Nigeria’s tax revenue rose to N7.44 trillion in the first quarter of 2026, but still fell short of its budget target by N2.24 trillion amid sweeping reforms introduced under the country’s new tax laws.
Documents presented by the Nigeria Revenue Service (NRS) at the Federation Account Allocation Committee (FAAC) meetings and obtained by Nairametrics showed that cumulative collections between January and March 2026 stood at N7.44 trillion against a prorated target of N9.68 trillion, translating to a performance rate of 76.87%.
The Q1 2026 performance marked a sharp contrast to the corresponding period of 2025, when the then-Federal Inland Revenue Service exceeded its target.
FAAC records from April 2025 showed that FIRS generated N6.04 trillion in the first three months of 2025, surpassing its N5.82 trillion target by N218.02 billion with a performance rate of 103.74%.
This indicates that tax collections increased year-on-year by N1.40 trillion or 23.2%, rising from N6.04 trillion in Q1 2025 to N7.44 trillion in Q1 2026. However, the revenue agency moved from outperforming its target to recording a substantial revenue gap.
What the data shows
An analysis of the Q1 2026 figures showed that the largest drag on collections came from Companies Income Tax and related non-oil taxes.
Companies Income Tax, Capital Gains Tax and Stamp Duties generated N3.75 trillion in the first quarter, below the target of N5.05 trillion by N1.30 trillion, with a performance rate of 74.25%.
- Similarly, Companies Income Tax on upstream activities generated N349.95 billion against a target of N523 billion, resulting in a shortfall of N173.05 billion.
- Petroleum royalties also came under pressure. Collections stood at N1.12 trillion compared to a target of N2.03 trillion, leaving a deficit of N909.25 billion and a performance rate of 55.10%.
- VAT remained one of the more stable revenue lines during the quarter.
- Total VAT receipts reached N2.42 trillion against a target of N2.49 trillion, reflecting a relatively modest shortfall of N73.71 billion and a performance rate of 97.04%.
Oil taxes delivered stronger results than most revenue categories. Petroleum Profits Tax and Hydrocarbon Tax collections rose to N1.62 trillion in Q1 2026, exceeding the target of N1.30 trillion by N318.23 billion and recording a performance rate of 124.42%.
However, the gains from oil taxes were insufficient to offset weaknesses across CIT, royalties and other revenue streams.
The report also showed that mineral royalties and other mineral revenue recorded no inflows during the quarter despite combined targets of N24 billion.
March collections rise above February levels
For March 2026 alone, the NRS generated N2.31 trillion against a budget target of N3.23 trillion, representing a shortfall of N915.09 billion and a performance rate of 71.64%.
Despite missing target, the March figure represented an increase of N120.66 billion or 5.51% compared to the N2.19 trillion collected in February 2026.
Oil taxes generated N614.96 billion in March, slightly above the monthly target of N608.75 billion by N6.21 billion. According to the agency, the decline from February levels was linked to lower receipts from Production Sharing Contracts.
- “The reason for the decrease in the PPT collections when compared with previous month is due to decrease in receipt from PSC,” the report stated.
Meanwhile, CIT, CGT, Stamp Duties and gas income generated N477.54 billion in March, significantly below the monthly target of N1.07 trillion, resulting in a shortfall of N596.62 billion.
The NRS attributed the month-on-month improvement in the category to additional tax remittances outside the traditional June filing period.
- “The increase in performance is as a result of increase in CIT & other tax payments received from taxpayers filing returns outside the peak period of the month of June,” the report added.
VAT collections for March stood at N664.42 billion against a target of N829.92 billion, reflecting a shortfall of N165.49 billion and a performance rate of 80.06%.
The agency linked the weaker VAT performance to declining consumption of VATable goods.
The report further disclosed that the March 2026 gross revenue included non-cash payments worth N294.58 billion and another N24.36 billion embedded in PPT/HCT and gas income collections respectively.
What you should know
The Nigeria Revenue Service (NRS) earlier said that the new tax reforms have positioned the agency to generate N40.7 trillion in taxes and royalties in 2026.
Executive Chairman of the NRS, Zach Adedeji, disclosed this during a roundtable in Abuja organised by the House of Representatives Committee on Appropriations for key stakeholders in the financial sector.
The 2026 projection represents a significant increase from the N28.23 trillion collected in 2025.
