The Federal Government has announced that any unremitted value-added tax (VAT) or withholding tax will now be automatically deducted from funds due to states, local governments, and federal ministries, departments, and agencies.
According to the government, the decision is aimed at ensuring that all public institutions comply with tax obligations and set a proper example for individuals and businesses across the country.
The Executive Director of Large Taxpayers and Government Directorate at the Nigerian Revenue Service (NRS), Amina Ado, disclosed this during a national workshop in Abuja attended by finance commissioners and accountants general from all 36 states.
She explained that while some government bodies consistently meet their civic responsibilities, there are still notable gaps in timely deduction and remittance of taxes such as VAT and withholding tax.
She added that under the Nigerian Tax Administration Act, the Office of the Accountant General of the Federation now has the authority to deduct unremitted taxes directly from budget allocations and forward them to the appropriate tax authorities.
Ado noted that these compliance gaps create imbalance in the country’s fiscal system, especially when some entities contribute less while still benefiting from shared national revenue.
The workshop was organized to strengthen collaboration between federal and state stakeholders and improve overall tax compliance and revenue generation across the country.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, emphasized the need for a transparent and accountable tax system that is embraced at all levels of government.
He described taxation as a social contract that helps convert public contributions into essential services such as healthcare, education, infrastructure, and security.
The Executive Chairman of the NRS, Zacch Adedeji, also announced plans to recognize and reward states and local governments that demonstrate strong tax compliance performance.
He added that the agency aims to significantly boost national revenue collection, which is essential for funding government operations and development projects.
