To keep track of its ambitious ₦723.817bn revenue projection for the 2021 fiscal year, the Lagos State Government via the Lagos State Internal Revenue Service is leaving no stone unturned as it has decided to clamp down on both foreign and local tax defaulters.

The seriousness of LIRS in increasing revenue generation was once again noticed when it went all out sealing defaulting firms especially in the hospitality sector for failure to meet up with the extended deadline of June 2021 in remitting tax liabilities to the state’s coffers.

This action of the state’s agency connotes the resumption of sealing premises for tax default since it decided to suspend it among other palliatives to cushion the effect of the Covid-19 pandemic on businesses. This also holds that the LIRS is now aggressive to boost state revenue, ensuring an up-to-date tax payment to complement the government’s effort to provide a conducive environment for businesses in the state.

Affected firms will now pay an additional ₦250,000 as a distraint cost to the LIRS.

On the flip side of enforcing tax compliance, the LIRS claims that less than 65% of the corporate organizations operating in the state paid taxes, pointing to gross tax evasion in the state.

Affected firms

In a recent disclosure on the measure taken, Mr. Seyi Alade, LIRS’s Director of Legal Services had stated that the affected firms were tracked down due to tax liabilities spanning 2013 to 2020 after the expiration of a 3 months extension of the deadline for filing annual returns from March 31 to June 30, 2020.

The affected firms which include a Chinese firm, restaurants, hotels, and guest houses are; Café Trance, Maple Cottage, Imperial Chinese Cuisine, New World Inn, Inspiro Galaria, Grace Garden Event, Cristabol Place, Queens Park Event Centre, Axor Suites, Blue Moon Hotel, Citi View Hotel, Kamal’s Crib, 7th Heaven and Infinity Platinum Bar and Restaurant. gathered from a report by the News Agency of Nigeria that some of the affected firms made payments regarding their liabilities in the course of the distrain/enforcement and had paid an additional ₦250,000 as cost of the distraint.

LIRS’s Procedures

  • It is pertinent to state that by extant laws before LIRS can seal any premises for tax default, it must have sent two letters to the management of the affected firm, reminding it of tax liabilities.
  • The letters required to be sent are Demand Notice and Letter of Intention to Distrain. In this case, the LIRS attested to have sent both letters to the affected firms.
  • The LIRS currently runs an initiative called ‘IBILE’ to get more taxpayers into the tax net.
  • The “IBILE” initiative is an electronic platform that represents the divisions in Lagos – Ikorodu, Badagry, Ikeja, Lagos, and Epe (IBILE).
  • Recall that the Lagos State 2021 budget is expected to be funded by ₦512bn contributions of the Lagos Internal Revenue Service while the deficit of ₦192.494bn was projected to be funded by a combination of internal and external loans.
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