The Tax Act, precisely Section 12(4) of the FIRS Establishment Act 2007 expressly stipulates the appropriate tax authority that can assess and collect taxes and levies. This excludes the use of consultants and agents. The rising cost of running government in addition to dwindling revenue has encouraged various state governments in Nigeria to come up with strategies to improve their revenue base.

Legal basis for outsourcing tax collection?

Section 102 Personal Income Tax Act (PITA) defines ‘tax collector’ as “a duly authorised official” of the SBIR or the FIRS. In effect, this means that agents or tax consultants are not “tax collectors” for the purpose of enjoying the “Powers of tax collectors” in Part XII of PITA. But section 24(2) and (3) PITL Rivers State suggests that ‘consultants’ may be regarded as ‘staff’ of the SBIR to “enjoy such terms … of services as the Board may… determine.”  Section 88(3) PITA provides that subject to 88(4), the SBIR may delegate the performance of any function, duty or power conferred on the Board, to any person by notice in writing or in the Gazette. As expected, section 88(4) PITA precludes the Board from delegating all key functions such as assessment or exercise of discretion vested in the Board for the determination of tax liability, etc.


However, when appropriately managed and monitored, outsourced revenue collection may establish a foundation for more effective and efficient local government revenue administration.

     Possibility of Litigation

Aggrieved citizens would find that challenging the validity of the rates or assessment rather than the capacity of the agent that is acting on behalf of the taxing authority, the more effective strategy. Where the challenge is successfully sustained, it disposes of the issue once and for all.



During the mid-term anniversary of Gov. Raji Fashola in 2009 the Director of Publicity of an opposition political party, alleged that the Lagos state government was encouraging waste in the system by paying at least N36 billion (thirty six million naira) to the Alpha-Beta Consulting from the internally-generated revenue of Lagos which amounted to over N240 billion (two hundred and forty billion naira).

Indeed allegations are rife that Alpha-Beta Consulting Ltd is paid at least 15% of Lagos State’s IGR which is said to amount to over N240 billion (two hundred and forty billion naira).

It is important to observe that the engagement of tax consultants in the area of revenue collection did not start with Gov. Raji Fashola or his predecessor. It is alleged that Col. Buba Marwa contracted revenue collection to Olusola Adekanola and Co. during his administration.

There are at least two issues at stake here which borders on probity and accountability, namely the fact that the amount being paid to the tax consultant in Lagos is a little staggering and that their terms of engagement seem to be shrouded in secrecy.

Arguments in favour of the use of tax consultants

Here are some of the arguments put forward in favour of the retention of tax consultants

Increase in Internally Generated Revenue in the States;

Update of Master Register;


There is a need to streamline the powers and activities of the tax consultants and to curtail their excesses by the putting in place a legal and administrative framework to regulate their activities, as the revenue drive of both the state and local governments cannot be used as a basis for the violation of the rights of the prudent tax payer.

Olufola Wusu Esq.

Copyright © 2012

Counsel at Megathos Law Practice

Olufola Wusu is a Solicitor & Advocate and Intellectual Property consultant

He can be reached at

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by Olufola Wusu Esq

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Filed under Taxation


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