The 1999 Constitution

Section 163

Where under an Act of the National Assembly, tax or duty is imposed in respect of any of the matters
specified in item D of Part II of the Second Schedule to this Constitution, the net proceeds of such tax or duty shall be distributed among the States on the basis of derivation and accordingly –

(If by any Act of the National Assembly the Federal Government has imposed and collected tax or any kind of duty which has been specified under Item D of Part II of the Second Schedule of the Constitution (All the schedules are contained after Chapter 8 of the Constitution), the net proceeds i.e. after appropriate deductions have been made, will then be distributed among States in Nigeria on the basis of derivation.)

Section 163 (a)

where such tax or duty is collected by the Government of a State or other authority of the State, the net
proceeds shall be treated as part of the Consolidated Revenue Fund of that State;

(In situations where such tax or duty mentioned in the previous section is collected by the Government of a State or other authority of the State, then the net proceeds from it will be seen to be the Consolidated Revenue Fund of that particular State.)

Section 163 (b)

where such tax or duty is collected by the Government of the Federation or other authority of the Federation, there shall be paid to each State at such times as the National Assembly may prescribe a sum equal to the proportion of the net proceeds of such tax or duty that are derived from that State.

(Where the Federal Government also collect such tax as contained in the second schedule, there shall be paid to each State an amount prescribed by the National Assembly which amount shall be equal to the proportion of the net proceeds of such tax or duty that are derived from that State.)

Section 164 (1)

The Federation may make grants to a State to supplement the revenue of that State in such sum and
subject to such terms and conditions as may be prescribed by the National Assembly.

(This is to the effect that subject to the terms and conditions stipulated by the National Assembly, the Federation can decide to make grants in aid of a State.)

Section 164 (2)

The Federation may make external grants to a foreign State or any international body in furtherance of the foreign policy objectives of Nigeria in such sum and subject to such terms and conditions as may be prescribed by the National Assembly.

(This is to the effect that the Federal Government of Nigeria can decide to make external grants to assist a foreign nation. These grants can be seen from the perspective of advancing our foreign policy. It is however subject to terms and conditions as may be stipulated by the National Assembly.)