Senate Approves Renaming FIRS to Nigeria Revenue Service, Passes Tax Reforms

By Emmanuel Kwada

The Nigerian Senate has passed two transformative tax reform bills, with the spotlight firmly on the rebranding of the Federal Inland Revenue Service (FIRS) into the Nigeria Revenue Service (NRS). The Nigeria Revenue Service (Establishment) Bill, 2025 and the Nigeria Tax Administration Bill, 2025, approved during Wednesday’s plenary, mark a new chapter in Nigeria’s tax administration, following a comprehensive report by the Senate Committee on Finance, chaired by Senator Sani Musa.

The Senate retained the Value Added Tax (VAT) at 7.5%, ensuring stability for consumers and businesses, while restructuring revenue distribution: 10% to the federal government, 55% to states, and 35% to local governments

The renaming of FIRS to NRS signals an expanded mandate to manage federal tax collection with greater efficiency and transparency.

The NRS will be led by a board with a non-executive Chairman and an Executive Vice Chairman as CEO, both subject to Senate confirmation. To sustain its operations, the agency will receive a 2% cost of production from oil and non-oil sector revenues, positioning it to drive economic growth through robust tax policies.

The Senate retained the Value Added Tax (VAT) at 7.5%, ensuring stability for consumers and businesses, while restructuring revenue distribution: 10% to the federal government, 55% to states, and 35% to local governments.

VAT revenue will now be allocated based on the “place of consumption,” directly benefiting states where goods and services are consumed.

Further strengthening the tax ecosystem, the Senate approved the creation of a Tax Appeal Tribunal, funded by the Consolidated Revenue Fund, to resolve disputes with professionalism and credibility.

The Office of the Tax Ombud was also established to address taxpayer concerns, reinforcing fairness. A controversial N5 million fine for disclosing institutional information was rejected as “draconian,” with the Senate opting instead for stricter penalties for non-compliance, such as N100,000 fines for failure to register and up to three years’ imprisonment for unremitted taxes.

The legislation sustains funding for key agencies like TETFUND, NASENI, NITDA, and NELFUND through a development levy, with 50% allocated to tertiary education and 15% to student loans. The NRS is empowered to collaborate with government bodies to review tax regimes and combat evasion through measures like asset seizure.

A rotational appointment system for executive directors across Nigeria’s six geopolitical zones ensures equitable representation.

As the NRS steps into its new role, these reforms underscore Nigeria’s commitment to a fairer, more dynamic tax system. The nation awaits the agency’s execution of this ambitious mandate to balance federal and state interests while fueling economic development.