When the Bola Tinubu led Federal Government of Nigeria signaled a long-overdue overhaul of Nigeria’s tax architecture in 2025, the atmosphere was of muted positivity. The consensus is that a simpler, more coherent tax code — consolidated into the Nigeria Tax Act and related instruments promised to widen the tax base, end policy fragmentation and finally drag some parts of our informal and digital economy into the light.
However, a few weeks ago, Taiwo Oyedele, Chairman of the Presidential Committee on Tax Reforms, was talking on Seun Okinbaloye’s MicOn Podcast about how the government can and may use banks and other financial services to go after tax defaulters. That singular comment has done more than any other thing the tax guru has ever said to turn public opinion from seeing the laudable objective of the Tax Act to close loopholes and capture revenue from the booming digital economy to seeing it as an enforcement regime of a government that is doing its best to turn the everyday digital life of Nigerians into a permanent dystopian audit trail.
The widened powers, that the government seems to be arbitrarily allocating to itself, to track digital transactions and to monitor income from remote work and freelancing now sit uneasily beside Nigeria’s data-protection regime, creating a clash between two legitimate public goods: tax collection and the right to privacy.
As Oyedele has been arguing the past few months, the government having a larger slice of everyday financial life: digital payments, cross-border gig payments, platform transfers and the flows between wallets, accounts and online marketplaces is necessary. the digital economy is substantial, and many are getting away with paying little or no tax. However, the unaddressed elephant in the room is not the tax on digital activity; it is the slippery slope that comes with government agencies believing they have the right to monitor you online.
This fear of exposure is real not in the least because it creates several practical problems especially from the perspective of the taxpayer. From the NIMC to INEC, to even Banks, Nigerians have legitimate complaints about how excessive data collection has increased exposure of Nigerians to digital threats. The more personal financial data held by public agencies, the higher the risk of breaches, leaks or secondary uses for non-tax purposes (law enforcement, political profiling, or administrative convenience). And as Abuja based lawyer, Ayomide Ahmed points out, Nigerian government agencies have never been able to resist what he calls “mission creep”, i.e. once detailed financial transaction logs become available to one government department, that agency will always succumb to the pressure repurpose them elsewhere. What makes this even more unfortunate for the tax payer is that inter-agency data-sharing mechanisms within the Nigerian government are weakly regulated. In other words , once an agency has your data, all of them and even private companies who have a contract with the government have it.
However even beyond the existential fears of data leaks, a report from associates and partner of Lagos based legal chambers Udo Udoma and Bello-Osagie identifies that many independent Nigerian creators, diaspora contractors and digital entrepreneurs operate on razor-thin margins and that the kind of intrusive monitoring that treats all digital income as suspect could discourage participation in formal channels and push actors into more obscure payment corridors, defeating the very compliance objectives the reforms seek to advance. This could actually be a blow to Nigeria’s nascent digital economy itself.
As economic researchers Cyril Lee Oriafoh and Prof Osasu Obaretin, of the Department of Accounting, University of Benin adds the new tax architecture and our data-protection law are not yet fully reconciled. Nigeria’s modern data-protection framework — now embodied in the Nigeria Data Protection Act and the operational rules that followed the 2023 enactment — establishes principles such as purpose limitation, data minimization, consent where necessary, and independent oversight through a data protection commission. Those rules are meant to prevent wholesale, indiscriminate surveillance in the name of legitimate objectives. But the tax machinery envisaged by the 2025-2026 reforms risks sidestepping these safeguards if it relies on broad mandatory disclosures or unfettered access to transaction streams without clear legal limits and judicial oversight. The result would be a legal tug-of-war: tax officials demanding wider data flows; privacy law insisting on narrow, justified processing
Now that the crucial issues have been identified, what is the way forward? First, legislation or administrative rules that authorize data access for tax purposes must be precise and proportionate. That means clear definitions (what data, from which platforms, for which periods), robust thresholds (when can bulk data be requested vs. targeted queries?), and independent judicial or quasi-judicial authorisation for intrusive requests.
Secondly, non-negotiable technical safeguards: data minimization (only the fields strictly necessary), time-limited retention, encryption at rest and in transit, and mandatory breach-notification obligations. Third, transparency and redress — citizens and platform users must be informed when their data is requested and given avenues to challenge improper collection or misuse. Fourth, platform-level compliance should be structured so that service providers are not unduly burdened, but are required to implement privacy-preserving reporting (for example, aggregate or tokenized reporting where possible). Finally, an empowered and adequately funded data-protection authority should be given clear tools to audit revenue authority processes and to sanction breaches.
Nigeria is at an inflection point. We can choose a high-road path: one where tax modernization proceeds hand-in-hand with privacy protection, demonstrating that revenue generation and civil liberties are complementary rather than adversarial. Or we can choose a lower path — ad hoc data grabs, weak oversight and the normalization of surveillance in the name of compliance. That latter choice would leave taxpayers less secure, entrepreneurs less confident, and our digital economy less attractive to the very investors and creators we wish to encourage.
A report from PricewaterhouseCoopers sounds a note of warning to the Nigerian government: “Public trust is a fragile commodity. People will comply when the rules are seen as fair and the processes transparent. Give citizens confidence that their data is handled narrowly, lawfully and with respect for individual dignity, and you increase voluntary compliance.” The report further continues that if the government continues to treat financial data as if it belongs to the state by default, and resistance will follow. A universe where the taxman’s books become the state’s window into the private life of every Nigerian, is a dystopia that is neither worth imagining nor experiencing.
The debate now requires urgency Revenue reforms are necessary and overdue; privacy protections are likewise non-negotiable. This is where the ministers of Communications and the Digital Economy, the Nigerian Information Technology Development Agency (NITDA) as a body, the Senate and the House of Representatives, the Presidency, the Nigeria Data Protection Commission and civil-society stakeholders must sit down and reconcile the statutes of the tax act with precise, enforceable rules that protect citizens while enabling deserved revenue. If the government is sincere about building a digital economy that is both prosperous and which they want to create opportunities for Nigerians, it must back up its tax ambitions with privacy-conscious implementation — before the January 2026 start date renders the choice irreversible.
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