By Precious Owolabi

A Data Analyst at Oxfam International UK, Mr Olasunkanmi Omolola, has stated, that Nigeria has the potential to establish a robust, transparent, and efficient tax system through the strategic application of data science, essential for national development.

In his statement, Mr Omolola highlighted the transformative impact of data-driven decision-making on the global economic landscape, noting how data science and artificial intelligence (AI) are revolutionising industries worldwide.

He emphasised that in Nigeria, a nation with immense potential yet significant challenges, the application of these tools in its tax system could usher in a complete revolution.

“A digital tax system underpinned by data science would ensure transparency and accountability, minimising leakages and boosting revenue,” he remarked.

Currently, many Nigerian states remit alarmingly low tax revenues, a situation often attributed to manual processes and corruption.

“Transitioning tax collection to digital methods could mitigate these issues. By avoiding physical cash transactions, referred to as Archlaw Cash Payments, the government could ensure that more funds reach its coffers.

Mr Omolola advocated for the establishment of a centralised National Database or National Databank integrating taxpayers’ information. This would enhance revenue collection by creating a single source of truth.

“One key aspect of this system would be the introduction of a Security Identification Number (SIN) for all taxable entities.

This unique identifier would link individuals and organisations to their financial activities, enabling authorities to track Value Added Tax (VAT) payments, monitor compliance, and detect tax evasion,” he added.

He also highlighted the importance of prioritising incentives such as tax holidays and concessions for priority sectors, which could attract investments to high-growth areas and ensure a balanced approach to tax reforms.

The petroleum sector, traditionally the backbone of Nigeria’s economy, has experienced declining revenues due to over-taxation and regulatory uncertainties, discouraging investors.

A data-driven tax regime could address this by assessing optimal tax rates to balance revenue generation with investor confidence.

Similarly, data science could play a pivotal role in bridging gaps in the telecommunications and airline industries, using analytical tools to detect underreporting and ensure fair taxation.

VAT collections, which significantly contribute to government revenue, could also benefit from real-time analytics and machine learning models.

These tools could track transactions across retail, manufacturing, and other industries, predicting trends, identifying anomalies, and ensuring compliance while fostering trust between taxpayers and the government.

To achieve these reforms, the government must invest in digital infrastructure, train professionals, and foster public-private partnerships. Collaborations with technology firms could integrate advanced analytics tools into the tax system, while universities and training centres could develop a new generation of data scientists equipped to tackle Nigeria’s unique challenges.

This shift towards data science aligns with global best practices, as seen in countries like Estonia and Singapore, where digitised tax ecosystems have achieved remarkable success.

For Nigeria, such transformation would not only increase revenue but also rebuild public trust in governance.

A complete digital overhaul of Nigeria’s tax system, anchored by data science, is not merely aspirational but a necessity. By leveraging predictive analytics, automated tax collection systems, and secure digital payment methods, Nigeria can overcome inefficiencies, enhance compliance, and secure its economic future.

While this effort demands vision, collaboration, and sustained investment, its potential to transform the nation’s fiscal landscape is immense.