The Nigeria Revenue Service has the power to assess, collect, and administer taxes. Taxpayers' income is assessed, and the correct revenue amount is collected and accounted for by the Service on behalf of the Federal Government. The NRS (Establishment) Act, 2025 also provides that the agency can collect tax revenue for local, state, and foreign governments.
Sections of the NRS Establishment Act, 2025 for tax collection
The law provides these rights to the agency. Section 4(1) a to c provides these rights to the NRS. And they form part of the function of the agency. Subsection (1a) states that the NRS has the function of assessing persons, including corporations, companies, partnerships, enterprises and individuals chargeable with tax.
Subsection (1b) provides the government agency with the power to collect or recover taxes assessed, enforce payment of taxes, and remit taxes collected under the provisions of this Act or any other law, except for designated accounts.
Subsection (1c) states that the NRS can administer all revenues accruing to the Government.
Section 5(1) to (3) states the NRS can collect revenues on behalf of a state and local government based on an agreement. Section 5(1) states: “The Service may, on request, assist any State of the Federation, the Federal Capital Territory or Local Government to collect or administer a tax.”
Section 5(4) explicitly grants the Service the right to collect taxes on behalf of foreign governments. It states in part: “Where an agreement or arrangement between the Government of Nigeria and the Government of another country… for the collection of revenue claims due to the Government of that country… the Service shall carry out such obligation as may be prescribed in that agreement or arrangement.”
The function of the NRS is to assess and collect tax revenue
From the above, we can summarise the functions of NRS to assess and collect taxes below:
Assessment of tax revenue for taxpayers: The Service can assess taxpayers' income to determine the tax accrued to the government. This is assessed through the Nigeria Tax Act, 2025. However, taxation theory allows for three types of assessments. That is, direct, self and additional assessments.
For direct assessment, the NRS employee determines the revenue to be charged to a taxpayer. Taxpayers are allowed to use the tax laws to determine the tax owed themselves. An additional assessment arises if the Service believes that the taxpayer is under-assessed.
To collect taxes from taxable persons: After assessment, the NRS will collect the tax from the taxpayers. This statutory right cannot be delegated to any organisation or individual. When a taxpayer refuses to pay taxes, Section 4(1b.) states that the authority has the power to enforce payments. The taxes collected and remitted are not limited to the Nigeria Tax Acts, 2025, but include other laws in Nigeria.
Management of revenue collected
After assessing and collecting the revenues, the Service will provide proper management of the money collected. An accounting technology system can be used to collect accrued revenue, track, and make payments into the appropriate government accounts.
Tax collection for Local and State governments: Section 5 subsections (1) to (3) of the NRS (Establishment) Act allows local and state governments to partner with the Service on their tax assessment, collection, and administration.
Read: The Nigerian Tax System and Current Tax Laws
The revenue collected for the Local or state government must be that which it has the statutory right to collect. The revenue collected must be remitted to the local or state government or any relevant tax authority as agreed by the parties.
Collecting taxes for other countries: To avoid double taxation or provide administrative assistance, other countries may make arrangements with the NRS to collect and remit taxes. This is found in subsections (5) to (9) of section 5. It explains what the agency will do to ensure proper collection and remittance of revenue claims.