Tax Reform Debate: Clarifying the Jurisdiction of the Nigerian Revenue Service

By Tolu Adegbie

The Punch Newspaper of September 22, 2025 carried an article titled “Tax reform: Centralized collection undermines federalism” by Prof. Jack-Osimiri. While I acknowledge the professor’s distinguished academic position, it is important to engage with his claims using the same standards expected in scholarly discourse: reliance on primary sources, accurate interpretation of statutes, and avoidance of sweeping assertions that are not supported by a comprehensive review of the relevant laws as taught in even PHD class.

On the Claim of “All Revenues”

The article suggests that the Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS), has been granted the authority to collect all revenues, taxes, and levies payable to the three tiers of government. A textual reading of the Nigerian Revenue Service (Establishment) Act 2025 (NRSEA) does not support this interpretation.

Section 4(1) of the NRSEA provides that the NRS shall assess taxable persons—including corporations, partnerships, and individuals—chargeable with tax. Importantly, Section 5(1) qualifies this power by stating that the NRS may, on request, assist any state, the Federal Capital Territory, or local government in the collection or administration of taxes.

This provision preserves the constitutional and statutory taxing powers of subnational governments while creating a mechanism for voluntary delegation. To read “all revenues” into the Act, therefore, stretches the language beyond what the legislature intended.

Constitutional Consistency and the NTAA

The professor further argues that the NRS framework conflicts with the Constitution’s separation of taxing powers. However, a close examination of the Nigerian Tax Administration Act (NTAA) 2025 demonstrates that its provisions are consistent with Nigeria’s fiscal federalism.

Section 3(1) of the NTAA delineates the jurisdiction of the NRS. Specifically, the service is empowered to administer taxes on companies, members of the armed forces, foreign service officers, non-residents deriving profit from Nigeria, and a range of levies, including petroleum-related taxes, value-added tax (VAT), and certain surcharges. Subsection (b) further empowers the NRS to administer income tax, stamp duties, and tax incentives.

These provisions neither displace state or local authority over personal income tax, property tax, and other local levies, nor do they contradict the Taxes and Levies (Approved List for Collection) Act 1998 (as amended). Rather, they clarify the scope of federal jurisdiction—particularly over non-residents and entities without a domicile in any state.

Rationale for Reform

One of the most significant developments reflected in the 2025 tax reforms is the explicit empowerment of the NRS to collect taxes from non-resident companies and digital platforms. The global economy has shifted dramatically toward cross-border e-commerce and digital services.

Without a clear federal mandate, individual states lack the bargaining capacity to enforce compliance against multinational corporations.
According to the National Bureau of Statistics (Punch, December 18, 2024), international digital companies such as Google, Netflix, and Facebook remitted ₦3.85 trillion in taxes to the federal government within the first nine months of 2024. VAT collections accounted for ₦1.28 trillion of this amount.

This outcome was only possible because the FIRS—acting at a national level—engaged with these corporations, where state tax authorities had encountered resistance. The NRSEA and NTAA now provide statutory authority to consolidate and expand these efforts.

Composition of the Reform Committee

The article also questioned the legal competence of the Presidential Tax Reform Committee. This characterization is inaccurate. In addition to the brilliant Professor Taiwo Oyedele, who has decades of tax practice experience, the committee included two Senior Advocates of Nigeria and a professor of law serving as dean at one of Nigeria’s oldest universities. Moreover, at least six state Internal Revenue Service (IRS) chairmen, representing all geopolitical zones, and many eminent Nigerians representing the private sector and professional bodies were actively involved. The suggestion that the committee lacked legal and practical tax expertise is therefore unfounded.

Federalism, Delegation, and Practice

Drawing from my own experience as a former Executive Chairman of a State Internal Revenue Service and as a former ranking member of the Joint Tax Board, I must emphasize that delegation is a recognized practice in Nigerian tax administration. Local governments have, in several instances, authorized state IRS to collect taxes on their behalf, often resulting in higher revenue yields than when they operated independently.

This collaborative model neither violates the constitution nor diminishes the autonomy of subnational governments; rather, it enhances efficiency while respecting constitutional boundaries.

The Larger Goal: Simplification

It is equally important to situate the reforms within the broader debate on tax simplification. The Taxes and Levies (Approved List for Collection) Act 1998 (as amended) currently recognizes 39 separate taxes, rates, and levies.

Both academic and policy communities have long criticized this fragmentation. The reform effort aims, ultimately, to streamline these into a smaller set of single-digit taxes.

Achieving this requires collaboration across all tiers of government, but it would undoubtedly reduce compliance costs and increase taxpayer confidence.

Conclusion

The Tax reform laws introduced in 2025 in my view, neither usurp the constitutional powers of states and local governments nor undermine fiscal federalism. Instead, they clarify the jurisdiction of the federal tax authority, empower Nigeria to capture revenue from non-residents and digital service providers, and lay the foundation for a simplified tax system. Scholarly debate is welcome, but such debate must rest on careful engagement with the relevant statutes. To suggest otherwise risks misinforming the public and distracting from the urgent task of building a fair, efficient, and sustainable tax system for Nigeria.

Tolu Adegbie
Former Executive Chairman, Ondo State Internal Revenue Service