Lagos State has implemented several changes to revamp the existing income-tax regime with key objectives of simplification of language, ease of compliance, and scrapping of obsolete provisions.
Lagos State plans to generate more than two-thirds of its N3.366 trillion 2025 budget through internally generated revenue (IGR).
Deputy Director, Information and Communication Technology (ICT), Lagos State Internal Revenue Service (LIRS), Dr Rasheed Olu-Ajayi, said the goal of increasing digitisation of the state’s tax system is to make the process concise, clear, easy to understand, less in disputes and with greater tax certainty to taxpayers.
To this end, there have been a comprehensive review of the tax regime following stakeholders’ inputs.
He gave a brief overview of what employers filing of annual tax returns involved: “They are expected to have been pre-registered on the Enterprise Tax Administration system, where they would have had their payer ID as the log in username, and they would have had a corresponding password. This involves both individual and corporate entities. So once they have those requirements, they’re able to log in to the Enterprise Tax Administration system, when in, they’ll navigate to the annual returns filing system. And from there, they’ll be able to upload their schedule of their withholding taxes. Their projections for the year and their annual returns for the year. The templates are quite there and explicit so no one can miss that. Once that information is uploaded into the system, the tax can be computed.”
He also emphasised the need for employers to file their tax return with your agency with the service on time.
He said : “It’s a regulatory requirement; it’s a statutory requirement which is the Federal Government Act, Personal Income Tax Act 2011 as amended. where all employers of labour and individuals are expected to file their returns from the first of January of every year to 31st of January of that same year. So not doing so will be acting against the law and there is a penalty for not complying with such.
“So that’s why it is imperative for everyone to file their returns within this window. For corporate entities it is generally from the first of January to 31 of January. For individuals, it is from the first of January to 31st of March”.
He further spoke on measures put in place to simplify the process for taxpayers.
He noted that there are new things in place in the Enterprise Tax Administration system with several modules added to the application which may not necessarily be in line with the annual returns filing system.
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“The Enterprise Tax Administration system has been fully developed. The application is continuously being improved on a daily basis. So in the last few months, we’ve added things such as the Geographic Information Systems (GIS), Adequacy Returns on it. As of last year, people can now apply for tax clearance online, which was never possible. So, a lot of new innovations have been added to the system.
“It is one of our core values in the agency to be very Innovative. We have to be professional and that is why we’re doing everything possible to ensure that the application becomes a lot more seamless and the usability is more friendly for people to be able to use the Enterprise Tax Administration system,” Olu-Ajayi said.
He clarified that the agency has not increased the number of requirements for corporate tax payers.
“We would not take anything other than what has been prescribed by law for people to file their returns, which is their annual returns to projections, their withholding taxes. And then their development levies which have been prescribed by law for them to upload. And once they are uploaded, those documents we could say that compliance requirements have been completed with regards to annual returns,” Olu-Ajayi said.
On issue of penalties for late submission and non-compliance.
Said “Compliance has been very good. I mean since the emergence of e-tax from 2019, the agency has continuously had an increase in the number of people who fill their returns on a yearly basis. That said, we would say that the rate of compliance is 100 per cent because there’s still a lot more people out there who are yet to be captured into the tax net. So according to the regulations, anyone who does not meet or who does not comply with tax regulations would be asked to pay N50,000. It’s very infinitesimal. And you can tell that the law is archaic, maybe the new tax reform will be more stringent on the penalties for non compliance. So for individuals is N50,000 and for corporate entities is 66, 500. But I can assure you that the new tax reform bill which is expected to be passed into law will probably have more stringent penalties.”
On incentives, he said while the agency was constrained by extant laws.
“The agency would have loved to do that, but our products are hard to sell. The reality is that we are only complying to the laws of the Federal Republic of Nigeria. Unfortunately tax laws in Nigeria do not give incentives for people who comply early. The only thing is that they would not love to soil their names as a result of tax evasion which perhaps is a benefit for people doing their legitimate business. And then in some cases, when the agency is making announcements on people who comply with tax obligations such names can also pop up in our publications that these individuals are 100 per cent compliant with their tax payment. So those are the kind of benefits that you have in this part of the world,” Olu Ajayi said.
On the efforts has the agency has made to ensure those travelling abroad or relocating have access to their tax clearance documents in time, he responded that the government support genuine travelers.
Said he: “Obviously when they present their traveling documents at the foreign embassies, they will be required to have your tax clearance. Our advice is for those going to the diaspora to present complete documents. So, we pray for people looking to go to the Diaspora to be able to have a hitch free process. They need to comply with tax regulations so that their tax clearance can be part of what they can present at the embassies.”
