP ratio among the lowest in Africa.
The challenge traces back to the constitutional frameworks of 1960 and 1963, which gave the federal parliament authority over income, customs, and excise taxes while leaving residual levies to regional governments. However, implementation stumbled due to ethnic tensions and limited administrative capacity.
From the 1979 derivation principle to the 1986 Structural Adjustment Programme (SAP), various constitutions and reforms were introduced to connect taxation with national development. Yet, each phase followed the same cycle: bold plans, poor implementation.
The introduction of Value Added Tax (VAT) in 1993 marked a significant change, replacing the limited sales tax system and starting at a rate of 5 per cent. Although VAT was intended to boost revenue, its potential was undermined by poor compliance with remittance and widespread corruption.
The return to civilian rule in 1999 brought renewed hope, with new provisions requiring citizens to be honest in their tax declarations. However, multiple taxation and unclear administrative processes discouraged compliance. The 2004 tax law reforms made only slight progress, and even the establishment of the Federal Inland Revenue Service (FIRS) in 2007 couldn’t foster the expected culture of voluntary compliance.
Digitalisation efforts continued with the launch of e-filing initiatives in 2009 and the Treasury Single Account (TSA) in 2015 to reduce financial leakages. The Finance Act 2020, which increased VAT to 7.5 per cent, was the most recent attempt to enhance non-oil revenue. Yet, the lingering question remained: could citizens place their trust in a system they perceived as unjust?
That question lies at the core of the new reform. During the FIRS’ Taxpayer Webinar Series, Dick Irri, Coordinating Director of the Government and Medium Taxpayers Group, and Tamadi Shettima from the Special Duties Group, encouraged Nigerians to acquaint themselves with the new framework.
The core message was clear: this reform isn’t just procedural; it’s a move to restore trust.
The Office of the Tax Ombud, created under the Joint Revenue Board (Establishment) Act of 2025, offers a fair way to handle complaints about administrative issues, delays, or misconduct by tax officials. Operating independently, the OTO gives taxpayers a low-cost and easy option to resolve problems without going to court.
Although the Ombud won’t interpret tax laws or determine liabilities, it will have extensive investigative powers, including access to tax offices, interviewing witnesses, gathering evidence, and suggesting corrective measures. It can even report instances of arbitrary administration directly to the National Assembly.
The 2025 tax reform package, which also includes the Nigeria Tax Administration Act, Nigeria Revenue Service Act, and Nigeria Tax Act, aims to redefine the relationship between taxpayers and the government.
First, the reforms aim to introduce transparency by design. The Tax Ombud will operate independently of revenue agencies, with legal authority to investigate misconduct and suggest remedies. If handled with integrity, this independence can bridge the trust gap that has long caused citizens to question the fairness of the tax system.
Second, the framework promotes digitalisation and data transparency. FIRS plans to enhance its integrated tax data management system to include more taxpayers, simplify filing, and minimise human interaction—helping to reduce corruption and delays.
Third, the laws establish uniform administrative standards across federal and state tax authorities to prevent overlapping levies and double taxation, which often discourage businesses from complying.
Finally, the reforms tie taxation to service delivery, building a system where citizens can clearly see how their taxes contribute to public goods like infrastructure, healthcare, and education. This connection between taxes and tangible benefits is expected to boost voluntary compliance and shift public perception of taxes from a burden to a civic duty.
Together, these measures aim to transform taxation from a coercive model into a collaborative system built on mutual accountability and national progress.
The Personal Aspect of Change
During the media engagement, Irri highlighted the core of the reform using a metaphor from African wisdom: “You cannot beat a child and not expect the child to cry.”
He elaborated, “Taxpayers who might face repayment risks or have concerns about the behavior of revenue officials can report their grievances. That’s the role of the Tax Ombud in simple terms. Not every issue needs to end up in court.”
His analogy highlights the idea that authority should be paired with empathy. Nigerians are not opposing taxation; they are calling for fairness, transparency, and accountability.
The effectiveness of the OTO will hinge on its accessibility and efficiency. While the law mandates a 14-day response period for complaints, its actual success will depend on operational challenges, staffing, funding, and political commitment.
If managed with integrity, the Tax Ombud has the potential to reshape the relationship between taxpayers and the government, turning taxation into a trust-based social contract rather than an act of coercion. However, if it succumbs to bureaucracy and interference, it risks becoming just another symbolic reform with minimal impact.
The creation of the Tax Ombud isn’t just an administrative achievement; it’s a challenge to Nigeria’s dedication to fair governance. In a nation burdened by unfulfilled fiscal promises, the real issue isn’t the existence of laws but whether they will be upheld.
If trust is the price citizens pay for governance, fairness should be the return they receive from the state.
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