₦airaland Forum

Kenya’s economy is $56.6 billion smaller than Nigeria’s, with a population of about a quarter of Africa’s most populous nation. Yet, the East African nation consistently collects more taxes.

The contrast could be due to structural weaknesses in Africa’s fourth-largest economy. For decades, Nigeria has relied on oil revenues, with tax revenues remaining among the lowest in the world, at less than 10% of GDP. By comparison, Kenya collects around 15% of its GDP in taxes.

Kenya’s GDP per capita of $2,470 outshines that of Nigeria ($806.84), which might explain some tax collection disparities.

Nigeria’s public finances remain exposed to oil price fluctuations, inflation, and rising debt costs. Kenya’s broader tax base has not eliminated these fiscal pressures, but it generates more relative to its size—an estimated $20 billion annually, compared to Nigeria’s target of about $12 billion in the next financial year.
Kenya’s approach

The Kenya Revenue Authority (KRA), the state agency responsible for tax collection, has built a diversified tax base, leveraging technology. The agency collects income tax, VAT, excise duties, customs revenues, and, more recently, digital service taxes.

Enforcement has been enhanced through electronic invoicing (eTIMS), mobile-based filing, and closer integration with banks and telecom operators. Mobile money platforms such as Airtel Money and M-Pesa, which handle transactions worth more than 50% of Kenya’s GDP annually, have expanded the taxable base by bringing more of the economy into formal financial channels.

This has resulted in steady growth in collections from KES 1.67 trillion ($12.9 billion) in FY2020/21 to KES 2.57 trillion ($20 billion) in FY2024/25, averaging over 11% annually. The tax-to-GDP ratio has remained around 14–15% in recent years, nearly double Nigeria’s 7–9%.

Part of Kenya’s edge comes from how far its taxman is willing to go. The Kenya Revenue Authority has built a reputation for mixing technology with old-fashioned snooping. Officers now scan social media to see if the lifestyles people flaunt online match what they declare on their tax returns. In a 2024 crackdown, more than 460 wealthy individuals were flagged for living large while paying little.

The agency has also gained access to payroll and payment records for civil servants and government suppliers, giving it another layer of visibility into incomes that might otherwise go under the radar. On the financial side, KRA has started linking its systems directly with banks and mobile money platforms like M-Pesa, which most Kenyans use daily. That makes it harder to hide money flows outside the tax net.

And the push doesn’t stop with traditional assets. Kenya is among the few countries in Africa moving to tax cryptocurrency transactions, with rules being drawn up to make sure crypto exchanges feed data straight into the revenue system. All of this has steadily expanded the pool of taxable activity — a big reason why Kenya manages to collect more revenue, despite being a much smaller economy than Nigeria.

To tighten compliance further, KRA has deployed a new class of field agents with paramilitary training known as Revenue Service Assistants (RSAs). Around 1,400 of them were trained to help with tax registration, verify taxpayer information, ensure traders issue proper receipts, and support the rollout of systems like eTIMS and iTax. These assistants also make physical visits to businesses to help them comply with excise and other regulatory requirements.

On the enforcement side, KRA has penalties for individuals or companies between KES 1,000 ($7.74) and KES 1 million ($7,740) for non-compliance. Tax compliance certificates are a requirement for people applying to government jobs, suppliers seeking contracts, and citizens running for public office.

Nigeria’s catch-up effort

Unlike Kenya, Nigeria has a trust deficit between the government and its citizens, who doubt that the government will spend funds wisely, due to documented cases of mismanagement.

“This leads to a high level of tax evasion and aggressive avoidance,” said Taiwo Oyedele, who now leads Nigeria’s tax reform efforts, in 2022.

Only about 10 to 12% of Nigerians pay tax, and just 9% of corporates comply. The International Monetary Fund (IMF) agrees that poor compliance and weak tax morale are major issues, but it also highlights Nigeria’s generosity with exemptions and low rates. In 2021 alone, ₦6.8 trillion ($4.57 billion) was foregone due to tax exemptions.

Also, the country’s VAT collection efficiency—the ratio of actual revenues to potential revenue— is among the lowest in Africa. It noted that the country can increase tax revenues if priority reforms are implemented. With oil revenues drying up, the government has taken this advice to ramp up tax collection efforts.

Non-oil tax collections increased to ₦15.94 trillion ($10.71 billion) in 2024 from ₦5.97 trillion ($4.01 billion) in 2022, mainly through VAT, corporate income tax, customs duties, and the electronic money transfer levy.

The government is now targeting ₦16.05 trillion ($10.79 billion) in 2025, ₦17.85 trillion ($11.99 billion) in 2026, and ₦19.73 trillion ($13.26 billion) in 2027.

To achieve these targets, new tax legislation signed in June 2025 increased capital gains tax from 10% to 30% for corporations, introduced progressive income tax brackets, and imposed taxes on crypto transactions.

In a separate policy document, the government outlined measures to expand VAT collection agents, simplify compliance, reduce tax expenditures, and employ technology to enhance transparency and enforcement.

The Federal Inland Revenue Service (FIRS), Nigeria’s tax collection agency, relies on its TaxPro Max, launched in 2021, to enable online filing and payments. Since August 1, 2025, large businesses with turnovers exceeding ₦5 billion ($3.36 million) must integrate their invoicing systems with the FIRS platform for real-time validation and reporting.

VAT collection in supermarkets, hotels, and retail outlets will also be automated, and a real-time data mining portal will facilitate desk reviews, audits, investigations, and prevent leakages.

Authorities argue that Nigeria’s VAT rate — 7.5% compared with Kenya’s 16% — is too low for its ambitions, but political resistance blocked a recent proposal to raise it to 10%.

FIRS is also linking its database with the Nigeria Inter-Bank Settlement System Plc (NIBSS), the Nigeria Customs Service (NCS), the Nigerian Communications Commission (NCC), and the Corporate Affairs Commission (CAC), mirroring Kenya’s effort to go to any length for its taxes.

Banks and financial institutions will also face tighter monitoring as FIRS reconciles remittances of the EMTL, a ₦50 charge on transfers of ₦10,000 and above.

On the enforcement side, Nigerians who fail or refuse to register for tax will be fined ₦50,000 ($33.60) in the first month, and ₦25,000 ($16.80) for other subsequent months. Any company that awards a contract to an unregistered person will also be fined ₦1 million ($672.09).

Nigeria aims to increase its tax-to-GDP ratio from below 10% to 18% by 2027. Nige

ria still has a long way to go to fulfil its tax revenue potential, but it has started the long walk there.

https://techcabal.com/2025/09/22/nigeria-tax-reform-vs-kenya-model/

The problem of incompetence in tax collection is already raring its head again.

We have been told that the new tax regime will go into effect on the 1st of January 2026 and before then, everyone will be expected to already have a Tax Identification Number (TIN), but even as of now approaching the end of September, there is no single registration centre anywhere where one can get a T.I.N.

Are they now going to introduce registration centres at the 11th hour so people will be queueing for their T.I.N during the Christmas break because they want to beat the deadline of 1st January 2026?

To add insult to injury, they will still penalise you if you fail to acquire a T.I.N before the deadline.

Nigerians are watching and waiting.

i have a first hand experience on how they do it

if you are using a toll for instance, you dont pay cash, you use your phone and dail a code to pay, as you pass the toll, they will issue you the receipt.

They are actually very advanced when it comes to collecting tax.

every damn thing is taxed in that country.

These APC people are coming up with a lot of BS to justify overtaxing Nigerians.

If the government wants to truly increase Nigeria's revenue though taxation, they should automate the process and compel all companies to pay taxes digitally.

Stop the analogue collection of taxes. Your workers are steàling the taxes.

Tulumbu Agbadomudeens don come with propaganda..

How much oil does Kenya have?

You have also conveniently forgotten that the same Tax law led to the riots in Kenya and the government had to backtrack.

If you want NEPAL+ Kenya situation next year, no wahala, tell Tinubu to carry on.

Why is how they pay or collect taxes you guys always emphasise what about how taxes are effectively utilise in other countries, it is always about taking no giving back
Such a situation brings disequilibrium
When the people fulfils their obligations, government must discharge their responsibilities too
They will never tell us the free health care in uk or Canada from taxes, or free schools from taxes,or subsidies for children from taxes, all this makes it bearable for the citizens to cope with whatever taxes
But in Nigeria our taxes are used to finance the opulent lifestyles of our politicians and the parasites will still have the audacity to say its not enough despite having nothing to show for the ones they had collected

Remember to state that a riot triggered by new tax reforms nearly grounded the east African country not long ago.

I am assuming this is one of those propaganda posts that the paid laptop boys have been encouraged to make. Una want introduce new taxes with doing anything tangible, over to Nigerians sha, me I dey far dey watch.

The core reason we cannot be taxed anywhere near Kenyans is simple. Oil money. The availability of oil money from a small part of the country means theft or almost as good as free money. Now if free money is not managed well, how will the masses be encouraged to submit their sweat for mismanagement? How?

Look at! You people will go to soakaways to look for reasons to justify your bleeding dry of the people.
Does the Kenyan president have a yatch? Does the Kenyan president have a presidential jet? Is his convoy alone worth billions of naira? Does he earmark over 20 billion naira each year just for feeding in the presidential quarters? Do Kenyan government ministers drive in over 50 vehicle convoys like the Nigerian fact minister does? Are Kenyan lawmakers the highest paid on earth?

There is nothing that justifies telling Nigerians to pay more in taxes when the money the that belongs to the citizens of this country is being looted by government officials. Why should we keep paying for people who are bereft of ideas on how to improve the fortunes of this country?

to create a good society, taxation is very important but if well use

Hmmm
Hmmm
Hmmm
Hmmm
I'm tired of APC always justifying hardship and tough economic measure on their citizens

Otti said that taxes is made to be a reward for good governance and prosperity of the people not suppose to be a burden....provide good governance, remove corruption, citizens will be obliged to pay taxes....have you heard that government official bought houses in florida and paid in cash....we pay taxes ,while people that should use it for public good,will rather use it for personal luxury....so unfair

People should come together and put datas on how many youth who are gainfully employed. You can’t tax a poor country to become rich!

Enough of these rubbish talks about taxes! What has the government successfully achieve since independence? The present government have been wasteful of scarce resources! What happened to monies realized from Subsidy removal? Where is accountability?

I hope the government push forward with this useless tax setup. Nigerians would do the needful! Transparency must start from the top, politicians looking for funds to to finance their sexual escapades!

Collecting more tax is one, using the fund realise from it to better the lives of Nigerians is another.

If we can't see the impact of money generated from fuel subsidy removal, I wonder why anyone should believe the government on the reason to increase taxes.

They will just be giving thievery state governors more money and use the rest to pay poor Nigerians that are not exists.

So?


What about copying the Kenya's minimum wages first?

BlackViper:
The problem of incompetence in tax collection is already raring its head again.

We have been told that the new tax regime will go into effect on the 1st of January 2026 and before then, everyone will be expected to already have a Tax Identification Number (TIN), but even as of now approaching the end of September, there is no single registration centre anywhere where one can get a T.I.N.

Are they now going to introduce registration centres at the 11th hour so people will be queueing for their T.I.N during the Christmas break because they want to beat the deadline of 1st January 2026?

To add insult to injury, they will still penalise you if you fail to acquire a T.I.N before the deadline.

Nigerians are watching and waiting.

Na you post am, na you still counter am so make e be like say them never pay you and Seun for this post...

Make Una rest! The ones they are collecting wetin them dey use am do? Repair road for 3Trillion?

They will always seek the most useless datapoint to justify the stupid policies.

Any discerning should be very scared and worried about the future of Nigeria. Current insecurity is child's play to what's coming

You can't run any business in Kenya without paying tax.

If you are running foods and drugs business, it's not even about the tax but scrutinizing before approval.

When we said things are just too easy in Nigeria, some people dont understand

Now, they can bring up another country as benchmark for what's going to favour them. If citizens demand stuff like what's obtainable in the US or UK or Australia for example, they'll come with different reasons why we shouldn't compare that way. People ruling in Nigeria are purely evil.

Did you also compare the minimum wages of both Nigeria and Kenya at all ehn op? 🤔

Just do the comparison and show us here too let us all see 🧐

Compare yourself to an oil-producing country instead of Kenya. Propagandists keep pushing out half-truths to further their thirst for more money.

[quote author=BlackViper

We have been told that the new tax regime will go into effect on the 1st of January 2026 and before then, everyone will be expected to already have a Tax Identification Number (TIN), but even as of now approaching the end of September, there is no single registration centre anywhere where one can get a T.I.N.[/quote]You can get you TIN on your mobile. Just visit the FIRS website. The entire registration process is very straightforward. Less than 3 minutes. And then your TIN is sent to your email. Those who don't have email will have to visit the FIRS office nearest to them.

That said, I agree with you that dissemination of public information is below par in Nigeria. I struggle to understand what the Ministry of Orientation or whatever it is called, actually do.

Nigerians seldom joke with money.
Whoever has the president's ears should tell him to thread carefully on this taxation matter. The interpretation of the planned tax policy will not be interpreted in the simple way we see it.

Imagine the hausa radio explanation. Explore how the Yoruba news caster will say it. Think about how an Igbo news analysis will put it to the public. The backlash is one we may never recover from.

If you want the policy to hold. You need a year of consistently showing what you can do as a government especially at the state level. Trust building has to happen first.

Speak to the president, otherwise Kenya will be a dress rehearsal.

What is all this talk of tax tax tax
All the ones they've collected what have they used it for
Is it not houses in Florida we are seeing everywhere

The Nigerian government isn’t interested in collecting taxes but rather they genuflect and play dirty elections and ethnic politics with the tax issue

🤣🤣🤣🤣.. empty brains. If they are few people, then that’s why they collect higher tax

I don't understand how people uses other country with better infrastructure and better economy to judge our own leaders here