By Abubakar Yunusa
The Nigeria Revenue Service (NRS) says it has identified significant leakages in the deduction and remittance of value-added tax (VAT) and withholding tax by some states and government agencies.
Amina Ado, executive director of large taxpayer and government directorate at the NRS, spoke on Tuesday at a national workshop on strengthening tax compliance under Nigeria’s new tax regime in collaboration with the sub-national.
Ado said findings from the agency’s monitoring and audit activities showed persistent compliance gaps among some subnational governments and government-owned entities (GOEs).
“Our field monitoring and audit activities have revealed that while many sub-national entities are exemplary in their civic duties, there are still some significant structural leakages, especially in the prompt deduction and delay in remittance of Value Added Tax and Withholding Tax,” Ado said.
“Whereas some jurisdictions work hard to fill the national revenue pool while others participate in the distribution without making their fair contribution. This compliance gap distorts and creates an imbalance in our fiscal federalism.”
The tax expert said the workshop was organised to deepen collaboration among federal and sub-national stakeholders and improve revenue collection under the country’s evolving tax framework.
She said the NRS is targeting about N40 trillion in tax revenue for the federation, describing the goal as critical to Nigeria’s fiscal sustainability.
“This historic goal requires us to approach our compliance gaps with sincerity and complete transparency,” Ado said.
The NRS executive director said enhanced cooperation, information sharing, and coordinated implementation of tax policies are necessary to strengthen revenue generation and national development.
She said the agency plans to shift its relationship with states and government institutions away from an “enforcement-heavy” model to a more collaborative compliance framework.
Also speaking, Zacch Adedeji, chairman of NRS, said the agency’s major responsibility is to sustainably finance the federation account allocation committee (FAAC).
Adedeji said the NRS is focused on improving tax compliance and collection efficiency across the three tiers of government.
“The stakes are higher this year as the NRS is faced with the Herculean task of raising about N40 trillion in tax revenue for the Federation,” he said.
“We have reported about the imbalance in the compliance existing among states and GOEs, which does great damage to institutional fairness, undermines the broader compliance culture and unfairly burdens compliant states.”
He said the agency would launch an initiative in 2026 to identify and recognise the most tax-compliant states across multiple categories.
In his goodwill remark, Taiwo Oyedele, minister of finance and coordinating minister of the economy, said the federal government’s tax reforms are aimed at expanding the tax net without increasing the burden on citizens.
“The opportunity is to reform our tax space, expand the tax net without increasing the tax burden and encourage voluntary compliance and use technology to plug leakages,” Oyedele said.
He noted that cooperation between the federal and subnational governments is necessary to build a transparent and efficient tax system.
