Abideen Akande, the Chief Compliance Officer of the Lagos Inland Revenue Service (LIRS), recently discussed the state’s annual tax returns and various tax-related matters in an interview with Edidiong Ikpoto. One of the key topics was the LIRS whistleblower initiative launched last year. Akande reported that the agency has received valuable information from the tax-paying public, resulting in over 15 cases, of which approximately nine are actionable. While he noted improvements in compliance and connections within the state, he emphasized that these enhancements cannot be solely attributed to the whistleblower initiative, as other concurrent initiatives are also contributing to this progress.
When asked about the penalties for filing incorrect tax returns, Akande explained that the law does not aim to punish individuals unless they are particularly uncooperative. According to Section 94, if a taxpayer submits an incorrect return without a reasonable excuse, they may face a penalty of N20,000 upon conviction. Additionally, the taxpayer would be required to pay double the amount they under-declared, effectively penalizing those who attempt to cheat the government.
Akande also elaborated on the importance of annual tax returns in Lagos State, which are mandated by the Constitution of the Federal Republic of Nigeria. The Constitution requires every citizen to voluntarily disclose all earned income and pay the appropriate taxes to the tax authority. This self-assessment process means that individuals are responsible for declaring their earnings and the corresponding taxes owed. Currently, the LIRS is running a campaign focused on the obligation of employers, whether corporate entities or sole proprietorships, to file tax returns on behalf of their employees. This responsibility does not absolve employees from their own obligation to file returns.
The obligation to file tax returns rests with both the individual taxpayer and the employer. However, the current campaign specifically targets employers, as they have the necessary information about their employees’ earnings throughout the year. Employers are expected to report the total amounts paid to each employee and the taxes deducted. The law stipulates that the tax authority must prescribe the format for submitting these returns, which should include essential details such as the employee’s name, tax ID, total amount paid, and the tax deducted.
Regarding the timeline for filing these returns, Akande clarified that employers must report their payments from January 1 to December 31 each year. The deadline for submission is January 31. If an employer fails to file by this date, they face significant penalties: a N500,000 fine for corporate entities and a N50,000 fine for individuals. This strict liability offense means that penalties are incurred automatically after the deadline.
In terms of the filing process, Akande noted that Lagos has transitioned from manual filing to electronic filing over the past few years. The only method currently accepted is through the E-tax platform, which can be accessed online at etax.lirs.net. To assist employers who may lack the necessary resources for electronic filing, the LIRS has established specialized centers where dedicated staff provide free assistance.
Finally, Akande highlighted the fundamental differences between filing as an individual and as a corporate entity. While the constitutional requirement mandates individuals to file taxes, companies are primarily taxed at the federal level. In Lagos State, the focus is on personal income tax, which includes the taxes that employers withhold from their employees’ earnings.
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