The Nigeria Revenue Service (NRS) has uncovered significant loopholes in how some state governments and government-owned agencies deduct and remit Value Added Tax (VAT) and withholding tax. This revelation came during a national workshop on tax compliance held on Tuesday.
NRS Executive Director Speaks on Tax Compliance Failures
Amina Ado, Executive Director of Large Taxpayer and Government Directorate at the NRS, stated that investigations and audit exercises conducted by the agency revealed ongoing failures in tax compliance among certain states and government-owned entities. While some states have remained committed to meeting their tax obligations, others still delay or fail to properly remit taxes deducted from transactions.
According to Ado, field monitoring and audit activities have shown that many sub-national entities are exemplary in their civic duties. However, there are still significant structural leakages, especially in the prompt deduction and delay in remittance of VAT and withholding tax. She warned that this situation weakens Nigeria’s revenue system and creates unfairness among states contributing to the federation account.
NRS Targets N40 Trillion Revenue
Ado explained that the workshop was organized to improve cooperation between the federal government and sub-national authorities under Nigeria’s new tax structure. She said the NRS is aiming to generate about N40 trillion in tax revenue for the federation, describing the target as vital for the country’s economic stability and development.
The NRS official stressed that achieving this goal would require transparency, better information sharing, and stronger coordination among all levels of government. She added that the agency plans to move away from an aggressive enforcement style and instead build a more cooperative relationship with states and government institutions to improve compliance.
Some States Benefit Without Fair Contribution
Also speaking at the event, Zacch Adedeji, Chairman of the NRS, said the agency’s key responsibility is to ensure sustainable funding for the Federation Account Allocation Committee (FAAC). Adedeji stated that the tax body is intensifying efforts to improve tax compliance and boost revenue collection across federal, state, and local governments.
Adedeji noted that 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 observed serious imbalances in compliance levels among states and government-owned entities, warning that such practices damage fairness in the system and place unnecessary pressure on states that comply with tax rules.
The NRS chairman also disclosed that the agency plans to introduce a recognition programme in 2026 to reward the most tax-compliant states in different categories.
NRS Announces Mandatory Tax ID
Meanwhile, the NRS and the Joint Revenue Board have introduced a new Tax ID system for all taxable persons in Nigeria. The new unified Tax ID will simplify tax registration, filing, payment, and improve transparency across all government levels. Banks, MDAs, and organizations have been directed to migrate from the old TIN Validation API to the new Tax ID platform.
