The FIRS-DGFIP Memorandum of Understanding: Key Legal Considerations for NRS

The concerns expressed by the general public regarding the Memorandum of Understanding between Nigeria and France are well-founded, particularly in light of the legal obligations imposed on the Nigeria Revenue Service (NRS).  In this legal update, we consider some of the key legal obligations binding on the NRS, in relation to said FIRS-DGFIP Memorandum of Understanding.

1. The Obligation of Secrecy & Confidentiality (NTAA/NRSEA)

The NRS is subject to strict confidentiality and secrecy obligations under Sections 142 and 143 of the Nigeria Tax Administration Act (the "NTAA"), 2025. The general rule mandates the confidentiality and secrecy of all taxpayer information. Under Section 143, taxpayer information may only be shared in the following limited circumstances:

a) Prosecution: Information may be shared only as necessary for the prosecution of a tax offense.

b) Double Taxation Treaties: Where the law establishing the treaty allows for sharing information to claim allowances or relief from income tax.

c) Tax Information Exchange Agreements (TIEA): Where information is shared within the context of a TIEA or a Double Taxation Agreement (DTA) between Nigeria and another country that contains specific provisions relating to information exchange.

2. Data Protection Obligations under the NDPA

Sharing taxpayer data involves significant implications under the Nigeria Data Protection Act (the "NDPA"). These include:

(a) Lawful Basis: The NRS must comply with the NDPA, which requires a lawful basis for any processing or sharing of personal data. For public authorities, they must show that the have a legal obligation to share tax payer information. While Section 143 of the NTAA empowers the NRS to share information, it clarifies that such exchange must occur within a defined legal framework (prosecution, DTAs, or TIEAs). Thus, any disclosure outside this framework fails the lawful basis requirement and would likely constitute a breach of the NDPA.

(b) Adequacy & Transfer Impact Assessments: The NRS must ensure that any country receiving taxpayer data has adequate data protection laws or that appropriate safeguards are in place. As an EU member, France is generally deemed to have an adequate level of protection. However, the NRS cannot assume adequacy for other countries under Nigerian DTAs without first conducting a Transfer Impact Assessment (TIA) to evaluate the recipient's legal safeguards.

(c) Compliance with Data Protection Principles: Even when sharing data under a lawful framework, the NRS must adhere to core data protection principles, which includes:

i. Data Minimization: Sharing must be necessary, proportionate, and limited to the minimum information required.

ii. Accuracy: Information must be accurate and up-to-date.

iii. Integrity & Confidentiality: Data must be transmitted and stored securely to prevent unauthorized access.

iv. Accountability: The NRS must maintain records to demonstrate that every disclosure complies with both tax and data protection laws.

It is useful to note that failure to adhere to these principles could render the data sharing unlawful and subject to legal challenge, even if the sharing is technically authorized under the NTAA.

Key Takeaways

These provisions establish a coherent framework that serves as a critical guardrail for Nigerian tax sovereignty. Some the practical implications are that:

1. No Unilateral Access: France (or any foreign authority) cannot unilaterally demand access to taxpayer information outside the specific scope of a treaty.

2. Strict Purpose Limitation: Exchange of information must occur strictly for the purposes defined in the NTAA, subject to Nigerian oversight. The NRS must retain ultimate control over tax payer information. 

3. MoU Limitations: A Memorandum of Understanding (MoU) that is solely technical, advisory, or focused on capacity-building does not satisfy the criteria of a Tax Information Exchange Agreement. Consequently, an MoU may not, on its own, serve as a lawful basis for the disclosure of taxpayer information.

This publication is based on the authors' independent analysis, observations, and experience advising clients on regulatory and compliance matters. It is provided solely for informational purposes. The views expressed herein do not constitute legal advice or an official recommendation, nor do they represent the position of any institution or client. Readers should seek specific professional advice before relying on any part of this publication.