AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Under the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service has exclusive responsibility for taxes on companies, VAT, the development levy, petroleum taxes and tax on non-residents, while each state's internal revenue service administers personal income tax, including PAYE, for individuals resident in that state. Local government revenue committees assess and collect the taxes, fines and rates within their jurisdiction, and VAT revenue is shared 10% federal, 55% states and FCT, 35% local governments.
Who administers which tax (as of October 2026)
| Tax or levy | Administered by | Legal basis |
|---|---|---|
| Company income tax (all companies) | Nigeria Revenue Service | NTAA s.3(1)(a)(i) |
| Development levy (4%) | Nigeria Revenue Service | NTAA s.3(1)(a)(v); NTA s.59 |
| Value added tax | Nigeria Revenue Service | NTAA s.3(1)(a)(v) |
| Tax on income from petroleum operations (hydrocarbon tax, PPT) | Nigeria Revenue Service | NTAA s.3(1)(a)(v) |
| Income tax of non-residents with Nigerian income | Nigeria Revenue Service | NTAA s.3(1)(a)(iv) |
| Income tax of armed forces and police personnel (non-civilian) and Foreign Service officers | Nigeria Revenue Service | NTAA s.3(1)(a)(ii)-(iii) |
| Personal income tax of resident individuals, including PAYE, chargeable gains, trusts and estates | State internal revenue service (or FCT-IRS) of the state of residence | NTAA s.3(2), s.87-88, First Schedule |
| Stamp duties | NRS has power to administer; state powers over stamp duties preserved | NTAA s.3(1)(b)(iii), s.87(1) |
| Taxes, fines and rates within a local government's jurisdiction | Local Government Revenue Committee | NTAA s.93-94 |
| Withholding tax | Remitted to the authority with jurisdiction over the payee's tax | NTAA s.28, s.51 |
How your state of residence is decided
For an individual, the relevant state is the state of residence on 1 January of the year of assessment, under the First Schedule to the Tax Administration Act. An employee in a Nigerian employment is resident for the year in the state where they have their place or principal place of residence on 1 January, or on the day they start the job if they join during the year. Someone on leave on 1 January is placed by their residence just before the leave began. Disputes between states about residence go to the Joint Revenue Board (JRB Act s.5(b)).
Example
An employee lives in Ogun State and works for a Lagos company. If their principal place of residence on 1 January is in Ogun, the employer deducts PAYE and remits it to the Ogun State Internal Revenue Service, not Lagos, even though the office is in Lagos. The employer still files its own company return with the NRS.
How VAT money is shared
Section 81 of the Tax Administration Act fixes the split of net VAT revenue, notwithstanding any other formula.
| Tier | Share of net VAT |
|---|---|
| Federal Government | 10% |
| State governments and the FCT | 55% |
| Local governments | 35% |
| Basis for sharing among states and local governments | Weight |
|---|---|
| Equality | 50% |
| Population | 20% |
| Consumption (place of consumption, not place of filing) | 30% |
This is why VAT returns must show consumption of taxable supplies by location (NTAA s.22(11)), whichever office the return is filed with. A business that sells across many states therefore needs its sales records to show where customers consumed the supply.
The coordinating bodies
- Joint Revenue Board (JRB Act s.3-5): keeps the national Tax ID database, resolves disputes between tax authorities, advises on double taxation and promotes harmonisation of taxes, levies and charges.
- State Joint Revenue Committee (NTAA s.95-96): chaired by the state service's Executive Chairman with local government revenue chairmen; implements Joint Revenue Board decisions and harmonises tax administration in the state.
- Tax Appeal Tribunal (JRB Act s.23, s.29): hears disputes under federal and state tax laws.
- Office of the Tax Ombud (JRB Act s.36-41): takes complaints about tax authorities and officials, including on taxes, levies and charges.
If you are being asked to pay a levy you think is unlawful, the Tax Ombud is the statutory complaints route. Our city guides cover the practical steps: illegal levy collectors in Lagos and multiple taxation in Abuja. For which state office serves you, see LIRS, FCT-IRS or RIRS.
A checklist for employers and businesses
- Register the business for a Tax ID with the NRS and file company returns there (NTAA s.4, s.11).
- Register as an employer with the state service of each state where employees are resident, not only the state of your office.
- Record each employee's state of residence as at 1 January every year; it decides where their PAYE goes for the whole year.
- Remit PAYE and other deductions by the 21st of the following month to the right authority (NTAA s.107).
- File the employer's annual return of emoluments by 31 January with each state service (NTAA s.14).
- File monthly VAT returns with the NRS by the 21st, showing where supplies were consumed, unless you are a small business that has not opted in (NTAA s.22).
- Keep receipts for every state and local levy paid, so you can show what was demanded and by whom if you need to complain.
How we put this together
We read the gazetted texts of the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 (Official Gazette No. 117, Vol. 112, dated 26 June 2025) section by section. The Nigeria Revenue Service website lists these Acts on its laws page, but its topic pages load in the browser and could not be read by our tools, so we worked from copies of the Gazette hosted by a third party and checked figures against the section and schedule numbers quoted here. Regulations, practice notes and orders issued after the Acts may change how a rule applies; where something depends on an order or regulation we say so. We also read the Joint Revenue Board (Establishment) Act 2025. The example is illustrative.
Questions people ask
Who collects PAYE in Nigeria?
The internal revenue service of the state where the employee is resident on 1 January of the year, not necessarily the state where the employer is based.
Is VAT a federal or state tax in Nigeria?
VAT is administered by the Nigeria Revenue Service under the 2025 laws. The revenue is shared 10% federal, 55% states and FCT and 35% local governments.
Does the NRS collect tax from individuals?
Only from certain groups, such as non-residents, military and police personnel in non-civilian roles and Foreign Service officers. Other individuals pay their state service.
Who resolves disputes between two states over my tax?
The Joint Revenue Board, which has power under section 5 of its 2025 Act to resolve disputes between tax authorities, including on residence.
Sources
- Nigeria Tax Administration Act, 2025 (Act No. 5), Official Gazette No. 117, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Nigeria Tax Act, 2025 (Act No. 7), Official Gazette No. 117, Vol. 112, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Joint Revenue Board of Nigeria (Establishment) Act, 2025 (Act No. 6), Official Gazette No. 117 (gazetted copy) · accessed Oct 2026
- Nigeria Revenue Service: Laws and regulations · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.