The Federal Inland Revenue Service (FIRS), yesterday, signed a Memorandum of Understanding (MoU) with the Lagos Internal Revenue Service (LIRS), on joint tax audit, investigation and automatic exchange of information.
The MoU signing ceremony which took place at the State House, Marina, Lagos State, was executed by the Executive Chairman, FIRS, Muhammad Nami, and the Executive Chairman, LIRS, Ayodele Subair, which was witnessed by the Minister of State, Budget and National Planning, Prince Clem Agba, and the Lagos State Governor, Babajide Sanwo-Olu.
The MoU, which establishes a joint FIRS-LIRS Audit and Investigation team, obliges the two tax authorities to share relevant information that would assist both parties in their tax administration and enforcement roles, while also providing for capacity building between both authorities.
Speaking during the ceremony, Nami was quoted in a statement to have said that the cooperation will enable the two authorities to work as a team to achieve set objectives.
He said: “We will carry out joint audits and investigations 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 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 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.”
We will carry out joint audits and investigations 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.
Tax systems
Nami also told Lagos residents 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.”
He noted that without the funds received through taxes, governments all over the globe would not be able to provide critical infrastructure such as roads, hospitals, internationally rated airports, schools and be able to cater for the security and safety of their citizens.
He added that “with this collaboration, 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, Sanwo-Olu informed that this collaboration commenced over a year ago with the intention to improve the fiscal space of the country.
He noted that the country’s tax-to-GDP ratio, at around six to eight per cent is unimpressive and unacceptable, as other nations within the Sub-Saharan region are doing better.
“Other nations, even 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.”
The Governor noted that with this collaboration, the State is now on track to rise above its N1.7 trillion to within the region of N4 to N5 trillion.
The Minister of State, Budget and National Planning, commended the two tax authorities for this landmark agreement, and appealed to other states to follow suit.
