- The NRS says it discovered major leakages in the handling of VAT and withholding tax by some states and government agencies
- The agency said some states benefit from FAAC allocations without contributing fairly through proper tax compliance
- NRS is targeting N40 trillion in revenue and plans to reward the most tax-compliant states starting from 2026
Legit.ng journalist Victor Enengedi has over a decade’s experience covering energy, MSMEs, technology, banking and the economy.
The Nigeria Revenue Service (NRS) says it has discovered major loopholes in how some state governments and government-owned agencies deduct and remit Value Added Tax (VAT) and withholding tax.
Speaking at a national workshop on tax compliance held on Tuesday, Amina Ado, Executive Director of Large Taxpayer and Government Directorate at the NRS, said investigations and audit exercises carried out by the agency revealed ongoing failures in tax compliance among some states and government-owned entities.
Source: UGC
According to TheCable, Ado stated that while some states have remained committed to meeting their tax obligations, others still delay or fail to properly remit taxes deducted from transactions.
Ado said:
“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.”
She warned that the 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 organised 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 the 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 benefiting 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 said the tax body is intensifying efforts to improve tax compliance and boost revenue collection across federal, state, and local governments.
Adedeji said:
“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 noted that the NRS had 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.
Source: Twitter
NRS announces mandatory tax ID
Meanwhile, Legit.ng earlier reported that 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 organisations have been directed to migrate from the old TIN Validation API to the new Tax ID platform.
Source: Legit.ng