More than two-thirds of Nigerian households encounter informal levies despite the country's push to streamline taxation, according to the Nigeria Economic Summit Group's Tax Perception Survey 2026. The NESG found that 67.2 percent of households reported exposure to informal collections, raising questions about whether overlapping charges could weaken the relief promised under Nigeria's new tax laws. Among businesses, the challenge is similarly widespread: 13.9 percent of surveyed firms reported facing illegal charges. The survey covered 18,000 working adults and 9,097 firms across Nigeria's 36 states and the Federal Capital Territory between July and September 2026.
The persistence of informal payments threatens to increase operating costs for businesses, weaken margins, and discourage smaller enterprises from entering the formal tax system, tax experts warn. Oluwadamilare Oladele, managing director of a Lagos-based fintech company, described the problem as 'double extraction', saying many small business owners view formal taxes as an additional burden stacked on top of existing informal payments. 'If citizens are encouraged to enter the formal tax net, the government must also ensure they are not simultaneously subjected to informal levies that often cost more than formal taxes,' Oladele said. The experience of small business operators in Lagos illustrates the issue: payments to state revenue authorities, local governments, and other collectors create uncertainty over actual tax liabilities.
The survey identified poor public services and high taxes as the main reasons households avoid tax obligations. About 35 percent of those encountering informal levies cited poor public services as the cause, while 18.6 percent pointed to high taxes. This suggests that taxpayer resistance stems not only from the amount demanded but also from perceived value received. The NESG also found that 74.4 percent of households recognised the government's right to tax, although average trust in tax authorities stood at just 2.01 out of four. Among firms asked to file returns or provide records in the preceding year, 95.8 percent reported complying.
Presumptive taxation, which allows authorities to estimate liabilities for businesses without formal accounting records, illustrates the confusion facing operators. Omolara Bamidele, who runs Tobshe Hair salon in Lagos for over nine years, was initially assessed at N150,000 under this system in November 2025, later negotiating the amount to N80,000, but she remained uncertain how the initial figure was calculated. Tax expert Oluwafemi Odusote explained that presumptive taxation does not eliminate other statutory obligations. Businesses can still face additional charges based on their activities and regulatory frameworks, he said, creating multiple layers of taxation.
While Nigeria's tax harmonisation framework aims to reduce overlapping obligations and simplify the system, state and local governments retain powers to impose authorised charges within their jurisdictions. The challenge for policymakers involves not only widening the revenue base but also ensuring clearer assessment procedures, better coordination among revenue authorities, and stronger enforcement against unauthorised collections. Without these measures, the new tax regime risks remaining undermined by informal demands that make the system unpredictable for both households and businesses.
For Nigerian households and small businesses, informal levies create uncertainty about actual tax obligations alongside formal payments, potentially increasing their total financial burden despite government promises of tax simplification.