When President Bola Tinubu's administration enacted the revised Personal Income Tax Act in 2025, the public reaction was a mix of cautious optimism and deep-seated doubt. The reforms, championed by Tax Reforms Committee Chairman Taiwo Oyedele, introduced a progressive structure: a zero percent rate for annual incomes below N800,000 and a top rate of 25 percent for earnings exceeding N50 million. Despite these seemingly fair adjustments set for implementation in 2026, a fundamental question lingered among Nigerians: Will this actually change anything?
The Core Issue: A Crisis of Trust, Not Just Collection
For years, the relationship between the Nigerian taxpayer and the state has been strained. Citizens regularly contribute to a system that offers little visibility into how their money is spent or what tangible benefits it delivers. Nigeria's tax-to-GDP ratio remains critically low, hovering between 8 and 11 percent, far below the African average of 16 percent. Using OECD methodology, it was a mere 7.9 percent in 2022. The problem is twofold: a vast informal economy and a profound lack of transparency. Landlords collect cash rent, traders operate off the books, and citizens are left with PDF budget documents they cannot decipher. Without seeing their taxes translate into better schools, safer roads, or reliable amenities, skepticism becomes the default position.
Practical AI Solutions for Immediate Impact
Artificial Intelligence cannot magically fix the entire system overnight, but it can deliver immediate, practical clarity. Nigeria already possesses the digital building blocks—National Identity Number (NIN), Bank Verification Number (BVN), Corporate Affairs Commission (CAC) records, and extensive payment data—to support a transparency revolution.
First, AI can dramatically improve compliance by identifying evasion. The government already holds enough disparate data to spot inconsistencies. AI algorithms can cross-reference bank activity, POS transactions, property records, and declared income. A landlord with steady bank deposits but no declared rental income, or a business with high digital turnover but minimal revenue filings, would be easily flagged. Banks already use similar technology for fraud detection; applying it to tax compliance is a logical and overdue step.
Second, AI can plug leakages in public spending. Annual audit reports consistently reveal billions lost to inflated contracts, duplicated payments, and abandoned projects. AI-driven analytics can monitor procurement and project execution in real-time, flagging irregularities such as a contractor receiving repeated payments for similar work or a project's cost suddenly doubling without justification. Countries like India and Brazil are already using such tools to reduce corruption, offering Nigeria a proven blueprint.
Building Public Trust Through Accessible Data
The final, crucial role for AI is in bridging the information gap between the government and the people. Currently, budget and spending data is scattered across technical portals and dense documents. AI can transform this complex information into clear, searchable public dashboards. Imagine a resident in Enugu or Port Harcourt searching for their local road project and instantly seeing the allocation, contractor, and completion status in plain language. This visibility turns abstract tax contributions into accountable public goods.
Furthermore, AI-powered tools can simplify tax filing for small businesses, the backbone of the economy. Many SMEs avoid filing due to confusion, not criminal intent. Streamlining this process with intelligent guidance can widen the tax net without burdening entrepreneurs. AI can even bolster national security by analyzing combined tax and customs data to detect abnormal financial flows linked to smuggling or illegal mining in border regions.
The path forward does not require an expensive, ground-up overhaul. It demands coordinated data integration, strong privacy safeguards, independent auditing, and a firm commitment to transparent technology use. The 2025 tax reforms are a step in the right direction, but as analysts Shripad Deshpande and Sai Chand Boyapati argue, restoring faith requires making the system visible. By leveraging AI for practical transparency, Nigeria can finally build the trust its tax system has lacked for decades.
