Exploring the Tactics Used by Tax Evaders in Nigeria and FIRS’ Countermeasures.

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As Nigeria strives for economic development and fiscal stability, the issue of tax evasion remains a significant challenge. Tax evasion, the illegal act of evading the payment of taxes, not only deprives the government of much-needed revenue but also undermines the integrity of the entire tax system. In this article, we will delve into some common tactics employed by tax evaders in Nigeria and examine the proactive countermeasures implemented by the Federal Inland Revenue Service (FIRS) to curb this detrimental practice.

Tactics Employed by Tax Evaders:

  1. Underreporting of Income: One prevalent tactic used by tax evaders involves the deliberate underreporting of income. Individuals and businesses may conceal a portion of their earnings to reduce their taxable income and, consequently, the amount of tax owed to the government.
  2. Transfer Pricing Manipulation: Multinational corporations sometimes engage in transfer pricing manipulation, adjusting prices on transactions between affiliated entities to shift profits to low-tax jurisdictions. This tactic minimizes the tax liability in higher-tax jurisdictions like Nigeria.
  3. Use of Offshore Accounts: Tax evaders often resort to offshore accounts to hide income and assets. These accounts provide a veil of secrecy, making it challenging for tax authorities to trace and tax the funds deposited in foreign jurisdictions.
  4. Ghost Employees and Inflated Deductions: In the corporate sector, creating fictitious employees or inflating deductions are tactics employed to reduce taxable income artificially. This deceptive practice allows companies to lower their tax liability by claiming false expenses.

FIRS’ Countermeasures:

  1. Enhanced Data Analytics: The FIRS has embraced advanced data analytics tools to sift through vast amounts of financial data. By leveraging technology, the agency can identify patterns indicative of tax evasion, enabling targeted investigations and enforcement actions.
  2. Voluntary Assets and Income Declaration Scheme (VAIDS): VAIDS is an initiative launched by the FIRS to encourage voluntary disclosure of previously undisclosed assets and income. By providing a window for taxpayers to regularize their tax status without facing penalties or prosecution, VAIDS promotes transparency and compliance.
  3. Common Reporting Standard (CRS): The FIRS actively participates in the CRS, an international initiative for the automatic exchange of financial account information. This collaboration allows tax authorities to access information about offshore accounts, making it more challenging for individuals and businesses to hide assets overseas.
  4. Strategic Collaborations: Recognizing the global nature of tax evasion, the FIRS engages in strategic collaborations with other tax authorities, international organizations, and financial institutions. These partnerships facilitate the exchange of information and enhance the effectiveness of cross-border investigations.


As tax evasion tactics evolve, so too must the strategies employed by tax authorities to counteract them. The FIRS, as the primary tax administration agency in Nigeria, is actively adapting to the changing landscape by deploying innovative measures and fostering international cooperation. By staying vigilant and employing a multi-faceted approach, the FIRS aims to create a tax environment that fosters compliance, transparency, and sustained economic growth for the benefit of all Nigerians.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

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