Presidential tax reform chief Taiwo Oyedele has raised alarm over President Donald Trump’s proposed External Revenue Service, warning that the initiative could destabilize international trade and add new layers of complexity to an already intricate global tax system. The warning comes as Nigeria navigates its own comprehensive tax reform agenda amid shifting global economic dynamics.
Responding to Trump’s inaugural announcement Monday night, Oyedele, who chairs Nigeria’s Presidential Committee on Fiscal Policy and Tax Reforms, expressed concern about the far-reaching implications of Trump’s aggressive new tax strategy. The U.S. president’s plan, which aims to “tax other countries to enrich our citizens,” represents a significant departure from traditional international tax protocols.
Trump’s inauguration speech outlined a bold vision for American tax policy, announcing the establishment of an External Revenue Service tasked with collecting “tariffs, duties and revenue” from foreign nations. “Instead of taxing our citizens to enrich other countries, we tariff and tax other countries to enrich our citizens,” Trump declared, promising “massive” revenue flows into the U.S. Treasury from international sources.
Oyedele’s response highlights the potential disruption to established global trade patterns and tax frameworks. His analysis gains particular significance given his current leadership role in Nigeria’s ambitious tax reform initiative, where he oversees the implementation of four groundbreaking tax bills introduced by President Bola Tinubu to the National Assembly in October 2024.
These Nigerian reforms, encompassing the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill, aim to modernize and streamline the country’s tax system. The timing of Trump’s announcement adds another layer of complexity to Nigeria’s reform efforts, potentially requiring adjustments to account for new international tax dynamics.
The situation has gained additional momentum following the Nigerian Governors’ Forum’s recent endorsement of a revised Value Added Tax sharing formula. The proposed structure suggests a distribution model allocating 50 percent based on equality, 30 percent on derivation, and 20 percent on population, representing a significant shift in resource allocation among states.
Despite ongoing debates and resistance, particularly in Northern Nigeria, Oyedele has expressed support for the governors’ proposed sharing formula, viewing it as a step toward more equitable resource distribution. However, Trump’s new tax initiative could force a reevaluation of these domestic reforms within the context of changing global tax landscapes.
The confluence of Nigeria’s internal tax reforms and Trump’s external revenue plans highlights the increasingly interconnected nature of global taxation systems. Oyedele emphasized the importance of creating a resilient domestic tax framework capable of navigating potential challenges while capitalizing on opportunities that may arise from international policy shifts.
Trump’s proposed External Revenue Service represents more than just a new American tax collection mechanism; it signals a potential paradigm shift in how nations approach international trade and taxation. The initiative could trigger retaliatory measures from other countries, potentially leading to escalating trade tensions and complicated tax disputes.
For Nigeria and other developing economies, the implications extend beyond immediate tax considerations to broader questions of economic sovereignty and development strategy. As countries worldwide grapple with the potential impact of Trump’s policy, the need for adaptive and resilient tax systems becomes increasingly apparent.
Oyedele’s warning serves as a reminder of the delicate balance between domestic tax reform and international economic relations. As Nigeria continues its tax modernization efforts, the challenge will be maintaining progress while preparing for potential disruptions in the global tax landscape.
The coming months will likely see intensified discussions among international tax experts and policymakers as they assess the full implications of Trump’s External Revenue Service and develop strategies to address its potential impact on global trade and taxation systems.
