Nigeria's most ambitious tax reform in a generation has produced its first quarterly report card, and the grade is incomplete.

The Nigeria Revenue Service generated a cumulative gross revenue of ₦7.44 trillion between January and March 2026, against a projected target of ₦9.68 trillion, a shortfall of ₦2.24 trillion and an overall performance rate of 76.87%, according to documents presented at the Federation Account Allocation Committee meetings. The figures arrive months after sweeping tax legislation took effect on January 1, 2026, formally transforming the Federal Inland Revenue Service into the Nigeria Revenue Service.

The paradox is unavoidable. While total tax revenue rose year-on-year by ₦1.40 trillion or 23.16% from ₦6.04 trillion in Q1 2025 to ₦7.44 trillion in Q1 2026, the growth was still insufficient to meet the significantly higher revenue expectations embedded in the 2026 fiscal framework. This is in sharp contrast to Q1 2025, when the then-FIRS exceeded its quarterly target, posting a performance rate of 103.74%.

The biggest gap was in corporate taxes. The NRS recorded cumulative collections of ₦3.75 trillion from Companies Income Tax, Capital Gains Tax, and Stamp Duties against a target of ₦5.05 trillion, a deficit of ₦1.30 trillion, and a performance rate of just 74.25%, despite that same category outperforming its target by ₦218.35 billion in Q1 2025.

VAT came closest to the target. The NRS generated ₦2.42 trillion from VAT against a target of ₦2.49 trillion, a shortfall of ₦73.71 billion and a performance rate of 97.04%, representing a year-on-year increase of ₦352.08 billion or 17.06%.

Oil revenues were the sharpest disappointment. Petroleum royalties and other oil and gas revenues generated ₦1.28 trillion against a target of ₦2.12 trillion, a performance rate of 60.30%. Petroleum royalties alone recorded a shortfall of ₦909.25 billion, while mineral royalties and other mineral revenues recorded zero inflow despite a combined quarterly target of ₦24 billion.

Finance Minister Taiwo Oyedele acknowledged the timing complexity of the transition, noting that the reforms came at a critical period as Nigeria balanced tax changes, exchange rate liberalisation, fuel subsidy removal, and inflation management alongside mounting socio-economic pressures. "The opportunity is to reform our tax space, expand the tax net without increasing the tax burden, encourage voluntary compliance, and use technology to plug leakages," he said.

The NRS has set its sights high for the full year. It is targeting ₦40 trillion in total tax revenue for 2026 and has announced it will begin ranking states by tax compliance performance. With ₦7.44 trillion collected in Q1 against a ₦9.68 trillion target, the gap between ambition and execution remains the defining challenge of Nigeria's tax reform moment.

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