Nigeria’s Revenue Authority Highlights Challenges in Achieving Revenue Goals
The Nigeria Revenue Authority has issued a warning that ongoing tax leakages, delayed remittances, and insufficient compliance by certain government entities and local bodies could endanger its objective of generating approximately N40 trillion in revenue for the federation by 2026.
Workshop Aims to Strengthen Tax Compliance
This concern was raised during a national workshop aimed at enhancing tax compliance within the framework of a new tax system, held at the Trancorp Hilton Hotel in Abuja. The event gathered stakeholders from federal agencies, state governments, ministries, departments, and revenue authorities to explore strategies for improving tax compliance and optimizing revenue collection.
Identifying Compliance Gaps
In her remarks, Ms. Amina Addo, Executive Director of the NRS High Taxpayers and Government Directorate, noted that significant gaps in tax payments have been identified through ongoing monitoring and auditing efforts. She emphasized that ambitious revenue targets necessitate transparency and enhanced cooperation across all governmental levels.
Addressing Structural Leakages
Addo pointed out that while some parastatals demonstrate commendable compliance, others have structural weaknesses, notably in the deduction and remittance of value-added tax (VAT) and withholding tax. “Our audits have revealed that many local bodies fulfill their civic duties admirably; however, serious structural leaks persist, particularly regarding the timely collection and remittance of taxes,” she stated.
Impact on Fiscal Framework
The existence of these compliance gaps has led to distortions in the country’s fiscal landscape. Addo remarked, “This discrepancy creates imbalances, as certain jurisdictions strive to contribute to national revenue pools while others benefit without making proportional contributions.”
Transforming the Tax Collection Framework
The NRS is transitioning its relationship with government agencies from a contentious enforcement-focused model to a collaborative compliance framework, leveraging technology-driven remittance systems and promoting transparency in processes. In his keynote address, NRS Executive Chairman Dr. Zak Adeji, represented by Executive Director for Finance and Corporate Services, Mr. Muhammad Lawal, acknowledged the challenges posed by the ambitious N40 trillion revenue target, calling it a formidable task.
Support for Sustainable Funding
Adeji reiterated the NRS’s commitment to sustainably fund the Federal Accounts Allocation Board, which serves as the financial backbone for the three-tier governmental structure. He indicated that the workshop aims to address ongoing compliance barriers and enhance awareness among ministries, departments, and agencies regarding their tax obligations under the new law.
Ensuring Fairness in Tax Compliance
During the workshop, Adeji emphasized the need to evolve from an enforcement-driven approach to one centered on voluntary compliance and institutional cooperation. He remarked that compliance disparities between states and government-owned enterprises undermine the integrity of the tax system and negatively impact the overall culture of compliance.
Plans for Recognition of Tax Compliance
Adeji announced an initiative to recognize the most tax-compliant states starting in 2026, encouraging excellence in tax collection. He stated, “Our agency will begin to identify the top-performing states across various metrics and celebrate their achievements at the end of the year.” Meanwhile, Taiwo Oyedele, the Minister of Finance and Economic Affairs, representing the Federal Government, expressed that the ongoing tax reforms intend to reduce reliance on volatile financial resources, contributing to a more stable and equitable fiscal environment.
Collaborative Efforts for Future Growth
Oyedele emphasized the importance of collaboration between the federal and state governments in resource mobilization to achieve sustainable development. He concluded that technological advancements and enhanced transparency in managing public funds are crucial in fostering voluntary tax compliance among citizens. Additionally, the Treasurer of the Federation, Dr. Shamsleddeen Ogunjimi, underlined that a more coordinated institutional framework is essential for successful tax reform as Nigeria moves forward.
