The Federal Government has granted two significant requests that is key for the smooth take-off of the newly established Nigeria Revenue Service, NRS, which is due to replace the Federal Inland Revenue Service, FIRS.
Recall, that President Bola Tinubu had last month signed the Tax Administration Act 2025 into law, which is expected to take effect in January 2026.
Under the new Act, the Service is empowered to raise funds through loans, overdrafts, and other financial instruments to meet its statutory obligations.
Ahead of its take-off however, the President granted it the legal authority to borrow funds for its operations from any source.
According to a signed copy of the new Tax Act, 2025, obtained by Punch, the President also approved for the Service to receive four per cent of the revenue collected to sustain its operations.
The approval is inline with Section 28 of the Act which states that “The Service may borrow by way of loan, overdraft or otherwise from any source, such sums as it may require for the performance of its functions and meeting of its obligations under this Act.”
Another major financial provision in the new law is the statutory 4 per cent retention of total non-petroleum revenues collected by the Service, as provided under Section 22(a) of the Act.
It stated, “The Service shall establish and maintain a fund which shall consist of, and to which shall be credited- Funds of the Service: 4 per cent of the total revenue, less petroleum royalty, collected by the Service, which shall be appropriated by the National Assembly for the capital and recurrent expenditures of the Service.”
Beyond borrowing and allocation, the law opens additional revenue channels for the NRS, allowing it to receive grants-in-aid, gifts, endowments, and contributions from both domestic and foreign sources, provided such donations are not at odds with its objectives.
It also allows the agency to raise money by leasing, selling, or hiring its properties, further widening its income streams. It said, “All sums of money accruing to the Service by way of grants-in-aid, gifts, testamentary dispositions, endowments, and contributions from any source;
“Such moneys as may be granted to the Service by the Federal, State, or Local Governments or other donor agencies, provided such grants are not intended for purposes contrary to the objective of the Act or functions of the Service; and
“All other moneys which may accrue to the Service from other sources, including charges for assistance in tax collection, the disposal, lease or hire of, or any other dealing with, any property vested in or acquired by the Service.”
In exchange for this autonomy, the Act imposes stricter transparency requirements. The NRS is now mandated to submit audited financial reports to the Minister of Finance annually, not later than June 30, with the reports to be forwarded to the Federal Executive Council and the National Assembly within 30 days.
It must also prepare yearly budget estimates by September 30 for parliamentary appropriation and ensure all accounts are audited within six months after each financial year. These measures, stakeholders believe, will provide guardrails against misuse of funds while encouraging strategic investment in tax collection and enforcement.
The law also reinforces the Service’s central role in economic development policy, mandating it to collaborate with ministries and agencies in using tax policy to stimulate growth, review tax regimes, and promote investments.
The Service is now statutorily empowered to “Investigate tax fraud and revenue loss, Seize or freeze assets derived from tax evasion, Monitor international tax dynamics, Maintain databases and statistics on all taxable persons, support research and policy recommendations for revenue generation.”
The newly signed Tax Administration Act 2025 also vested the NRS with far-reaching powers to enforce tax compliance, recover lost revenues, and play an active role in shaping the country’s fiscal policy.
Under the new law, the NRS has been assigned broad responsibilities beyond traditional tax collection, including assessing taxable entities, conducting financial investigations, freezing assets linked to tax fraud, and advising the Federal Government on tax waivers and revenue losses.
A review of Part IV of the Act reveals that the NRS will now be responsible for assessing all taxable persons and institutions, including individuals, companies, corporations, partnerships, and enterprises, and ensuring that all tax liabilities are recovered and remitted to designated government accounts.
“The Service shall collect or recover assessed taxes, enforce payments, and remit such taxes under the provisions of this Act or any other applicable law,” the law states.
Beyond revenue collection, the Act also mandates the Service to administer all revenue accruing to the government and to collaborate with relevant ministries and agencies in reviewing tax regimes. This collaboration aims to promote the use of taxation as a tool to stimulate and grow economic activities.
In a significant shift towards transparency and accountability, the Service is empowered to carry out investigations to enforce compliance with tax laws and determine the extent of financial losses incurred by the government due to tax fraud, evasion, or unjustified waivers.
The legislation further authorises the NRS to take strong enforcement actions including the identification, tracing, freezing, seizure, or confiscation of assets linked to tax fraud, in line with relevant laws.
The agency is also directed to introduce new compliance and regulatory measures, maintain control techniques, and detect and prevent tax law violations.
To boost capacity and global tax alignment, the Service is empowered to collaborate and share intelligence with both national and international organisations, as well as undertake personnel exchange programmes to deepen expertise and comparative experience.
Additionally, the NRS is charged with monitoring international taxation dynamics, maintaining databases on taxable entities and waivers, and supporting research that examines the effects of tax policy, fraud, and evasion on Nigeria’s economic development.
“The Service shall undertake and support research or similar measures to stimulate economic development and determine the manifestation, extent, and effects of tax waivers, fraud, evasion and other matters that affect effective tax administration,” the law reads.
