Document background
The Tax Allocation Agreement serves as a crucial instrument in Nigeria's fiscal governance framework, providing a structured approach to managing tax revenue distribution between different governmental entities. This document becomes necessary when establishing or updating revenue sharing arrangements between federal, state, and local governments, or when implementing new tax collection and distribution mechanisms. The agreement typically includes detailed allocation formulas, collection procedures, reporting requirements, and compliance mechanisms aligned with Nigerian tax laws and constitutional provisions. It is particularly relevant in cases involving multiple tax authorities or when implementing new tax revenue sharing schemes, ensuring clear delineation of responsibilities and rights among various governmental stakeholders.
