The Federal Inland Revenue Service (FIRS) is preparing to launch an ambitious, technology-driven tax initiative that will leverage artificial intelligence and machine learning to identify, assess, and collect taxes from millions of previously untaxed businesses in Nigeria’s vast digital and informal economy. The move marks a historic shift in African public finance: for the first time, AI is being systematically deployed not just to power private-sector fintech innovation—but to enforce state revenue collection at scale.
This strategic pivot from fintech to fiscal policy was confirmed in recent public remarks by FIRS leadership and detailed in internal strategy documents reviewed by media outlets. While the full rollout has not yet been officially dated, multiple sources—including officials within the Ministry of Finance—say the system will go live in early 2026, following successful pilot programs that used AI to analyze transaction data from mobile money platforms, e-commerce sites, ride-hailing apps, and social media commerce.
“AI is no longer just a tool for lending algorithms or fraud detection,” said a senior FIRS official who spoke on condition of anonymity. “It is now central to how we define and deliver tax justice in a digital-first economy.”
Nigeria’s informal sector accounts for over 65% of employment and an estimated 50% of GDP, according to World Bank data. Yet, it contributes less than 10% of total tax revenue, creating a massive fiscal imbalance. Meanwhile, the digital economy—including gig work, online marketplaces like Jumia and Konga, and fintech-enabled micro-entrepreneurship—is growing rapidly but remains largely invisible to traditional tax systems.
To close this gap, FIRS is building a National Digital Tax Intelligence Platform (NDTIP) powered by AI and big data analytics. The system will integrate anonymized transaction records from banks, payment processors, telecom operators, and digital platforms—using pattern recognition and behavioral modeling to flag income-generating activities and estimate taxable liabilities.
For example:
- A freelance graphic designer receiving payments via PayPal and Flutterwave could be flagged through cross-platform transaction clustering.
- A social media seller running a large-scale Instagram-based fashion business may be identified by volume of transfers and customer engagement patterns.
- Ride-hailing drivers with high monthly earnings on Uber or Bolt could be assessed based on real-time income data shared under regulated open-finance frameworks.
The platform draws inspiration from successful models in countries like Rwanda, where AI-powered tax tools increased revenue collection by 20% between 2021 and 2024, and India, where the Income Tax Department uses its Project Insight algorithm to monitor non-filers with high spending profiles.
FIRS has already partnered with Nigeria’s National Identity Management Commission (NIMC), the Central Bank of Nigeria (CBN), and major fintech firms—including Opay, Palmpay, and Paga—to establish secure data-sharing protocols under the country’s Data Protection Act 2023. All data will be processed in compliance with privacy safeguards, officials say, with human oversight required before any audit or assessment is issued.
“This isn’t surveillance,” emphasized Zacch Adedeji, Executive Chairman of FIRS, during a recent event hosted by the African Tax Administration Forum (ATAF). “This is about fairness. If you’re earning income, even digitally or informally, you should contribute to national development. Technology allows us to level the playing field without burdening compliant taxpayers.”
Critics, however, warn of risks. Civil society groups like the Centre for Social Justice (CSJ) have raised concerns about potential overreach, lack of transparency in AI decision-making, and the risk of penalizing low-income earners who operate in cash-based survival economies.
“There must be clear appeal mechanisms and thresholds,” said Yakubu Sadique, a tax policy analyst at the Centre for Fiscal Leadership. “Automated systems can amplify bias if not carefully designed. The goal should be inclusion—not coercion.”
Still, international institutions are watching closely. The International Monetary Fund (IMF) praised Nigeria’s approach in its April 2025 Regional Economic Outlook, calling it “a bold step toward modernizing tax administration” and noting that improving tax-to-GDP ratio—from current levels of around 6% to 12–15%—is critical for sustainable debt management and public investment.
With Nigeria facing rising debt servicing costs and pressure to fund infrastructure and social programs, expanding the tax net is no longer optional. And as global trends show, AI is the most scalable solution available.
The FIRS initiative confirms a broader transformation: AI is no longer confined to the fintech labs of startups and banks—it has entered the heart of statecraft. From credit scoring to currency stabilization, and now to tax policy, algorithms are redefining how African governments interact with their economies.
In Nigeria, that future is arriving fast.
And soon, every digital transaction may carry a silent observer: the Nigerian state, powered by artificial intelligence.
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