Lagos Targets N5tr Tax Revenue From Planned FIRS, LIRS Joint Tax Operations, Audit

Caption: Executive Chairman, FIRS, Muhammad Nami signing the MoU between Federal Inland Revenue Service (FIRS) Lagos State Internal Revenue Service, on collaboration on Exchange of Information and implementation of Joint Tax Audit and Investigation Exercise, at the State House, Marina, Lagos State, on Monday, February 6, 2023.

Governor Babjide Sanwo-Olu of The Lagos State, on Monday expressed confidence that the Memorandum of Understanding (MoU) signed between the Federal Inland Revenue Service (FIRS) and Lagos Internal Revenue Service (LIRS) could improve the state government’s tax revenue collections by as much as 194.12% from the current N1.7tr to N5tr yearly.
Talks leading to the MoU, according to a statement by Johannes Oluwatobi Wojuola, Special Assistant to the Executive Chairman, FIRS (Media & Communication), will see both tax authorities collaborating on joint tax audit, investigation and automatic exchange of information, according to Governor Sanwo-Olu, commenced over a year ago with the intention to improve the country’s fiscal space.
Nigeria’s tax to GDP ratio at around six to eight percent, he noted, was unimpressive and unacceptable, at a time other nations “within the Sub-Saharan region are doing between 14 to 15%.
“If you talk about developed countries, they are doing 35 to 40%, and that is what makes them developed countries because indeed, it is really an avenue for you to support your government and hold them accountable,” he stressed.
In his message to the people of Lagos, Nami stated that “civilisation globally does not happen by accident,” but that “people or citizens of various jurisdictions, states and countries globally make it happen through the taxes they pay.”
Speaking at the ceremony, The Executive Chairman, FIRS, Muhammad Nami, said the cooperation would enable the two parties to work as a team to achieve these objectives.
“We will carry out joint audit and investigation as a team; we will also conduct automatic exchange of information for gathering data for the purpose of 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 are able to implement presumptive tax regime as far as issues of tax administration is 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 Honourable Minister of Finance would issue in due course.
“The presumptive tax would be for the purpose of Personal Income Tax and also Ground Rent administration in Lagos State.
“Another key issue I want to emphasize 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 specialization 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 added.
Nami explained that without funds received by the government through taxes, governments across the globe would not be able to provide critical infrastructures such as roads, hospitals, internationally rated airports, schools and be able to cater for security and safety of their citizens.
With this collaboration, he continued, “we are confident that Lagos State would earn more revenue from taxes, and be able to deliver to Lagosians a 4th Mainland Bridge, a Lekki International Airport — which it has already conceived — and other critical infrastructure.
“I appeal to the Lagos State Government to continue to give Lagosians—particularly taxpaying residents—value for the taxes they pay.”
On his part, the Minister of State, Budget and National Planning, Prince Clem Agba commended the two tax authorities for this landmark agreement, and appealed to other states to follow suit.