The N2.24 trillion tax revenue shortfall recorded by Nigeria Revenue Service’s (NRS) for the first quarter of 2026 has triggered a wave of concern among Nigerians, with economic experts blaming the underperformance on possible tax compliance gaps as the country pivots to a new tax law.
According to documents presented by the NRS at the Federation Account Allocation Committee meetings on Tuesday, the agency generated a total of N7.44 trillion revenue in Q1 (January to March) 2026. This represent a N2.24 trillion shortfall when compared to N9.68 trillion revenue target for the period.
This ‘underperformance’ followed the introduction of the new tax laws, whose implementation commenced in January.
However, BusinessDay’s check showed that while the actual revenue fell below target, it was 23.16 percent higher compated to N6.04 trillion revenue collected by the Service in first quarter of 2025.
Speaking on the performance of the Agency, Muda Yusuf, chief executive officer, Centre for Promotion of Private Enterprises (CPPE) said that it is ‘too early’ to access the outcome of the new tax law seeing that the period undet review is the first quarter into the tax reform.
Yusuf cited the natural friction that comes with transitioning to a brand-new tax architecture, emphasized that policy loopholes only become visible once implementation begins.
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“We cannot, at this stage, begin to write off the reform. This is the first quarter into the tax reform. So the implementation of the tax reform obviously, there will be one or two issues that may hinder or constrain full implementation, issues of compliance, issues of enforcement. All of those things may not have been fully in place.
“So for me, because it is the first quarter and it is the first full quarter into the implementation of the reform, my expectation is that because this is just the beginning, it is still early days to begin to assess performance, whether the reform is working or the reform is not working.
“My view is that we should give them the benefit of the doubt. As being the first quarter, there may be a few problems here and there about compliance and enforcement. Because until you start the implementation of a policy or a reform, you don’t know where the loopholes are likely to be,” Yusuf said.
Yusuf also explained that having completed the first quarter, the revenue authority has likely identified operational gaps and areas requiring alignment.
Also speaking with BusinessDay, Samson Simon, chief economist Arkk Economics & Data limited said that the revenue slump is a cause for concern for the executive arm of government, as it affect the revenues available to government for development.
“You know, when you just have a new law and you’re transitioning from the old laws to new ones, sometimes the transition may not be as smooth as you wanted. So, that’s why I’m saying that we should give them the benefit of the doubt. I believe it’s just a blip and they can easily overcome it. Because I don’t know of any fundamental problem that is making them. When it’s affecting the fundamentals, then that’s when you should be scared, when it’s structural.
“But if we’re transitioning, I believe after the transition period, everything should go back to normal and things should be even improved because the reforms were brought so that the revenue generation can be improved. So, I believe the laws are not bad in my view. So, I believe this should be a temporary problem.
“In the short run, it’s a big indictment on minister Taiwo Oyedele, and sadly for the president as well. Because ultimately the buck stops at the president’s table. It’s not good news at all, and I think they need to go back to the drawing board to find out what actually is the problem.
“It means less spending for capital,” Simeon explained. “Normally, if they don’t meet up, it’s the capital part that they normally throw under the bus. By not releasing money for capital expenditure, and they will be postponed. The moment you are postponing a lot of capital projects for many years, ultimately a lot of them will not be done.
“There are only two options. It’s either you suspend or you delay certain expenditure, right? Or you have to borrow money to cover the shortfall. So, normally these are the two options. You either borrow or you can suspend. You know, what they are doing now by not releasing money for capital expenditure is also another way of postponing the spending on capital expenditure.
“And by implication, some of these things might not even be done eventually. Because the moment you are postponing a lot of capital and projects for many years, ultimately a lot of them will not be done. So, that’s also one way of doing it but that might not be enough. So, it implies the possibility of more borrowings by the government. I know they have borrowed a lot so far, but they keep on borrowing. Nigerians should expect that, but I believe this should be a temporary problem. I don’t want to believe that there’s something fundamental about the revenue generation problem,’ he said.