Tax jurisdiction: taxes and levies of federal, state and local governments

A company in Lagos pays company income tax, VAT and stamp duty to one authority, deducts PAYE from its staff and pays it to another, and pays a signboard permit to a third. A teacher in Kaduna pays personal income tax to the State, while a soldier in the same city pays it to the federal authority.

The exam asks who collects what: five levies of the Local Government Revenue Committee, the taxes collectible by each tier, and which authority deals with which taxpayer.

This topic covers tax jurisdiction, the number of taxes each tier may collect, the taxes and levies of the Federal, State and Local Governments, the Federal Capital Territory arrangements, and the court ruling on the 2015 Ministerial Order. The previous topic covered the tax authorities and their powers. The next covers the tax identification number and registration.

Key terms in plain English

Syllabus check

This topic is in syllabus area A, introduction to taxation, tax administration and ethics (20% of marks). It covers:

• tax jurisdiction and the relevant tax authority;
• the taxes and levies collectible by the Federal, State and Local Governments;
• the FCT arrangements and the ruling on the 2015 Ministerial Order.

CAMA 2020 and tax jurisdiction

The Companies and Allied Matters Act 2020 (CAMA 2020) is the company law of Nigeria. The sections below apply to this topic.

The rules in more depth

Tax jurisdiction and the relevant authority

For incorporated companies, the relevant tax authority is the FIRS. For unincorporated entities, individuals and bodies of individuals, it is the State Board of Internal Revenue. To decide which State board is relevant to a person, his residence must first be settled.

A person with several places of residence is dealt with at his principal place of residence, which is:

• the State where he normally resides
• the place nearest to his place of work
• where income comes from more than one State, the Federal Capital Territory

A company also registers with the authorities of the States where its employees and suppliers live, for PAYE and withholding tax.

How many taxes each tier collects

Taxes collected by the Federal Government

1. Companies income tax;
2. withholding tax on companies and non-resident individuals;
3. petroleum profits tax;
4. value added tax;
5. tertiary education tax;
6. capital gains tax on companies and non-resident individuals;
7. stamp duties on corporate bodies;
8. personal income tax on members of the armed forces, members of the Nigeria Police Force, staff of the Ministry of External Affairs, and non-resident individuals.

Taxes and levies collected by State Governments

1. Personal income tax: PAYE and direct assessment (self-assessment);
2. withholding tax on individuals;
3. capital gains tax on individuals;
4. stamp duties on instruments executed by individuals;
5. pools betting, lotteries, gaming and casino taxes;
6. road taxes;
7. business premises registration fees: in urban areas up to ₦10,000 for registration and ₦5,000 for annual renewal; in rural areas ₦2,000 and ₦1,000;
8. development levy on individuals only, not more than ₦100 a year;
9. naming of street registration fees in the State capital;
10. right of occupancy fees on State-owned land in urban areas;
11. market taxes and levies where State finance is involved.

The Federal Capital Territory

Under the FCT Internal Revenue Service Act 2015, the FCT-IRS collects, for residents of the FCT:

• PAYE of individuals in employment in the public and private sectors
• direct assessment of self-employed individuals and enterprises
• FCT property tax
• stamp duties on individuals and enterprises
• withholding tax
• capital gains tax

Taxes and levies collected by Local Governments

1. Shops and kiosks rates;
2. tenement rates;
3. marriage, birth and death registration fees;
4. slaughter slab fees;
5. on and off liquor licence fees;
6. street naming registration fee, except in the State capital;
7. right of occupancy fees on land in rural areas;
8. market taxes and levies, excluding markets where State finance is involved;
9. motor park fees;
10. domestic animal licence fees;
11. bicycle, truck, canoe, wheelbarrow and cart fees, other than for a mechanically propelled truck;
12. cattle tax, payable by cattle farmers only;
13. road closure levy;
14. radio and television licence fees, other than for transmitters;
15. radio licence fees, imposed by the local government of the State where the car is registered;
16. illegal parking fees;
17. public convenience, sewage and refuse disposal fees;
18. customary burial ground permit fees;
19. religious places establishment permit fees;
20. signboard and advertisement permit fees.

The Local Government Revenue Committee

Section 90 of the Personal Income Tax Act set up a Local Government Revenue Committee (LGRC) for each local government area of a State. It has the Supervisor for Finance as Chairman, three local government councillors, and two other persons experienced in revenue matters, nominated by the Chairman of the local government on personal merit.

It is responsible for the assessment and collection of all taxes, fines and rates in its area, and accounts for the amounts collected in the manner the chairman of the local government prescribes. It is autonomous of the local government treasury department and runs the revenue department, which is its operational arm. The Wharf landing charge, where applicable, also forms part of the lists commonly given in examination answers.

Many local governments oppose this federal law, claiming that it contravenes the 1999 Constitution, which vests local government administration in the State House of Assembly. This is one of the constitutional issues that should be settled in a federal system.

Why jurisdiction decides where returns are filed

Jurisdiction matters in practice because a payment to the wrong authority does not discharge the liability, and the taxpayer may be assessed again by the right one. A company with a head office in Lagos and branches in other States normally files its company income tax return with the FIRS.

It files PAYE with each State where its employees reside, and withholding tax on payments to individuals with the State of each individual. But withholding tax on payments to companies goes to the FIRS. A self-employed individual files his return with the State where he is resident. A resident of the FCT files with the FCT-IRS.

Each tier has the power to assess, collect and enforce, so a company must keep records that show which employee or supplier belongs to which State.

Order of the three tiers in an answer

In an exam answer, set out the taxes in the order Federal, State, Local, state the number for each tier (8, 11, 20), and then add the FCT-IRS as a separate item. Examiners give a mark for each correct tax and each correct tier, so do not leave a tax without saying who collects it.

The Ministerial Order of 2015 and the 2020 ruling

The Taxes and Levies (Approved List for Collection) Act (Amendment) Order 2015, made by the Minister of Finance, added many heads such as infrastructure maintenance levy, wharf landing charge, consumption tax and the National Information Technology Development levy. On 8 May 2020, in a suit by the Registered Trustees of the Hotel Owners and Managers Association of Lagos, the Federal High Court in Lagos held the Order unconstitutional, null and void.

The Constitution gives law-making power to the legislature, and schedules are part of a law, so only the legislature can amend them. Heads added by the Order are therefore not enforceable.

Which authority deals with which taxpayer

The position from 2026

The Nigeria Revenue Service replaces the FIRS, and the Joint Revenue Board replaces the Joint Tax Board. The Nigeria Tax Act 2025 contains the income tax, VAT and stamp duty rules, and the Nigeria Tax Administration Act 2025 sets up State Joint Revenue Committees (sections 95 and 96).

The Joint Revenue Act also makes State revenue services autonomous, and VAT revenue is now shared 10% to the Federal Government, 55% to the States and 35% to local governments. For a question on a period before 2026, use the lists above.

Worked examples

1. (a) Local government where the property is.
2. (b) State where the casino is.
3. (c) Federal: assessed and collected by the FIRS on companies.
4. (d) Federal: FIRS collects for members of the Nigeria Police Force.

1. His principal place of residence is the place nearest his work, so Abuja.
2. He is taxed through the FCT-IRS for his personal income.

1. Company income tax, VAT and stamp duties go to the FIRS.
2. PAYE for each employee goes to the State where he lives: Ogun SIRS or Oyo SIRS.
3. Withholding tax on payments to individuals goes to the State of the individual.

How to score full marks

• Link each tax to its tier in a table, as marks are given for each correct pair.
• Count the taxes: 8, 11 and 20, and list at least five for local governments when asked.
• Decide the authority by the taxpayer and residence.
• Add the 2020 ruling when the question mentions the Ministerial Order.

Common mistakes in the exam

• Giving PAYE to the FIRS for an ordinary employee.
• Listing capital gains tax on individuals as federal.
• Putting the tenement rate with the State.
• Forgetting the FCT-IRS.

Quick revision

• Company: federal. Individual: State of residence.
• 8, 11 and 20 taxes by tier.
• Armed forces, police, external affairs and non-residents: federal.
• FCT residents: FCT-IRS.

Practice questions

Questions 1 to 10 are multiple choice. Questions 11 to 13 are written. Try each before opening the answer.

Model answers

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