Working Paper 240
This paper empirically examines Nigeria’s implementation of tax standards for exchange of information (EOI), with particular emphasis on the common reporting standard (CRS) for automatic exchange of information (AEOI). It interrogates the institutional, technological, and political-economic conditions under which offshore financial data is translated into legally enforceable tax assessments and sustained improvements in voluntary compliance, rather than merely accumulating as dormant digital archives within secure administrative infrastructure. In doing so, the analysis systematically evaluates the fiscal, organisational, and governance-related costs and benefits of tax transparency regimes, while illuminating the structural and operational constraints that shape their practical effectiveness.
This study adopts a mixed-methods research design, integrating qualitative and quantitative data to assess Nigeria’s implementation of EOI standards. It draws on semi-structured interviews with key officials from federal and state revenue services, and other relevant national, regional, and international organisations. These are complemented by focus group discussions (FGDs) with reporting financial institutions (RFIs) and tax advisers, as well as administrative and secondary data sourced from the Organisation for Economic Co-operation and Development’s (OECD’s) Tax Transparency in Africa reports (2019–2025), peer reviews from the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum), internal Federal Inland Revenue Service (FIRS) records and EOI-supported audits. Through systematic triangulation of these diverse data sources, the analysis traces how legal, institutional, and technological design choices influence operational practice, compliance behaviour, and revenue performance.
By conventional transparency benchmarks, Nigeria has emerged as a comparatively advanced adopter of global tax transparency standards. The country has ratified the Convention on Mutual Administrative Assistance on Tax Matters (MAAC) and the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (CRS MCAA), enacted CRS regulations, established a persons with significant control (PSC) and beneficial ownership framework, and developed a fully segregated ‘secure perimeter’ certified under ISO 27001. Collectively, these institutional and technological investments have enabled Nigeria to conduct full reciprocal CRS exchanges and gradually strengthen compliance and enforcement. Reflecting these gains, CRS-informed audits of corporate taxpayers generated additional assessments and tax recovery of approximately €16 million between March 2022 and March 2023, while the pre-AEOI Voluntary Assets and Income Declaration Scheme (VAIDS) mobilised an estimated €153 million in previously undisclosed assets and income between 2017 and 2018.
The key finding is that Nigeria’s principal constraints stem less from the absence in formal compliance than from cost pressures, inadequate institutional capacity, and the complexities of fiscal federalism. The fully detached secure perimeter and the acquisition of a commercial off-the-shelf (COTS) AEOI information technology (IT) solution embed a structurally exclusive trajectory that is difficult to sustain under significant budgetary constraints. RFIs, particularly commercial banks, continue to face significant administrative and compliance burdens, while the early phases of implementation were characterised by a high share of undocumented accounts. Most importantly, CRS data relating to individual taxpayers remains largely underutilised. Many state revenue services (subnational) lack the infrastructure and information security systems to meet the Global Forum’s baseline requirements and audit capabilities required to systematically convert this information into actionable compliance evidence.
The paper argues that ‘effective use’ of exchanged information should be treated as an explicit policy objective of international tax cooperation. For Nigeria, this entails adopting a formal AEOI utilisation strategy, investing in data governance and analytics, moving over the medium term towards a more integrated and cost effective AEOI IT architecture, and building secure channels for vertical information sharing anchored in ongoing tax and beneficial ownership reforms. For other African and developing countries, Nigeria’s experience illustrates the long-term implications of architecture choices and the need to embed AEOI within broader tax digitalisation strategies. For international standard setters, it suggests that a future United Nations Framework Convention on International Tax Cooperation (UN FCITC) should recognise effective use as a context-sensitive obligation of best efforts, support cost-effective AEOI models for low- and middle-income countries, and, under strong safeguards, facilitate the wider use of tax information for anti-corruption and control of illicit financial flows.
