Foreign currency taxes hit N6.33tn amid naira volatility

Nigeria's tax landscape is undergoing a notable shift, with foreign currency-denominated tax receipts soaring to N6.33 trillion in 2025. This substantial increase, representing a 27.3% jump from N4.97 trillion in 2024, underscores a growing reliance on tax inflows linked to foreign currencies. The analysis, drawn from National Bureau of Statistics data, highlights the dual impact of increased contributions from multinational corporations and the persistent effects of exchange rate volatility on government revenue.

These foreign currency tax payments now account for a significant portion of the nation's tax earnings, making up approximately 35.5% of the combined total VAT and Company Income Tax (CIT) collections. This indicates that over one-third of government revenue from these key tax heads is directly tied to foreign currency transactions. Both VAT and CIT collections saw healthy increases, with VAT rising from N6.72 trillion in 2024 to N8.61 trillion in 2025, and CIT growing from N7.66 trillion to N9.22 trillion in the same period.

The breakdown reveals that 'other payment channels, including the naira equivalent of VAT paid in foreign currency,' saw an increase from N1.83 trillion to N2.10 trillion. This category is particularly relevant for sectors operating across borders, such as telecommunications, oil and gas, and financial services. Similarly, company income tax paid in foreign currency rose from N3.14 trillion to N4.23 trillion, reflecting the tax contributions of firms earning in dollars, including oil producers and exporters.

From The Punch's viewpoint, this trend is a direct consequence of Nigeria's recent exchange rate reforms, which have moved the country towards a more market-determined currency regime. While this may boost government coffers in naira terms, it also highlights the vulnerability of the economy to currency fluctuations. The increasing share of foreign-currency tax receipts suggests a deepening integration with the global economy but also necessitates careful management of exchange rate policies to ensure stability and sustainable revenue growth. The volatility observed across quarters in CIT payments further emphasizes the need for robust economic strategies.