AI can be utilized to revolutionize taxation, transform the informal sector into an economic powerhouse – Chief Blakey Ijezie
As the world rapidly advances into the digital age, the future of taxation is poised for a groundbreaking transformation, says Chief Blakey Okwudili Ijezie.
In a visionary address at his quarterly taxation conference in Lagos on Thursday, Chief Ijezie, Founder and Managing Partner of Okwudili Ijezie & Co. Chartered Accountants, outlined a bold strategy for integrating the informal sector into the formal economy through the strategic use of Artificial Intelligence (AI).
He noted that the “informal sector, often seen as the backbone of many developing economies, contributes significantly to GDP—up to 40% in some nations. Yet, it remains largely untaxed and underserved by financial institutions. This sector is marked by unregistered businesses, low tax compliance, limited access to formal financial services, and a vulnerable workforce.”
According to Chief Ijezie, the key to unlocking the full potential of this sector lies in harnessing AI’s transformative capabilities.
“AI-powered solutions,” Chief Ijezie noted, “have the potential to overhaul the traditional taxation framework, particularly in the informal sector.
“By automating processes such as registration, licensing, and tax compliance, AI can simplify the integration of informal businesses into the formal economy. Real-time tax monitoring, automated audits, and personalized tax advice will become the norm, allowing tax authorities to make data-driven decisions that enhance revenue collection and reduce evasion.”
Chief Ijezie highlighted that formalizing the informal sector through AI will yield multiple benefits: increased tax revenue, improved economic growth, enhanced financial inclusion, and better social protection for workers. The adoption of AI will not only optimize tax collection but also foster transparency and trust between taxpayers and authorities.
To encourage informal sector executives to embrace formalization, Chief Ijezie advocates for a series of incentives. These include tax holidays, reduced tax rates, streamlined registration processes, and access to capacity-building programs. AI can further ease this transition by offering automated bookkeeping, digital payment systems, and business analytics that enhance operational efficiency.
Case studies from other jurisdictions underscore the effectiveness of AI in taxation. For instance, Kenya’s tax authority has seen a 25% increase in revenue through AI-powered systems that detect and prevent tax evasion. Similarly, India’s Goods and Services Tax (GST) system uses AI to identify and close tax gaps, resulting in a 15% revenue boost.
Chief Ijezie envisions a future where AI revolutionizes Nigeria’s tax system, making it more efficient, inclusive, and capable of driving economic growth. AI’s ability to analyze vast amounts of data will enable tax authorities to better assess risks, select audits, and make informed policy decisions. Moreover, AI will play a crucial role in digitalizing the tax process, moving away from physical records to secure, transparent, and efficient digital transactions.
However, the adoption of AI is not without challenges. Nigeria’s tax infrastructure may require significant upgrades to support AI technology, and there are concerns regarding data privacy, security, and the skills gap among tax professionals. Addressing these issues will be essential to ensuring that AI’s benefits are fully realized.
Chief Ijezie called on stakeholders to embrace this transformative era, where AI is not just a tool but a catalyst for creating a fairer, more efficient tax system. By working together —tax authorities, businesses, and technology providers— Nigeria can build a future where taxation is no longer seen as a burden but as a driver of growth, inclusion, and prosperity.
