Tax Challenges in Nigeria’s Informal Economy

Babatunde Fowler, Executive Chairman of the Federal Inland Revenue Service, notes that most income from side hustles in Nigeria remains untaxed. This practice contributes to the nation's low tax-to-GDP ratio of 10%, one of the world's smallest.

The informal sector, dominated by sole entrepreneurs and freelancers, accounts for significant untaxed activity. This segment represents a major challenge for tax collection efforts in Nigeria.

Recent government initiatives target alternative income sources, including side hustles, to boost tax revenue. Minister for Finance Kemi Adeosun has specifically called for addressing this group.

Public backlash arises as many Nigerians view side hustling as a legitimate response to economic hardship, not tax evasion.

Babatunde Fowler, Executive Chairman of the Federal Inland Revenue Service, states that most income from side hustles in Nigeria escapes taxation. This practice contributes to Nigeria's tax-to-GDP ratio of 10%, one of the world's lowest.

The informal economy, primarily composed of sole entrepreneurs and freelancers, generates substantial untaxed revenue. This sector represents a key challenge for tax collection in Nigeria.

Minister for Finance Kemi Adeosun has proposed targeting side hustles as part of a government effort to increase tax revenue from alternative income sources.

Public backlash occurs because many Nigerians perceive side hustling as a legitimate economic adaptation to harsh conditions, not tax evasion.