The Nigeria Revenue Service (NRS) has warned that tax leakages, delayed remittances and weak compliance by some government institutions and sub-national entities could undermine its target of generating about N40 trillion in revenue in 2026.

The agency raised the concern during the National Workshop on Strengthening Tax Compliance Under the New Tax Regime held in Abuja.

Speaking at the event, Executive Director, Large Taxpayer and Government Directorate at the NRS, Amina Ado, said monitoring and audit activities had revealed major gaps in tax remittances.

She said achieving the revenue target would require stronger transparency and 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 N40 trillion in tax revenue for the federation. This historic goal requires us to approach our compliance gaps with sincerity and complete transparency,” she said.

Ado noted that while some states had shown strong compliance levels, structural leakages remained a challenge, especially in the deduction and remittance of Value Added Tax (VAT) and Withholding Tax.

“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 said.

She warned that unequal contributions to the national revenue pool could distort Nigeria’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 added.

Speaking through Executive Director, Finance and Corporate Services, Muhammad Lawal, NRS Executive Chairman, Zacch Adedeji, described the N40 trillion target as a major undertaking.

He said the agency remained focused on sustainably financing the Federation Account Allocation Committee (FAAC), which he described as vital to funding the three tiers of government.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, represented by his Chief of Staff, Tolu Adegbie, said ongoing tax reforms aimed to reduce Nigeria’s dependence on unstable revenue sources.

“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 said.

Oyedele added that the reforms aligned with broader government policies, including exchange rate reforms, fuel subsidy removal and efforts to curb inflation.

Accountant-General of the Federation, Shamseldeen Ogunjimi, said improved institutional coordination and domestic resource mobilisation were critical to sustainable development.

He stressed that transparency, accountability and technology-driven reforms would strengthen tax administration and improve voluntary compliance.

Chairman of the Forum of Finance Commissioners and Ekiti State Commissioner for Finance, Akintunde Oyebode, said state governments remained committed to working with the NRS to improve tax collection and data sharing.

He noted that much of Nigeria’s economic activity remained in 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 said.