NIGERIA recorded a N2.24 trillion shortfall in tax revenue collection in the first quarter of 2026 as the country’s ongoing tax reform programme and transition from the Federal Inland Revenue Service to the Nigeria Revenue Service (NRS) continued to reshape the fiscal landscape.
Documents from the Federation Account Allocation Committee (FAAC) showed that gross revenue collections for the period stood at N7.44 trillion against a projected target of N9.68 trillion, representing a performance rate of 76.87 per cent.
The development highlights mounting pressure on government finances at a time authorities are seeking to boost non-oil revenues, strengthen tax compliance and finance an ambitious national budget amid declining oil earnings and elevated borrowing costs.
Analysis of the revenue performance indicated that weaker-than-expected Companies Income Tax collections significantly affected overall receipts during the quarter. Lower petroleum royalties also contributed to the revenue gap, reflecting ongoing challenges in the oil and gas sector, including production constraints and fluctuating global oil market conditions.
However, Value Added Tax collections and Petroleum Profits Tax receipts showed relative resilience, helping to cushion the broader decline in government revenue.
The Q1 performance comes as the newly established Nigeria Revenue Service intensifies efforts to reposition tax administration and improve collection efficiency under the federal government’s fiscal reform agenda.
The NRS has repeatedly stressed the need for stricter compliance by government agencies, corporate organisations and state authorities, warning that taxes collected but not remitted to the federation account could attract sanctions.
According to officials familiar with the ongoing reforms, the revenue agency may begin deducting outstanding liabilities directly from FAAC allocations due to states and government institutions that fail to meet remittance obligations.
The government is targeting about N40 trillion in revenue generation for 2026 as part of broader efforts to reduce fiscal deficits, improve infrastructure financing and lessen dependence on debt.
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