A Dynamic Model of Tax Administration Reform and Compliance Equilibrium in Nigeria

This doctoral study develops an original dynamic model of tax administration reform and compliance equilibrium in Nigeria, integrating insights from principal-agent theory, evolutionary game theory, and institutional change literature. Existing tax compliance models are predominantly static, capturing equilibrium compliance rates at a point in time, but the Nigerian tax administration experience is fundamentally characterised by continuous co-evolution between increasingly sophisticated taxpayer evasion strategies and iterative administrative reform responses. The dynamic model developed in this study treats the interaction between the revenue authority and taxpayer population as a repeated game with learning, where administrative reform investments by the FIRS shift the detection probability function and alter the taxpayer's evolutionary compliance strategy. The model is calibrated using administrative panel data from the FIRS covering three major reform episodes: the creation of the Large Taxpayer Office, the introduction of TaxPro-Max, and the Finance Act amendment cycle. Calibration employs a Simulated Method of Moments approach, with compliance rates and audit yields as key calibration targets. Counterfactual simulations identify the reform sequencing that generates the highest long-run compliance equilibrium given budget-constrained reform investment. The study expects to derive an original reform sequencing theorem establishing conditions under which base-broadening reforms dominate enforcement intensification in the long-run compliance equilibrium. Theoretical contributions include the dynamic compliance equilibrium model and its calibration methodology. Keywords: dynamic model, tax administration reform, compliance equilibrium, game theory, FIRS.