Effect of tax innovation and capacity building on financial sustainability of the Nigeria Revenue Service
Loading...
Date
2026-03-31
Journal Title
Journal ISSN
Volume Title
Publisher
FUDMA Journal of Accounting and Finance Research (FUJAFR)
Abstract
Purpose: The revenue authorities in both developed and developing nations, including Nigeria, continue to grapple with challenges such as widespread tax evasion, low voluntary compliance, and weak technological frameworks. These issues underscore the pressing need for integrated strategies that combine tax innovation with institutional capacity building to foster financial sustainability. This study investigated the effect of tax innovation and capacity building on the financial sustainability of the Nigeria Revenue Service (NRS).
Methodology: The study adopted a descriptive survey design and stratified sampling. The data were collected from a sample of 294 employees, drawn from a total population of 1,112 NRS staff across the six North Central states in Nigeria. The analysis employed Partial Least Squares Structural Equation Modeling (PLS-SEM).
Results and conclusion: Results showed that tax innovation has a strong and statistically significant positive effect on financial sustainability (β = 0.525, p = 0.000), while capacity building has an insignificant effect on financial sustainability (β = 0.175, p = 0.140). However, capacity building significantly moderated the relationship between tax innovation and financial sustainability (β = 0.138, p = 0.048). The study concluded that tax innovation substantially enhanced financial sustainability.
Implication of findings: Findings indicated that innovation in tax processes reduces inefficiencies, enhances compliance, and strengthens revenue collection, all of which contribute to a more financially sustainable tax system. However, suggesting that capacity-building efforts alone may not independently translate into sustainable financial outcomes within NRS, and both strategies should be integrated for optimal results.
Description
This study investigated how tax innovation and capacity building influenced the financial sustainability of the Nigeria Revenue Service. Using survey data from staff, it found that tax innovation significantly improved sustainability by enhancing compliance and revenue collection. Capacity building alone does not have a direct significant effect on sustainability. However, it strengthens the impact of tax innovation when both are combined. The study concludes that integrating tax innovation with capacity development is essential for achieving a more sustainable and efficient tax system.
Keywords
Citation
Olumoh, Y. A., Sanni, M., Abdulrauf, L. A.-O., Ademokoya, A. A., & Mustapha, A. (2026). Effect of tax innovation and capacity building on financial sustainability of the Nigeria Revenue Service: English. FUDMA Journal of Accounting and Finance Research [FUJAFR], 4(1), 290-306. https://doi.org/10.33003/fujafr-2026.v4i1.298.290-306