The Lagos Internal Revenue Service (LIRS) is set to implement a new measure to collect outstanding tax liabilities from employers who have failed to remit taxes. According to a recent notice, the LIRS will direct banks to debit the accounts of defaulting employers, as provided for in Section 60 of the Nigeria Tax Administration Act (NTAA). This move is part of the implementation of the country’s new tax laws, which came into effect on January 1, 2026.
The LIRS notice explains that when a taxpayer fails to settle outstanding tax liabilities, the agency may instruct banks, employers, tenants, debtors, or other individuals holding money on behalf of the taxpayer to pay the owed amount. This includes agents, business partners, and anyone owing money to the taxpayer. Once a substitution notice is issued, the person served is required to remit the specified amount to the LIRS from funds belonging to or payable to the defaulting taxpayer.
The NTAA provides the LIRS with the authority to take this measure to ensure compliance with tax laws. The agency’s move is aimed at increasing tax revenue and promoting a culture of tax compliance among employers and individuals. The LIRS notice serves as a reminder to taxpayers of their obligations under the new tax laws and the consequences of non-compliance.
In a related development, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, had earlier clarified that the government would not debit personal accounts over tax remittances. However, the LIRS notice suggests that the agency is taking a more proactive approach to collecting outstanding tax liabilities from employers.
The implementation of this measure is significant, as it highlights the government’s efforts to boost tax revenue and ensure compliance with tax laws. The move is also expected to impact businesses and individuals who have failed to remit taxes, as they may face penalties and fines for non-compliance. As the LIRS continues to enforce the new tax laws, taxpayers are advised to review their tax obligations and ensure compliance to avoid any potential penalties.
