Nigeria’s N40tn Revenue Target Under Threat From Tax Leakages

The Nigeria Revenue Service (NRS) has warned that persistent tax leakages, delayed remittances, and weak compliance by some government institutions and sub-national entities could jeopardise its ambitious N40tn revenue target for the federation in 2026.

The agency raised the concern on Tuesday during a National Workshop on Strengthening Tax Compliance Under the New Tax Regime held at the Transcorp Hilton Hotel, Abuja, where stakeholders from federal and state governments, MDAs, and revenue agencies met to review strategies for improving collection efficiency.

Speaking at the event, the Executive Director of Large Taxpayer and Government Directorate at the NRS, Ms Amina Ado, said monitoring and audit exercises had uncovered significant gaps in tax remittances across several institutions.

She explained that while some sub-national governments had demonstrated strong compliance, others were contributing to structural leakages, particularly in Value Added Tax (VAT) and Withholding Tax deductions.

“This workshop is coming at a time when the Nigeria Revenue Service has taken the huge responsibility of raising about N40tn in tax revenue for the Federation,” she said. “This historic goal requires sincerity and complete transparency.”

Ado warned that uneven compliance was distorting fiscal balance, as some jurisdictions contributed more to the revenue pool than others while still benefiting from shared funds.

The Executive Chairman of the NRS, Dr Zacch Adedeji, represented by Mr Muhammad Lawal, described the N40tn target as a “Herculean task” requiring collaboration and improved transparency across all tiers of government.

He said the service was working to strengthen the Federation Account Allocation Committee (FAAC) by ensuring more efficient and predictable revenue inflows to support national development.

“Our goal is to move away from enforcement-heavy friction and adopt a collaborative compliance framework where every stakeholder contributes fairly,” he said.

Adedeji also disclosed plans to introduce a recognition system for the most tax-compliant states beginning in 2026 to encourage accountability and healthy competition.

Minister of Finance, Mr Taiwo Oyedele, represented by his Chief of Staff, said ongoing tax reforms were designed to broaden the tax base without increasing the burden on citizens, while reducing reliance on volatile revenue sources.

Other stakeholders, including the Accountant-General of the Federation and state finance commissioners, stressed the need for stronger intergovernmental coordination, improved data sharing, and greater transparency to strengthen voluntary compliance and reduce leakages across the system.