Nigeria’s tax revenue could reach a new milestone of about N50 trillion by
December, this year as the Nigeria Revenue Service (NRS) strives to harmonise
strategic initiatives aimed at deepening tax compliance and collections.
In a mid-year economic snapshot, the NRS showed that it had reached a record
estimated collection of N21.6 trillion in first half 2026, about N6.7 trillion
below N28.3 trillion collected in 2025 and 75.6 per cent above N12.3 trillion
recorded at the inception of the President Bola Ahmed Tinubu’s administration
in 2023. Tax revenue had stood at N21 trillion in 2024.
The report underlined that while oil revenue remains significant, non-oil
revenue has seen remarkable growth as a result of the economic diversification
programme of the Tinubu’s administration. Non-oil revenue currently
represents about 76 per cent of total collections.
The report also showed that Tax-to-Gross Domestic Product (GDP) ratio has
increased by three percentage points from 10.3 per cent in May 2023 to 13 per
cent in first half 2026.
NRS attributed the remarkable improvement in tax collection to the
digitalisation of the tax systems such as national e-invoicing system rolled out
to large taxpayers and the four new tax reform laws – Nigeria Tax Act, Nigeria
Tax Administration Act, Nigeria Revenue Service Establishment Act and Joint
Tax Board Establishment Act, which became effective on January 1, 2026.
According to the agency, the transformation of the organisation from the
Federal Inland Revenue Service (FIRS) to NRS also folded in non-tax revenue
streams previously collected by other agencies, thereby creating a central
revenue consolidation system.
The report identified Executive Order 9 of February 2026 as a contributor to the
improvement as it increased monthly Federation Account receipts by 60 per
cent from N1.8 trillion in February to N2.88 trillion in March 2026 by closing
deduction loopholes on upstream remittances.
Executive Order 9, which was signed in February 2026, requires upstream oil
and gas operators to remit royalties, taxes, and production-sharing-contract
profit oil directly and in full to the Federation Account, rather than allowing
these sums to be netted off or deducted at source before reaching the treasury.
The NRS noted that beyond the one-off jump between February and March, EO
9 closes a structural leakage point that had, for years, allowed a portion of
Nigeria’s oil-sector earnings to bypass the federally distributable pool, meaning
its benefit should continue to compound in every subsequent month of full
compliance, making it one of the single most effective revenue-side reforms of
the administration to date.
“The tax-to-GDP ratio, while already improving, still has room to grow toward
the government’s 18 per cent target — representing a clear and achievable
runway for the Service to build on its current momentum, particularly as e-
invoicing coverage and the new tax laws take fuller effect through 2026 and
2027.”
The report added that sustained investment in staff training, recruitment, and
digital tooling under the current leadership has been cited internally as a
contributing factor to the back-to-back target over-performance.
The report outlined that Nigeria’s economy has made noticeable progress since
May 2023.
It said the administration inherited an economy burdened by an expensive fuel
subsidy, multiple foreign exchange rates, weak oil production and a tax system
that was not generating enough revenue.
According to the report, the removal of fuel subsidy and the unification of the
foreign exchange market became the foundation for many of the improvements
recorded across different sectors of the economy.
The NRS said inflation has declined significantly from its peak in late 2024,
while the balance of payments has moved from deficit to surplus and the
country’s external reserves have increased to their highest level in 17 years.
It noted, however, that inflation rose slightly between February and May 2026
due to higher global fuel prices linked to the Middle East crisis.
The report also said public debt has become more manageable relative to the
size of the economy, although debt servicing still consumes a substantial share
of government revenue.
It explained that the rise in total debt measured in naira was largely the result of
exchange rate changes rather than excessive new borrowing.
In the oil sector, the report said crude oil production has recovered to about 1.9
million barrels per day following stronger security measures, reduced pipeline
vandalism and continued implementation of the Petroleum Industry Act (PIC).
It also described Nigeria’s emergence as a net exporter of petrol in March 2026
as one of the country’s biggest economic milestones, attributing the
development mainly to increased local refining by the Dangote Refinery and
supportive government policies.According to the report, the trade position has
also improved as exports of refined petroleum products increased, while foreign
investment rose sharply following foreign exchange reforms and renewed
investor confidence. It added that the solid minerals sector generated higher
revenues after reforms aimed at formalising mining activities and strengthening
royalty collection.