The automated tax which is supported by third-party reporting from banks, captures revenue level and links to buyer expense records. This enables continuous monitoring and allows to be flagged automatically, limiting the scope for underreporting or margin manipulation.
According to Tania Davids, transformation lead at KPMG, "In a future world, five to now, we're looking at our returns in an automated fashion." The reform is part of the government's efforts to address the country's fiscal strain, with a of N23.85 trillion in the 2026 budget.
The shift to an automated system is expected to widen the effective tax net, as authorities will be able to validate submissions in near real-time and potentially pre-fill returns, transforming self-assessment into algorithmic verification.
However, the success of the reform depends investment in analytics infrastructure, cybersecurity, system integration, and skilled personnel. As Adeniyi Adeyemi, Group Head of Tax at Sterling Financial, noted, "We needed decision-making to rest on person; there was a clear protocol on escalation."
The automated model reduces discretion, and errors once absorbed within annual reviews may now trigger automated flags, requiring companies to have stronger internal controls and closer alignment between enterprise systems and invoicing platforms.
For businesses, the reform alters the compliance equation, shifting from periodic defense to continuous reconciliation. Companies will need to ensure that their accounting records reconcile with transaction-level data accessible to authorities, and tax functions are likely to move closer to finance and technology teams, with greater board-level oversight of compliance risk.
While the automated system is expected to reduce disputes over whether revenue exists, disagreement may shift to classification, deductibility, during the transition from legacy systems. As enforcement expands over the next two years, tax administration is moving from voluntary disclosure toward data-backed validation, and companies will need to adapt to the.
The reform is also expected to have a significant impact on smaller firms and self who may face steeper adaptation costs and to comply with the new system. The government's efforts to improve corporations are likely to be closely watched, as to validate submissions in and provide support to businesses.
As the automated tax assessment system becomes fully operational, companies be prepared to comply, will need to ensure that the system is fair, efficient, and reducing tax evasion.
