NRS Uncovers Major VAT and Withholding Tax Leakages by State Governments, Agencies
By Aboki Forex —
The Nigeria Revenue Service (NRS) has uncovered significant leakages in how some state governments and government-owned agencies handle Value Added Tax (VAT) and withholding tax deductions and remittances.
Speaking at a national workshop on tax compliance in Abuja on Tuesday, Amina Ado, Executive Director of the Large Taxpayer and Government Directorate at the NRS, said field monitoring and audit exercises revealed ongoing failures among certain states and government entities.
Ado stated that while many sub-national bodies are exemplary in meeting their tax obligations, others delay or fail to properly remit taxes deducted from transactions. This weakens the national revenue system and creates unfairness among states contributing to the Federation Account Allocation Committee (FAAC).
“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,” Ado said.
The NRS is targeting N40 trillion in tax revenue for the federation. Ado described the target as vital for Nigeria’s economic stability and development. She stressed that achieving this goal requires transparency, better information sharing, and stronger coordination among all levels of government.
The NRS plans to shift from aggressive enforcement to a more cooperative relationship with states and government institutions to improve compliance.
NRS Chairman Warns of Imbalances, Plans Reward Scheme
Zacch Adedeji, Chairman of the NRS, said the agency’s core responsibility is to ensure sustainable funding for FAAC. He noted that the NRS is intensifying efforts to improve tax compliance and boost revenue collection across federal, state, and local governments.
“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,” Adedeji said.
He warned that serious imbalances in compliance levels among states and government-owned entities damage fairness in the system and place unnecessary pressure on compliant states.
The NRS chairman also disclosed plans to introduce a recognition programme in 2026 to reward the most tax-compliant states in different categories.
In a related development, the NRS and the Joint Revenue Board recently launched a new unified Tax ID system for all taxable persons in Nigeria. The new system simplifies tax registration, filing, and payment, and improves transparency across all government levels. Banks, ministries, departments, and agencies have been directed to migrate from the old TIN Validation API to the new Tax ID platform.