Tax Compliance Level and Revenue Generation in Nigeria

Tax compliance is a critical factor influencing revenue generation in Nigeria. This study examines the relationship between tax compliance and four major tax revenue generation sources: Petroleum Profit Tax, Value-Added Tax, Capital Gains Tax, and Company Income Tax over the period of 2011 to 2023. Using an ex-post facto research design, secondary data from the Federal Inland Revenue Service and the Nigerian Bureau of Statistics were analyzed. The study employs the Autoregressive Distributed Lag model to investigate both the short-run and long-run effects of tax compliance on revenue collection. The findings reveal a positive and statistically significant relationship between tax compliance and revenue generation, indicating that increased voluntary adherence to tax regulations leads to higher tax revenue. The study recommends strengthening digital tax administration, enforcing compliance measures, and improving transparency in tax revenue allocation to enhance tax collection efficiency. These findings underscore the importance of policies aimed at fostering tax compliance to ensure sustainable economic growth in Nigeria.