In an insightful interview with Benjamin Alade, Tokunbo Akande, Special Adviser to the Executive Chairman of the Lagos Internal Revenue Service (LIRS), sheds light on the vital importance of timely tax filing for employers and businesses. He underscores the crucial role of tax compliance in maintaining a robust economic environment.
The process of tax filing in Lagos begins with understanding the taxpayer’s obligations. Akande clarifies that it’s not the taxpayers themselves but their agents – employers and service providers – who are responsible for filing. These entities act as government agents, withholding a portion of their employees’ or service vendors’ compensation as taxes and remitting it to the government.
Akande highlights that both corporate entities and individual sole proprietors are bound by law to deduct taxes from their employees’ salaries and remit them to the government. This also applies to payments made to service providers like auditors, where withholding taxes are necessary.
The benefits of prompt tax filing are manifold. Akande stresses that it contributes to effective economic planning by providing comprehensive records of financial transactions. These records are crucial for building a robust database, which aids in understanding economic activities and projecting future trends.
Regarding the consequences of late filing, Akande emphasizes that the deadline for filing PAYE yearly tax returns with the LIRS is January 31. While financial penalties exist, the more significant deterrent is the legal implication. Non-compliance can lead to prosecution and potential conviction, tarnishing the reputation of the involved entity far beyond the financial penalties.
The LIRS, operating under federal laws, has undertaken reforms to facilitate compliance. These include digitizing the filing process, allowing taxpayers to complete their submissions remotely and efficiently. However, failure to file on time can result in a fine of N500,000 for corporate entities, along with damaging their brand reputation.
On expanding the tax net, Akande mentions the initiatives at both federal and state levels. The LIRS employs a multi-channel approach, including continuous enumeration exercises and extensive tax education and enlightenment campaigns. The goal is to ensure that every taxable entity is captured in the tax net and that those within it pay their due taxes. The agency also leverages legal provisions to encourage tax compliance, activating laws that mandate tax compliance for certain activities.
This comprehensive approach by the LIRS signifies a committed effort to enhance tax compliance and expand the tax net in Lagos, thereby contributing to the state’s economic stability and growth.
