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The Role of Tax Policy Reforms in Enhancing Revenue Generation in Nigeria: A Case Study of the Finance Act 2020

  • Project Research
  • 1-5 Chapters
  • Abstract : Available
  • Table of Content: Available
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  • NGN 5000

Background of the Study

Tax policy reforms are a critical component of public finance management, designed to improve revenue generation, enhance compliance, and align with global best practices. In Nigeria, the Finance Act 2020 was introduced as a significant reform to modernize the tax system, broaden the tax base, and reduce fiscal deficits. Key provisions included changes to value-added tax (VAT) rates, tax incentives for small businesses, and updates to corporate income tax regulations (Oladapo & Nwachukwu, 2023).

The Act was enacted in response to declining oil revenues and the economic impact of the COVID-19 pandemic, which highlighted the urgency of diversifying government revenue sources. With its focus on improving transparency, simplifying compliance, and encouraging investment, the Finance Act 2020 represents a pivotal moment in Nigeria’s fiscal policy landscape (Usman & Bello, 2024).

This study investigates how these reforms have influenced revenue generation, focusing on their practical application and challenges since implementation.

Statement of the Problem

Nigeria has struggled with low tax revenue relative to GDP, with one of the lowest tax-to-GDP ratios in Africa. Structural inefficiencies, widespread tax evasion, and over-reliance on oil revenues have hampered the government’s ability to mobilize domestic resources (Adewale & Ibrahim, 2023). While the Finance Act 2020 was designed to address these issues, its effectiveness in enhancing revenue generation has been met with mixed reactions.

Challenges such as inadequate enforcement, low public awareness, and resistance from certain sectors raise concerns about the Act’s impact on Nigeria's fiscal health. This study seeks to analyze the effectiveness of the Finance Act 2020 in boosting revenue generation and identifying barriers to its success.

Objectives of the Study

  1. To examine the impact of the Finance Act 2020 on revenue generation in Nigeria.
  2. To evaluate the challenges affecting the implementation of the Finance Act 2020.
  3. To recommend strategies for improving tax revenue generation through policy reforms.

Research Questions

  1. What is the impact of the Finance Act 2020 on revenue generation in Nigeria?
  2. What challenges hinder the effective implementation of the Finance Act 2020?
  3. What strategies can enhance the role of tax policy reforms in revenue generation?

Research Hypotheses

  1. H₀: The Finance Act 2020 has no significant impact on revenue generation in Nigeria.
  2. H₀: Challenges associated with the Finance Act 2020 do not significantly affect its implementation.
  3. H₀: Proposed strategies will not significantly improve tax revenue generation through policy reforms.

Scope and Limitations of the Study

The study focuses on the Finance Act 2020 and its impact on revenue generation between 2020 and 2025. Limitations include access to up-to-date revenue data and the influence of external factors like global economic conditions on Nigeria's tax system.

Definitions of Terms

  • Tax Policy Reforms: Changes in tax laws and regulations to improve efficiency and revenue collection.
  • Finance Act 2020: Nigerian legislation aimed at updating tax laws to align with fiscal goals.
  • Revenue Generation: The process of collecting funds through taxes and other government-imposed levies.




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