WHEN the Federal Government signed the new Personal Income Tax reforms into law in 2025, Nigerians reacted with familiar skepticism. The adjustments, including a zero-per cent rate for those earning up to N800,000 annually and the 25 per cent bracket for incomes above N50 million were widely seen as fairer and more modern. Yet many doubted whether these changes, set to take effect from 2026, would make any difference in their daily lives. For years, taxpayers have contributed to a system that seldom shows where their money goes or what it achieves. Without that connection, trust continues to erode.
Nigeria’s tax problem is not only low collection, it is low transparency. People want to comply, but they want assurance that their contributions are not disappearing into opaque spending pipelines, abandoned projects and fragmented reporting systems. In a country battling rising costs, unreliable public services and growing insecurity, transparency has become central to public confidence not a secondary concern.
Artificial Intelligence cannot transform the tax system overnight, but it can bring immediate, practical clarity to how revenue is collected, monitored and used. And unlike many reforms that demand new infrastructure, Nigeria already has digital foundations that can support a more transparent system: NIN, BVN, CAC records, bank and payment data, and a rapidly expanding digital economy.
The government’s revised income tax structure shows an intention to ease the burden on low-income earners and strengthen progressivity. But reforms alone cannot restore faith. Citizens still have no clear window into how revenue moves from FIRS to ministries and from ministries to projects. Without visibility, even well-designed policies struggle to win public confidence.
Visibility is the central weakness. Nigeria’s tax-to-GDP ratio has hovered between 8 and 11 percent in recent years, far below the African average of about 16 percent. Using the OECD methodology, tax revenue was just 7.9 per cent of GDP in 2022 one of the lowest recorded across the continent. Much of the economy remains informal: landlords collect rent in cash, traders operate off the books, and many service providers leave no digital trail.
Meanwhile, spending data is scattered across portals and PDF documents that most citizens cannot interpret. When people cannot see functioning schools, safer roads, or improved public amenities funded by their taxes, skepticism becomes the default response.
This is where AI can add value not in abstract promises, but through practical applications Nigeria can implement now. One of the clearest opportunities lies in identifying individuals and businesses who are not paying their fair share. Nigeria already holds enough data to detect inconsistencies: bank activity, CAC registrations, property records and POS transactions reveal patterns that do not align with declared income.
A landlord receiving steady rent but declaring no rental income, a trader reporting unusually low revenue despite high digital turnover, or individuals with luxury spending habits disproportionate to their filings become visible when data systems communicate with one another. Banks already conduct similar checks for fraud detection. Extending that logic to tax compliance is both feasible and overdue. Another critical area is reducing leakages in public spending. Year after year, audit reports highlight billions lost to inflated contracts, duplicated payments, abandoned projects and procurement irregularities. AI-driven analytics can flag unusual patterns early — a contractor receiving repeated payments for similar work, a project whose cost suddenly doubles without justification, or discrepancies in the pricing of identical projects across different states.
Countries such as India and Brazil are already using similar tools to tighten procurement and reduce corruption, showing that Nigeria can adopt proven systems rather than start from scratch.
AI also offers a powerful way to make budget information accessible. At present, budget documents are scattered, technical and difficult for ordinary Nigerians to make sense of.
AI can convert these complex PDFs into clear, searchable public dashboards that show revenue, allocations and project-level spending in plain language. When a resident in Enugu, Jos or Port Harcourt can look up how much was allocated for their local road and whether the project was delivered, trust begins to grow naturally.
Small businesses, which make up the backbone of Nigeria’s economy, would also benefit from AI-guided filing tools that simplify declarations, reduce reliance on intermediaries and lower the risk of errors. Many SMEs avoid filing not out of evasion, but out of confusion. Making the process simpler will widen the tax net without placing new burdens on entrepreneurs.
Finally, AI can strengthen the connection between revenue and security. Financial flows in border towns and conflict-prone regions often reveal early signs of smuggling, illegal mining or the movement of funds tied to criminal networks. When tax and customs data are analysed together, security agencies can detect abnormal patterns earlier and respond more effectively.
Nigeria does not need an expensive overhaul to achieve this. It needs coordination, responsible data integration and firm oversight. With strong privacy protections, independent auditing and transparent use of technology, AI can help rebuild what Nigeria’s tax system has lacked for decades: trust.
Deshpande and Boyapati are AI enthusiasts focused on sustainable technology solutions for emerging markets. They can be reached via: [email protected] and [email protected]
