LIRS eye 100% annual tax returns in 2025 – Akande

In this interview with OLUWAKEMI ABIMBOLA, the Special Adviser to the Chairman of Lagos State Internal Revenue Service, Abideen Akande, sheds light on the progress and challenges of tax compliance among businesses in the state. With over 30,000 active PAYE operators filing their annual tax returns, LIRS is pushing for full compliance before the January 31, 2025, deadline. Excerpts:

you mentioned that the LIRS has been gaining traction in the area of corporate filings. There are about 40,000 active PAYE operators in Lagos. What is the level of compliance?

We have seen over 30,000 of them filing, so we are almost 80 per cent in compliance with last year’s record. You understand? So, if you have that, it gives you some measure of comfort. We don’t want any drop in that. We want to move close to 100 per cent as much as possible. The truth of the matter is that it’s a legal requirement. So, if you fall short of it, there are penalties. The penalties may not be something substantial, because if you’re a corporate body, the penalty is only N500,000, but if you are an individual that is a sole proprietorship or an enterprise, and that’s the individual that’s not the corporate entity, yes, the amount is just N50,000, but the key thing there is it’s not about the penalty itself. It’s more about the fact that the image of your enterprise is at stake because it means you are not compliant.

So, it’s also a negative for you in terms of maybe good governance at your own end as well. So that’s why we are saying that. Why do you want to go through that when you have made everything easy for you to do?

What you are filing, don’t forget, is just what you did on behalf of the government last year; it’s not your money; it’s not your money that you remitted.

All the law says is that, because you have done that for the government, please now present your report, because you are just like you employed an agent to look after your rented properties. After the person has collected and has given you the money. But at least at the end of the year, they will still give you a report that says, ‘I collected from Mister A, Mister B, and Mister C, and I’ve taken my own commission.’ In the case of the agent, all they had to do was report, ‘I had 15 employees last year; these are their names, and these are their tax identification numbers. This is how much I paid them as their salary. This is how much I deducted on behalf of the government from their salary. ‘

Of course, he will show the amount that he has remitted to the government. Then he will also report on that. This is the receipt that I got from you, and this is how much I’ve paid you, so my account is fine. But don’t forget that he was collecting the tax on behalf of the government. He is not a tax authority, so he doesn’t have a final say on how much, because he is not a tax man; he is just trying to interpret the law the way he or she understands it. So, it is a tax authority that will go through the books and say, eventually, that what you have done is correct, or what we have done is not correct, or you have overcharged Mister A so that Mister A will get a tax refund, or you have under-taxed Mister B, so that Mister B will have to go and look for the money and give it to us.

Don’t forget, when you talk of employers of labour, it is not just only employees, because they also employ other people who are not their employees, like they employ consultants, lawyers, and what have you. And they pay those money fees to them as well. But in paying fees to them, there’s also the element of tax, the withholding tax, that they have to charge. So, they also give that report, saying, ‘We employed this lawyer or that consultant, that auditor, in 2024, and I paid that person N100, and your withholding tax rules say I should remove N5. That N5 I have removed, and this is the record of it.’ So those are the things that they are supposed to submit to us.

When we are doing the one for the employees as well. That one, occasionally you may need to apply what we call some reliefs or allowances; if the person is subscribed to a pension scheme, you give some allowances. If they have subscribed to national health insurance, if he or she has subscribed to what you call life insurance. You could have given all those reliefs, but because you are not the final tax authority, you need to present all that data to us. The data that you present to us now, between the end of January and the end of March, don’t forget that Mister A, who you have taken tax from and have granted some relief, also has an obligation to file before the 31st of March. So, I will now say that I collected this much from you, my employer, as my salary, and you have deducted this much from me. So, when you do that, the tax authority will now use your own to verify claims made by your employers. That is the purpose of all this tax filing.

It’s quite clear, very simple, and even educative.

Yes, that’s what I tell people. Tax is as simple as you want to make it. I wasn’t a tax person as I worked in the bank. And when I was there, I never bothered. I just had an idea of what my net pay was. So, if I have a variation of plus or minus five per cent I take it. But if the variation now is huge. Then I’ll call the guys in financial control, and they will explain it to me.

The tax itself is a burden; it is a financial burden. So, all the things that we are doing are just to reduce the cost of compliance, and that’s why we have deployed ICT facilities, which we have made available to people. Our e-tax platform is working perfectly. They’ll just go in there. Anything that you want to do from registering yourself as a taxpayer or as an agent, that is as a company that’s employing people, it is as easy as ABC. What you need as a corporate person is to identify yourself, and the easiest way to identify your CAC RC number is. As an individual, the primary identity number that we have, in general, is the NIN. Before that, we were using proxies like BVN, but now NIN is a number. Once we have your NIN, we know who we are dealing with, all your transactions are obvious and we can move on from there. So, once we have done that, even if you have any challenges in moving forward in completing what we have started, we have a chatbot on the system with which you can interact, and it will address all your issues.

I’m not social media-savvy. The only social media I use is WhatsApp; it can be called social media. But the truth of the matter is that all our social media handles are working perfectly: Facebook, LinkedIn, X, Instagram, or whatever. Yes, I know their names; I just intentionally engage. I’m an ICT buff. I love technology, but social media, I just decided to put them to the side. All those platforms are working. And of course, the telephone lines are also working, with which you can reach our help desk anytime, and they will attend to you. I know that our help desk is working because even during COVID-19,. Before now, when technology was this advanced, it worked perfectly for us. We are good in that area as well.

What is the deadline for corporations to file these annual tax returns?

The deadline is 31st January 2025, to report on things that happened from the first of January 2024 to December 31, 2024.

Is it possible to get an extension or for such a request to be made by a PAYE operator?

It is not impossible, but we tried as much as possible to discourage it. So that’s why we are saying that people should try and not wait till the last week of January because by that time it will just be crowded. I always tell people. It’s an IT platform. The bandwidth is known. You understand. So, there’s a limit.

It is like this door. Now, when we are coming, I’m sure three people can’t enter through this door at the same time, but one person can. But imagine that from the morning I opened this door and people have been coming in, I’m sure by now, we would have had close to 1000 people in this room. But imagine if 10 people want to come in and they want to come at the same time; it would be almost chaotic. So don’t wait till that time. Because you are reporting on what transpired last year, you should have all your records ready. So don’t wait till then, and then, because it’s an IT platform that is open 24/7, you can do it even on Saturday or Sunday. You don’t have to be Monday to Friday. You understand. So, the platform is there, and you can do it any time of the day.

From your experience, what are some of the common mistakes businesses make when filing their annual returns?

The major problem that we’ve noticed is that you see, some of the operators usually do not fully complete the records of their employees. That is not helpful, because, for us, you are just an agent. The primary taxpayer is the employee, and that person should get value for what you have deducted from him or her. So, if they don’t complete all those records, it doesn’t give us adequate data to process information completely.

Okay, what are the exemptions from the filing?

Like the TIN, as in the Tax Identification Number. Under the new bills that are being considered now, it’s likely to force compliance by providing your Tax Identification Number. Most likely, there will be some penalty even under the withholding tax regulations; if you don’t put your tax identification number, you get surcharged double the rate. So, if you paid N100 and the withholding tax rate is N5, it will be deducted, but if your TIN is not there or your Taxpayer ID, then it will be N10. This is actually to force people to actually have their TIN.

In the next two or three years, I’m not too sure anybody will be able to do any meaningful transaction in Nigeria without a tax identification number.

Could you explain the difference between a tax identification number and a taxpayer ID?

Maybe it’s not proper to use the word legacy, but it was before Nigeria was ready to have a uniform tax number. Before the world, we are seen as only one entity. If you leave the shores of Nigeria today, you will need to before you can do any transaction in any of those other countries, you need to provide your Tax Identification Number. So, before Nigeria was not ready, Lagos went ahead to do its taxpayer ID. Eventually, it will be a legacy number that will be running in the background. You understand that what is at the forefront will be the Tax Identification Number that is issued by the Joint Tax Board. That will be the primary number for everybody in this country, which you can use anywhere in the world.

Yes, in Lagos, we will still issue, when we go on our platform, we issue you the taxpayer ID, but automatically, our system can generate the JTB TIN. Remember when the banks transitioned to 10-digit account numbers? As of today, I can tell you have your 10-digit number for the bank, but underneath that, your old account number is still running. Yes, it’s still running. So, that’s how it works: your Payer ID will still run in the background, whereas the TIN now sits on top of that. The Payer ID holds your records from the past years.

How can one get the taxpayer ID?

It is as simple as ABC: go to our E-tax platform; once you log in, key in your NIN and other details, and the NIN will be used to validate all the information you have given. Once it is validated, then the system will issue your taxpayer ID. The next time you want to log in, you log in with your Tax Payer ID automatically. Also, I’m sure they can generate the TIN for you. You can save it on your phone and be able to access it anywhere.

I’m sure the bankers will soon be sending letters to people to come and validate their Tax Identification Numbers. I’m telling you this because the regulation is very clear. The Joint Tax Regulation was signed last year by the minister and became operational this year. You have a deposit in the bank, and you are entitled to interest payment. That interest payment is subject to withholding tax. But if I don’t have your TIN, instead of charging you at x, I will charge you at 2x. I’m sure that they will be reaching out through phone or whatever to say, ‘Please submit your TIN if you don’t want to be surcharged double the rate. So, it’s something that will catch up.

Considering the issue of financial inclusion that our regulators have been hammering on, do you think this new regulation with the WHT will not make people avoid the banks and keep their funds at home to avoid paying taxes?

You are already paying the tax anyway because you have a deposit there. Whether you supply your TIN or not, you are already paying. When the bank is paying you interest that your deposit has earned, automatically, they would take what they should have taken. But ideally, those are the things they can aggregate together and share with you so that when you are filing your returns as well, you can include them. You can also tell the government that you are a taxpayer. ‘I am a taxpayer, so I need to know how you are spending my money,’ and when they ask how much you have paid, you can say, ‘See, the bank deducted this amount from my account as taxes.’ That’s why, if you see the bank statements from banks that are outside our jurisdiction on a quarterly basis, they will surely advise you of the amount of money they have deducted as tax for you, which they have remitted to their tax authority.

The requirement is not new. So, the financial inclusion that we have will not be impeded; if anything at all, it will be accelerated. You have been keeping your money in the bank it never occurred to you that you have been paying taxes but now, you will get a notification that you have been paying taxes. So, it gives you a sense that you are a good citizen of this country. I always say that tax is the one thing that confirms your membership or your citizenship wherever you find yourself because it’s like that is your membership fee that you are paying to the government.

Talking about individual filing, which is different from corporate filing, right? How does it work?

Individuals have an obligation to file their tax returns, and they don’t have to wait till March. The individual who already knows how much he earned from January 2024 to December 24, nothing stops him or her from filing now. You can file now.

Taxpayers may require substantial assistance from LIRS, even though you have mentioned that the website, the e-tax platform, is very easy to use. So how can businesses reach out to LIRs on this?

Now, I’ve said this before. For the convenience of everyone, we have adopted ICT, but the truth of the matter is that not everybody is ICT-savvy. So, the spectrum starts from zero to 100. There are people who are at zero; they just don’t know anything about ICT. We have factored that into our processes. And there are some people who are midway, and there are some people who don’t need our assistance. They are good.

They can use the chatbot that we have on the system; since you know how to use it, just ask the question, and it will tell you what to do. You can also call our numbers. We have agents and staff members that will attend to you. If they can’t solve the problem, they will take your details, because it’s being recorded, they will escalate it, and they are bound by our service commitment to get back to you within 24 to 48 hours max.

Then some people may have the skills but don’t have the equipment or the infrastructure. So, in every one of our offices, we have a dedicated Help Desk, and it is at zero cost.

I want to emphasise that it is at no fee to the taxpayer. You go there, and they are to help you structure your report, help you file it, and then you sign up yourself. They will take unnecessary precautions. There are some necessary things that you need to sign to show that you are the one who said they should upload these records for you. Aside from that, for some of our taxpayers or tax agents, we have dedicated account officers or relationship managers who liaise directly, one-on-one, with them.

That service is to the top PAYE operators because they provide substantially all that the state is using for all the things that people see. So, they need special attention. But for others as well, all these facilities are there. And if you have any challenges, get through to our help desk and then the call centre. All these things are put in place just for the convenience of the taxpayer.

Can you recall instances where some of the people manning the help desks demanded money from taxpayers for assistance?

If it is escalated, the person will be dismissed. If it is done and the taxpayer reports it and it’s confirmed, it is a dismissal. The rule is very simple. You are paid as an employee to assist taxpayers to comply. And it is clearly stated that’s what you have been paid to do. You collect your own salary every month. So, if you do it, ???????