The Digest:
The Lagos State Internal Revenue Service has invoked its legal authority to issue "substitution notices," directing third parties like banks, employers, and tenants to remit taxes owed by identified defaulters directly from funds held or owed to them. Using powers under the Nigeria Tax Administration Act 2025, the LIRS is targeting unpaid Personal Income Tax and Withholding Tax after issuing established assessments and final demands. The move, aimed at boosting compliance, has sparked debate, with some criticizing it as overreach and others defending it as a standard enforcement tool in efficient tax systems.
Key Points:
- The enforcement action directly targets the revenue stream of tax-defaulting individuals and businesses, aiming to recover owed funds.
- This demonstrates a significant escalation in the state's enforcement capabilities, potentially increasing overall tax compliance.
- Banks and employers are legally obligated to comply with the notices, placing them as intermediaries in tax collection.
- The use of this power tests the practical application and public acceptance of new provisions in the national tax law.
- This aggressive approach may spur a broader review of tax obligations by residents and businesses across Lagos.
The LIRS's action marks a decisive step in leveraging new legal frameworks to bolster tax revenue, setting a potential precedent for other states.
Sources: Social Media Reports (X)
