The Constitutionality of the Joint Revenue Board: A Challenge to Nigeria’s Fiscal Federalism

Introduction

On June 26, 2025, President Bola Ahmed Tinubu signed into law four landmark tax reform bills that fundamentally reshape Nigeria’s revenue administration landscape. Among these reforms is the Joint Revenue Board (Establishment) Act, which creates the Joint Revenue Board (JRB) and represents one of the most ambitious attempts to overhaul Nigeria’s fragmented tax system in decades.

Set to take effect on January 1, 2026, the JRB has sparked intense constitutional debate. Legal experts question whether centralizing revenue collection authority under federal oversight is compatible with Nigeria’s federal structure. This article examines the constitutional concerns surrounding the JRB and their implications for fiscal federalism.

The Problems the Reforms Seek to Address

Nigeria’s tax administration has long been plagued by significant challenges. Multiple revenue agencies operate with minimal coordination, creating confusion for taxpayers and opportunities for revenue leakage. Businesses operating across state lines face inconsistent tax rules, duplicate filings, and sometimes, double taxation. States lack standardized systems for tax assessment and collection, resulting in widespread inefficiencies.

The fragmented system has contributed to Nigeria’s chronically low tax-to-GDP ratio, which remains among the lowest globally. Revenue collection is often opaque, with limited accountability mechanisms. Taxpayers have few effective channels for resolving disputes or seeking redress for unfair treatment. These systemic failures have cost Nigeria billions in potential revenue while eroding public trust in tax administration.

The reforms aim to address these issues through comprehensive institutional restructuring and improved coordination across government tiers.

The New Institutional Framework

The JRB replaces the old Joint Tax Board, which was established under the Personal Income Tax Act in 2004 with a purely advisory role focused on personal income tax coordination. The new JRB’s mandate is significantly broader, covering harmonization and coordination of revenue administration across all types of taxes, levies, charges, and revenues at all levels of government.

The JRB’s composition reflects this comprehensive ambition. It includes the Executive Chairman of the Nigeria Revenue Service as Chairman, Chairmen of all State Internal Revenue Services, and representatives from various federal agencies including the Ministry of Finance and the Revenue Mobilisation Allocation and Fiscal Commission.

Beyond the JRB itself, the reforms introduce entirely new institutions. Specialized Tax Appeal Tribunals will handle tax disputes, while the Office of the Tax Ombud will advocate for taxpayer rights. This institutional architecture aims to create a unified approach to revenue collection across all tiers of government, bridging coordination gaps in Nigeria’s current system.

Constitutional Concerns: Federal Overreach

Despite these laudable objectives, legal experts have raised serious concerns about potential constitutional breaches. They allege that the powers conferred on the Nigeria Revenue Service violate federalism principles enshrined in the 1999 Constitution.

The constitutional provisions at issue include Sections 7, 62, 81, 121, and 124, Second Schedule Part 1, and Chapters 5, 6, and 7. These sections govern fiscal federalism and establish how revenues are generated, collected, and shared among federal, state, and local governments.

Section 4(1)(a) of the Nigerian Revenue Service Establishment Act 2025 has attracted particular scrutiny. This provision transfers the assessment and collection of income taxes from partnerships, enterprises, and individuals to the Nigeria Revenue Service functions traditionally performed by State Internal Revenue Services.

The practical implications are significant. Taxes generated by businesses operating entirely within a state would now be collected by a federal agency, even where those revenues belong to state governments. States would transform from independent revenue authorities into mere recipients awaiting federal remittance of revenues collected within their jurisdictions.

The Centralization Problem

More troubling to critics is the broader mandate empowering the NRS to collect all revenues, taxes, and levies accruable to federal, state, and local governments. This effectively creates a monopolistic national tax collector with unprecedented reach across all government tiers.

By consolidating virtually all tax collection authority under one federal agency, the federal government gains significant leverage over states and local governments. This arrangement undermines their constitutional status as coordinate not subordinate authorities. States lose not just administrative control but also the autonomy to determine how revenues within their jurisdictions are assessed and collected.

Critics argue this arrangement is fundamentally incompatible with Nigeria’s federalism, which presumes fiscal autonomy. Each tier of government should possess the power to generate, assess, and collect its own revenues. The JRB reforms, they contend, effectively convert Nigeria’s federal structure into a de facto unitary system in practice, even if not in name.

Centralised revenue collection in Nigeria

Potential Legal Challenges and Precedents

States may contest aspects of the reforms through litigation, though precedents on revenue centralization present a mixed picture.  While courts have historically been reluctant to challenge federal revenue authority as seen in the 2022 Court of Appeal decision in Federal Inland Revenue Service (FIRS) v. Attorney General of Lagos State that affirmed federal control over VAT collection, constitutional principles of fiscal federalism remain judicially protected in other contexts.

The Tax Appeal Tribunal’s 50% deposit requirement for appeals presents another constitutional vulnerability. Legal scholars argue this provision may violate Sections 6(6)(b) and 36(1) of the Constitution, which guarantee access to justice. Requiring taxpayers to deposit half the disputed amount before appealing effectively restricts access to adjudication, particularly for small businesses and individuals.

Beyond constitutional challenges, implementation faces practical obstacles. Nigeria’s intergovernmental relations are often characterized by mistrust and political tensions. States may lack the administrative systems, data infrastructure, or political will to collaborate effectively on the data sharing and policy coordination the JRB requires.

Several states with strong revenue bases particularly Lagos, Rivers, and Kano may be especially resistant to reforms that diminish their fiscal autonomy. These states have invested significantly in building their tax collection capacity and may view the JRB as federal encroachment on hard-won institutional gains.

The Federalism Question

At its core, the debate over the JRB concerns the nature of Nigerian federalism itself. Nigeria’s Constitution establishes a federal system where the federal, state, and local governments are meant to operate as coordinate entities, each with defined revenue sources and collection powers.

This constitutional design reflects a deliberate choice to distribute power across government tiers rather than concentrate it federally. Fiscal autonomy, the ability of each tier to control its own revenue generation and collection, is central to this design. Without fiscal independence, states cannot effectively exercise their constitutional functions or serve as meaningful checks on federal power.

The JRB reforms appear to deepen the centralization trend that has long made Nigeria’s fiscal federalism contentious. Since independence, Nigeria’s federal government has progressively expanded its control over revenue sources, leaving states increasingly dependent on federal allocations. The JRB may represent the culmination of this trend, formalizing federal dominance over virtually all revenue collection.

Proponents might argue that efficiency gains and improved coordination justify some sacrifice of state autonomy. However, critics contend that such efficiency cannot come at the cost of constitutional principles. Federal systems inherently trade some efficiency for accountability, checks and balances, and protection against tyranny. Dismantling these protections in the name of administrative convenience threatens the federal compact itself.

Analysis and Future Implications

The Joint Revenue Board represents a fundamental tension in governance: the desire for administrative efficiency versus the imperative to preserve constitutional structure. While the reforms address real problems in Nigeria’s tax system, they may do so through means that conflict with constitutional design.

If the reforms proceed as enacted, legal challenges are possible though not certain. Some states may mount constitutional challenges, particularly those with strong revenue bases and concerns about federal encroachment on their fiscal autonomy. However, current political realities including states’ unsuccessful litigation over VAT collection may make states more cautious about challenging federal revenue authority in court.

If such litigation occurs, the outcomes will shape Nigerian federalism for decades. If courts uphold the JRB’s broad powers, Nigeria’s federal system may effectively function as a unitary state for revenue purposes. If courts strike down key provisions, the federal government will need to redesign reforms to respect state fiscal autonomy while still achieving coordination goals.

A middle path may be possible. Courts could validate coordination mechanisms while limiting federal collection authority to federal taxes only. This would preserve the JRB’s harmonization role while maintaining each tier’s control over its own revenue sources.

Conclusion

The Joint Revenue Board reforms reflect a laudable ambition to modernize Nigeria’s tax administration and address long-standing coordination failures. However, they risk undermining the principles of fiscal federalism that are central to Nigeria’s constitutional framework.

As Nigeria navigates the tension between administrative efficiency and federal autonomy, the path forward requires careful constitutional crafting. Reforms must strengthen coordination without consolidating all collection authority federally. States need support in building capacity, not dispossession of their constitutional powers.

The coming year will prove decisive. By early 2026, affected states will likely have initiated constitutional action. By mid-2026, lower courts may issue preliminary rulings. The Supreme Court’s eventual decision—possibly arriving in 2027 or beyond—will determine whether Nigeria can achieve efficient tax administration while preserving genuine fiscal federalism, or whether the federal structure will continue its drift towards centralization.

The stakes extend beyond tax policy. How Nigeria resolves this tension will signal whether its federal system can adapt to modern governance challenges while remaining true to constitutional principles, or whether federalism will continue as constitutional fiction masking unitary reality.

References

1. Andersen Tax. “President Tinubu Signs 2025 Tax Reform Acts into Law; New Regime to Take Effect from January 2026.” Available at: https://ng.andersen.com/president-tinubu-signs-2025-tax-reform-acts-into-law-new-regime-to-take-effect-from-january-2026/
2. Afriwise. “Tax Administration in Nigeria – A Review of the 2025 Nigerian Tax Reform Laws.” Available at: https://www.afriwise.com/blog/tax-administration-in-nigeria—a-review-of-the-2025-nigerian-tax-reform-laws
3. MyTax. “How Nigeria Joint Revenue Board (JRB) Different Joint Tax Board (JTB).” Available at: https://mytax.com.ng/blog/how-nigeria-joint-revenue-board-jrb-different-joint-tax-board-jtb
4. 1st Attorneys. “The Nigerian 2025 Tax Reform Acts: Legal Review and Implications for Stakeholders.” June 28, 2025. Available at: https://1stattorneys.com/articles/2025/06/28/the-nigerian-2025-tax-reform-acts-legal-review-and-implications-for-stakeholders/
5. Punch Newspapers. “Tax Reform: Centralised Collection Undermines Federalism.” Available at: https://punchng.com/tax-reform-centralised-collection-undermines-federalism/
6. Forum of Federations. “Fiscal Federalism in Nigeria: Unsettled Issues.” Available at: https://www.forumfed.org/document/fiscal-federalism-in-nigeria-unsettled-issues/
7. Premium Times. “Bridging the Gaps in Policies and Implementation: Nigeria’s New Tax Laws” by Bolutife Oluwadele. Available at: https://www.premiumtimesng.com/opinion/807722-bridging-the-gaps-in-policies-ands-implementation-nigerias-new-tax-laws-by-bolutife-oluwadele.html

Contributor

Collins Okeke

Partner