Nigeria: Lagos and Federal Government Partners for Effective Taxation

Nigeria: Lagos and Federal Government Partners for Effective Taxation
  • Nigeria’s economic epic centre, Lagos has decided to partner with Nigeria’s Federal government to improve tax collection

Nigeria: Lagos and Federal Government Partners for Effective Taxation. Following an impressive run for Lagos in tax collection, the commercial capital of Nigeria has decided to take its quest for more tax collection to the next level.

Lagos State through the Lagos Internal Revenue Service, LIRS and the Federal Government through the Federal Inland Service has just sealed a Memorandum of Understanding (MoU) that allows for a joint investigation, automatic exchange of information and joint tax audit.

The MoU signed under the supervision of  LIRS Chairman; Mr Ayodele Subair, his counterpart at FIRS; Mr. Muhammad Nami,  the Lagos State Governor; Gov. Babajide Sanwo-Olu and Minister of State, Budget and National Planning, Prince Clem Agba takes off with immediate effect.

Lagos and Federal Government Partners: More Rationale of the MoU

With the agreement in place, both FIRS and LIRS will be able to collaborate effectively in information hearing that will allow for effective tax administration and enforcement.

A major perk about the MoU is that information sharing is instant and automatic with little or no human intervention as approval of regulation from the Ministry of Finance, Budget and National Planning is also sought out.

This partnership will also ensure the implementation of a presumptive tax regime that will cover the administration of Personal Income Tax and Ground Rent administration in Lagos State.

Both agencies also agreed that this partnership is coming at a time when revenue generation plays a critical role to enable the delivery of social development and the provision of critical infrastructure that allows businesses to thrive.

An instance cited on the projects that can be accomplished from the proceeds of taxation that is envisaged from the MoU is the Fourth Mainland Bridge which has been conceived for many years now to open Lagos up, connecting several communities.

Nigeria: Lagos and Federal Government Partners for Effective Taxation
The signing ceremony

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The Governor’s Take

The Governor of Lagos State, Sanwo-Olu revealed that the MoU has been in the pipeline since 2022 with the intention for the two agencies to contribute their quota in the closing in of the huge tax to Gross Domestic Product, GDP  deficit currently put at 6 to 8%.

See the statement from the FIRS chairman while sealing the MoU;

“We will carry out a joint audit and investigation as a team, we will also conduct an automatic exchange of information for gathering data for tax administration.

“With that information, we would be able to carry out tax administration seamlessly.

“In addition to that, what we are going to introduce administratively because of our joint operation, is to ensure that we can implement a presumptive tax regime as far as issues of tax administration are concerned.

“But that is going to happen after we are done with the regulation we are putting together with the Ministry of Finance, Budget and National Planning, which the Minister of Finance would issue in due course,’’ he said.

“Another key issue I want to emphasise is capacity building.

“There are certain things we know as FIRS and would like to share with the State Inland Revenue Service. And there are also areas of specialisation you have that we expect you to share with us through capacity building.

“The major objective of this collaboration is to raise enough funds for Lagos State government and the Federal Government to be able to fund their budgetary requirements,” the FIRS boss said.

“Without funds received by the government through taxes, governments all over the globe would not be able to provide critical infrastructures such as roads, hospitals, internationally rated airports, and schools and cater for security and safety of their citizens.

“With this collaboration, we are confident that Lagos State would earn more revenue from taxes and be able to deliver a 4th Mainland Bridge, Lekki International Airport, which it has already conceived and other critical infrastructure,’’ he said.

See the full comments of the Lagos State Governor during the ceremony:

“Other nations even within the Sub-Sahara region are doing between 14 to 15 percent.

“If you talk about developed countries, they are doing 35 to 40 per cent and that is what makes them developed countries.

“It is really an avenue for you to support your government and hold them accountable,” he said

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