By Ahmed Ahmed
The Federal Government has granted the Nigeria Revenue Service (NRS) sweeping financial and operational powers under the newly signed Tax Administration Act 2025, a landmark legislation designed to modernize tax administration, enhance transparency, and reposition the agency as a central pillar of Nigeria’s fiscal policy.
Signed into law by President Bola Tinubu in June 2025 and effective from January 2026, the Act empowers the NRS to borrow funds, retain a statutory share of revenue, and expand its enforcement and policy advisory roles in line with global best practices.
Legal Backing for Revenue Autonomy and Borrowing Powers
Under Section 28 of the Act, the NRS is now authorized to raise funds through loans, overdrafts, or other financial instruments as needed to fulfill its statutory obligations:
“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.”
In addition, Section 22(a) grants the agency statutory retention of 4% of all non-petroleum revenues collected, to be appropriated by the National Assembly for capital and recurrent expenditures. The retained funds will form part of a dedicated service fund to ensure operational independence.
Multiple Revenue Streams and Asset Utilization
Beyond direct revenue retention, the Act opens multiple alternative funding channels for the NRS. These include:
- Grants-in-aid and donations from domestic or foreign entities (subject to alignment with the agency’s mandate)
- Income from leasing, selling, or hiring of NRS-owned assets
- Fees from tax collection assistance or consulting services
“All moneys accruing to the Service from grants, endowments, property deals, or consulting services shall form part of its operational fund,” the Act states.
Mandatory Transparency and Financial Oversight
To balance its new autonomy, the NRS is now subject to strict accountability standards. The law mandates the agency to:
- Submit audited annual financial reports to the Minister of Finance by June 30 each year
- Forward the reports to the Federal Executive Council and National Assembly within 30 days
- Prepare and submit annual budget estimates by September 30
- Ensure all accounts are audited within six months after each financial year
These requirements are designed to prevent fund misuse while encouraging strategic investments in tax administration.
Expanded Mandate: Enforcement, Research, and Tax Policy Advisory
The Act assigns the NRS a broader economic and enforcement role, far beyond conventional tax collection. The agency is now responsible for:
- Assessing all taxable persons and institutions, including individuals, businesses, corporations, and partnerships
- Recovering unpaid taxes and remitting them to designated government accounts
- Investigating tax fraud, evasion, and illicit waivers
- Seizing or freezing assets linked to tax offences
- Monitoring international tax practices and aligning Nigeria’s systems with global standards
- Maintaining databases on all taxable entities, revenue waivers, and economic losses
- Supporting research on how tax policies affect economic development
The law also mandates the NRS to collaborate with ministries and agencies to use tax policy as a tool for stimulating growth and attracting domestic and foreign investments.
Data, Technology, and Global Cooperation
With a strong emphasis on data-driven enforcement, the NRS is required to:
- Provide up-to-date statistics on all taxable individuals and government revenue sources
- Deploy modern control techniques to detect tax law violations
- Exchange intelligence with local and international organizations
- Engage in capacity-building partnerships, including staff exchange and international benchmarking
The Tax Administration Act 2025 marks a fundamental shift in how Nigeria manages its domestic revenue system. By granting the NRS the tools, autonomy, and authority to operate as a modern, proactive, and transparent revenue agency, the legislation aligns with broader national efforts to reduce dependence on oil, improve fiscal sustainability, and accelerate economic reforms.
