Lagos rakes in N1.44tn as tax net widens

Lagos State collected N1.44tn in tax revenue in 2025, nearly three times the N678bn collected two years earlier, and well above the N1tn threshold the state crossed for the first time in 2024.

This is according to figures released by the Lagos State Ministry of Finance at its annual ministerial press briefing last Friday.

The figures represent one of the most sustained revenue growth runs recorded by any Nigerian state government in recent years, driven by a combination of digital infrastructure investment, expanded data-sharing with federal agencies, and a broadened tax base that now includes lotteries and gaming winnings.

Total internally generated revenue, which includes tax and non-tax income, reached N1.87tn in 2025, an 18.5 per cent increase from N1.58tn the previous year.

Total revenue, including federal transfers, stood at N2.6tn, up 16 per cent from N2.3tn in 2024. In 2021, total revenue was N773bn.

The Lagos Internal Revenue Service, which administers tax collection for the state, completed a full transition to electronic filing in 2023 and has since expanded its digital platform to cover stamp duties, capital gains tax, and expatriate tracking through integration with the Nigeria Immigration Service.

The service has also integrated with the Corporate Affairs Commission and the Financial Intelligence Unit, enabling it to cross-reference business registration and financial transaction data against tax records.

A revenue AI chatbot has been deployed to support taxpayer interactions, and payment is now accepted through mobile apps, point-of-sale terminals, USSD codes, and WhatsApp — channels designed to reduce friction for small businesses and individuals who might otherwise struggle to file or pay through traditional means.

Enforcement has been sharpened through what officials described as multi-level inter-agency collaboration, with particular focus on tracking high-net-worth individuals and businesses.

Top taxpayers are now required to submit outsourcing contracts as part of tax audits, closing a route through which income was being obscured.

Withholding tax obligations have also been extended to cover lottery and gaming winnings.

The Commissioner for Finance, Abayomi Oluyomi, told reporters at the briefing that the revenue growth had been achieved against a difficult macroeconomic backdrop, including elevated inflation and naira depreciation that eroded real purchasing power across the state.

The ministry reported 85 per cent overall revenue performance against targets in 2025, meaning roughly one naira in every seven projected did not materialise, a gap that officials acknowledged without elaborating on its causes.

The revenue growth has directly funded a significant expansion in state borrowing capacity.

Lagos raised a N230bn bond in the period under review: the largest ever issued by a sub-national government in Africa, at a fixed rate of 16.25 per cent, financing hospitals, housing, rail infrastructure and schools.

Its debt-service-to-revenue ratio stands at 15.84 per cent, well within the 30 per cent threshold set by the World Bank.