From FIRS to NRS: How Nigeria’s New Revenue Service Aims to Eliminate Multiple Taxation
Nigeria Tax Bill, is designed to replace the current fragmented tax system with a modern, functional framework.
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Dr Zacch Adedeji, has detailed how the transition of the agency into the Nigeria Revenue Service (NRS) will serve as the catalyst for a total overhaul of the country's fiscal landscape. Speaking before the House of Representatives Committee on Finance, Adedeji clarified that the move, enshrined in the Nigeria Tax Bill, is designed to replace the current fragmented tax system with a modern, functional framework. This shift is expected to centralise revenue activities and provide a more transparent environment for both domestic and international investors.
A Shift to Functional Tax Administration
The transition from FIRS to NRS marks a strategic move away from a "type-based" tax system to a "functional" model. Currently, taxpayers often navigate different departments for varied obligations, such as Value Added Tax (VAT) and Company Income Tax (CIT). The NRS structure aims to eliminate these silos by creating a single-window system.
According to Dr Adedeji, this functional approach ensures that:
• Taxpayers interact with a single entity for all tax-related matters, significantly reducing the complexity of compliance.
• Administrative costs are lowered for the government by streamlining internal departments and removing redundant processes.
• A holistic view of the taxpayer is maintained, allowing the authority to assess total economic footprints rather than isolated transactions.
Curbing the Burden of Multiple Taxation
One of the most significant value propositions of the NRS is the commitment to ending the multiplicity of taxes that has long hindered the Nigerian private sector. Adedeji emphasised that the reform focuses on "taxing the fruit, not the seeds," ensuring that businesses are not stifled by redundant levies.
By consolidating revenue collection under the NRS, the government seeks to:
• Enhance the Ease of Doing Business by providing a predictable and simplified fiscal regime.
• Attract Foreign Direct Investment (FDI) by removing the uncertainty associated with overlapping tax jurisdictions.
• Harmonise collection processes across various levels of government to prevent the harassment of small and medium-sized enterprises (SMEs).
Digital Transformation and Real-Time Compliance
The NRS mandate extends beyond structural changes, prioritizing a data-driven approach to revenue collection. The agency will leverage advanced technological tools to automate tax assessments and identify non-compliant entities in real-time. This digital integration linking with the Corporate Affairs Commission (CAC) and the Central Bank of Nigeria (CBN) aims to expand the tax net without necessarily increasing tax rates.
Conclusion: A New Era for Nigerian Revenue
The proposed evolution into the Nigeria Revenue Service is a cornerstone of the Federal Government's target to reach an 18% tax-to-GDP ratio within three years. By addressing the structural inefficiencies of the FIRS and focusing on taxpayer convenience, the NRS is positioned to drive sustainable economic growth. For investors and policymakers, the success of this transition will depend on the seamless implementation of the Nigeria Tax Bill and the agency's ability to maintain its newfound functional efficiency.
