Nigeria’s N40trn revenue target under threat from tax leakages —NRS

ABUJA—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 threaten its target of generating about N40 trillion in revenue for the federation in 2026.

The agency raised the concern at the National Workshop on Strengthening Tax Compliance Under the New Tax Regime in Abuja, yesterday.

Speaking at the event, Executive Director, Large Taxpayer and Government Directorate at the NRS, Ms Amina Ado, said the service had uncovered significant gaps in tax remittances during its monitoring and audit activities.

She said the ambitious revenue target would require transparency and stronger collaboration among all levels of government.

“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. This historic goal requires us to approach our compliance gaps with sincerity and complete transparency,” she said.

Ado stated that although some sub-national entities had demonstrated strong compliance, the agency had identified structural leakages, particularly in the deduction and remittance of Value Added Tax and Withholding Tax.

She added:  “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.’’

According to her, the situation has created distortions within the country’s fiscal framework.

“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,” Ado said.

In his keynote address, Executive Chairman of NRS, Dr Zacch Adedeji, who was represented by the Executive Director, Finance and Corporate Services, Mr Muhammad Lawal, described the N40trillion target as a “herculean task.”

He said the agency’s focus was to sustainably finance the Federation Account Allocation Committee, which he described as the financial lifeblood of the three tiers of government.

In is remarks, the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, who was represented by his Chief of Staff, Mr Tolu Adegbie, said the country’s tax reforms were aimed at reducing dependence on volatile revenue sources and creating a more stable and equitable fiscal system.

“It is my honour to welcome you all to this national workshop on strengthening tax compliance in our new tax regime; collaborating with sub-national governments for enhanced tax collection, an engagement that comes at a critical juncture in Nigeria’s economic development,” he said.

Oyedele said the reforms formed part of wider structural changes being implemented by the federal government, including the floating of the naira, fuel subsidy removal and efforts to tackle inflation.

“The new tax regime is a key part of our wider structural reform agenda, designed purposefully to move our economy away from reliance on volatile revenue sources towards a stable, predictable and equitable tax-based platform,” he stated.

On his part, the Accountant-General of the Federation, Dr Shamseldeen Ogunjimi, said Nigeria needed stronger institutional coordination and efficient domestic resource mobilisation to achieve sustainable development.

He said the success of the new tax regime would depend largely on collaboration between the federal government and sub-national entities.

He said technology and innovation must remain central to tax administration reforms, adding that 

transparency and accountability in the management of public funds would encourage voluntary tax compliance among citizens.

The Chairman of the Forum of Finance Commissioners and Ekiti State Commissioner for Finance, Akintunde Oyebode, said state governments were committed to strengthening collaboration with the NRS to improve revenue generation.

He said the controversial nature of some tax reforms had ultimately produced stronger laws that improved tax collection nationwide.

He added that closer cooperation between state governments and the NRS would help improve data sharing and tax administration, especially within the informal sector.

“Only 10 per cent of the payroll is actually in salary or wage-paying jobs. Ninety per cent of Nigeria’s employers sit in a diverse and often very dark informal sector,” he noted.

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