LIRS eye 100% annual tax returns in 2025 – Akande

On this interview with OLUWAKEMI ABIMBOLA, the Particular Adviser to the Chairman of Lagos State Inner Income Service, Abideen Akande, sheds mild on the progress and challenges of tax compliance amongst companies within the state. With over 30,000 energetic PAYE operators submitting their annual tax returns, LIRS is pushing for full compliance earlier than the January 31, 2025, deadline. Excerpts:

you talked about that the LIRS has been gaining traction within the space of company filings. There are about 40,000 energetic PAYE operators in Lagos. What’s the stage of compliance?

We have now seen over 30,000 of them submitting, so we’re virtually 80 per cent in compliance with final yr’s document. You perceive? So, if in case you have that, it provides you some measure of consolation. We don’t need any drop in that. We wish to transfer near 100 per cent as a lot as doable. The reality of the matter is that it’s a authorized requirement. So, in the event you fall in need of it, there are penalties. The penalties might not be one thing substantial, as a result of in the event you’re a company physique, the penalty is just N500,000, however if you’re a person that may be a sole proprietorship or an enterprise, and that’s the person who’s not the company entity, sure, the quantity is simply N50,000, however the important thing factor there’s it’s not concerning the penalty itself. It’s extra about the truth that the picture of your enterprise is at stake as a result of it means you aren’t compliant.

So, it’s additionally a destructive for you when it comes to possibly good governance at your individual finish as effectively. In order that’s why we’re saying that. Why do you wish to undergo that when you might have made all the pieces straightforward so that you can do?

What you might be submitting, don’t neglect, is simply what you probably did on behalf of the federal government final yr; it’s not your cash; it’s not your cash that you simply remitted.

All of the regulation says is that, as a result of you might have executed that for the federal government, please now current your report, since you are similar to you employed an agent to take care of your rented properties. After the particular person has collected and has given you the cash. However at the least on the finish of the yr, they may nonetheless provide you with a report that claims, ‘I collected from Mister A, Mister B, and Mister C, and I’ve taken my very own fee.’ Within the case of the agent, all they needed to do was report, ‘I had 15 staff final yr; these are their names, and these are their tax identification numbers. That is how a lot I paid them as their wage. That is how a lot I deducted on behalf of the federal government from their wage. ‘

In fact, he’ll present the quantity that he has remitted to the federal government. Then he may even report on that. That is the receipt that I bought from you, and that is how a lot I’ve paid you, so my account is okay. However don’t neglect that he was accumulating the tax on behalf of the federal government. He isn’t a tax authority, so he doesn’t have a closing say on how a lot, as a result of he isn’t a tax man; he’s simply making an attempt to interpret the regulation the way in which she or he understands it. So, it’s a tax authority that may undergo the books and say, finally, that what you might have executed is right, or what now we have executed shouldn’t be right, or you might have overcharged Mister A in order that Mister A will get a tax refund, or you might have under-taxed Mister B, in order that Mister B should go and search for the cash and provides it to us.

Don’t neglect, once you speak of employers of labour, it isn’t simply solely staff, as a result of in addition they make use of different people who find themselves not their staff, like they make use of consultants, legal professionals, and what have you ever. And so they pay these cash charges to them as effectively. However in paying charges to them, there’s additionally the aspect of tax, the withholding tax, that they should cost. So, in addition they give that report, saying, ‘We employed this lawyer or that marketing consultant, that auditor, in 2024, and I paid that particular person N100, and your withholding tax guidelines say I ought to take away N5. That N5 I’ve eliminated, and that is the document of it.’ So these are the issues that they’re purported to undergo us.

After we are doing the one for the workers as effectively. That one, often you could want to use what we name some reliefs or allowances; if the particular person is subscribed to a pension scheme, you give some allowances. If they’ve subscribed to nationwide medical health insurance, if she or he has subscribed to what you name life insurance coverage. You possibly can have given all these reliefs, however as a result of you aren’t the ultimate tax authority, it’s essential current all that information to us. The information that you simply current to us now, between the top of January and the top of March, don’t neglect that Mister A, who you might have taken tax from and have granted some reduction, additionally has an obligation to file earlier than the thirty first of March. So, I’ll now say that I collected this a lot from you, my employer, as my wage, and you’ve got deducted this a lot from me. So, once you try this, the tax authority will now use your individual to confirm claims made by your employers. That’s the objective of all this tax submitting.

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

Sure, that’s what I inform folks. Tax is so simple as you wish to make it. I wasn’t a tax particular person as I labored within the financial institution. And once I was there, I by no means bothered. I simply had an concept of what my internet pay was. So, if I’ve a variation of plus or minus 5 per cent I take it. But when the variation now’s enormous. Then I’ll name the fellows in monetary management, and they’ll clarify it to me.

The tax itself is a burden; it’s a monetary burden. So, all of the issues that we’re doing are simply to scale back the price of compliance, and that’s why now we have deployed ICT amenities, which now we have made obtainable to folks. Our e-tax platform is working completely. They’ll simply go in there. Something that you simply wish to do from registering your self as a taxpayer or as an agent, that’s as an organization that’s using folks, it’s as straightforward as ABC. What you want as a company particular person is to determine your self, and the simplest approach to determine your CAC RC quantity is. As a person, the first id quantity that now we have, generally, is the NIN. Earlier than that, we have been utilizing proxies like BVN, however now NIN is a quantity. As soon as now we have your NIN, we all know who we’re coping with, all of your transactions are apparent and we are able to transfer on from there. So, as soon as now we have executed that, even if in case you have any challenges in shifting ahead in finishing what now we have began, now we have a chatbot on the system with which you’ll be able to work together, and it’ll deal with all of your points.

I’m not social media-savvy. The one social media I take advantage of is WhatsApp; it may be known as social media. However the reality of the matter is that each one our social media handles are working completely: Fb, LinkedIn, X, Instagram, or no matter. Sure, I do know their names; I simply deliberately interact. I’m an ICT buff. I like know-how, however social media, I simply determined to place them to the facet. All these platforms are working. And naturally, the phone traces are additionally working, with which you’ll be able to attain our assist desk anytime, and they’ll attend to you. I do know that our assist desk is working as a result of even throughout COVID-19,. Prior to now, when know-how was this superior, it labored completely for us. We’re good in that space as effectively.

What’s the deadline for companies to file these annual tax returns?

The deadline is thirty first January 2025, to report on issues that occurred from the primary of January 2024 to December 31, 2024.

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

It isn’t unimaginable, however we tried as a lot as doable to discourage it. In order that’s why we’re saying that individuals ought to attempt to not wait until the final week of January as a result of by that point it would simply be crowded. I at all times inform folks. It’s an IT platform. The bandwidth is understood. You perceive. So, there’s a restrict.

It’s like this door. Now, after we are coming, I’m certain three folks can’t enter via this door on the identical time, however one particular person can. However think about that from the morning I opened this door and folks have been coming in, I’m certain by now, we might have had near 1000 folks on this room. However think about if 10 folks wish to are available in and so they wish to come on the identical time; it might be virtually chaotic. So don’t wait until that point. Since you are reporting on what transpired final yr, you must have all of your data prepared. So don’t wait until then, after which, as a result of it’s an IT platform that’s open 24/7, you are able to do it even on Saturday or Sunday. You don’t should be Monday to Friday. You perceive. So, the platform is there, and you are able to do it any time of the day.

Out of your expertise, what are among the frequent errors companies make when submitting their annual returns?

The main downside that we’ve observed is that you simply see, among the operators often don’t totally full the data of their staff. That’s not useful, as a result of, for us, you might be simply an agent. The first taxpayer is the worker, and that particular person ought to get worth for what you might have deducted from her or him. So, in the event that they don’t full all these data, it doesn’t give us ample information to course of info utterly.

Okay, what are the exemptions from the submitting?

Just like the TIN, as within the Tax Identification Quantity. Below the brand new payments which might be being thought-about now, it’s prone to power compliance by offering your Tax Identification Quantity. Almost certainly, there might be some penalty even underneath the withholding tax laws; in the event you don’t put your tax identification quantity, you get surcharged double the speed. So, in the event you paid N100 and the withholding tax price is N5, it is going to be deducted, but when your TIN shouldn’t be there or your Taxpayer ID, then it is going to be N10. That is truly to power folks to truly have their TIN.

Within the subsequent two or three years, I’m not too certain anyone will be capable of do any significant transaction in Nigeria with no tax identification quantity.

May you clarify the distinction between a tax identification quantity and a taxpayer ID?

Perhaps it’s not correct to make use of the phrase legacy, however it was earlier than Nigeria was able to have a uniform tax quantity. Earlier than the world, we’re seen as just one entity. If you happen to depart the shores of Nigeria at this time, you’ll need to earlier than you are able to do any transaction in any of these different nations, it’s essential present your Tax Identification Quantity. So, earlier than Nigeria was not prepared, Lagos went forward to do its taxpayer ID. Ultimately, it is going to be a legacy quantity that might be operating within the background. You perceive that what’s on the forefront would be the Tax Identification Quantity that’s issued by the Joint Tax Board. That would be the main quantity for everyone on this nation, which you need to use wherever on this planet.

Sure, in Lagos, we’ll nonetheless subject, after we go on our platform, we subject you the taxpayer ID, however robotically, our system can generate the JTB TIN. Bear in mind when the banks transitioned to 10-digit account numbers? As of at this time, I can inform you might have your 10-digit quantity for the financial institution, however beneath that, your previous account quantity continues to be operating. Sure, it’s nonetheless operating. So, that’s the way it works: your Payer ID will nonetheless run within the background, whereas the TIN now sits on high of that. The Payer ID holds your data from the previous years.

How can one get the taxpayer ID?

It is so simple as ABC: go to our E-tax platform; when you log in, key in your NIN and different particulars, and the NIN might be used to validate all the knowledge you might have given. As soon as it’s validated, then the system will subject your taxpayer ID. The subsequent time you wish to log in, you log in together with your Tax Payer ID robotically. Additionally, I’m certain they’ll generate the TIN for you. It can save you it in your telephone and be capable of entry it wherever.

I’m certain the bankers will quickly be sending letters to folks to return and validate their Tax Identification Numbers. I’m telling you this as a result of the regulation could be very clear. The Joint Tax Regulation was signed final yr by the minister and have become operational this yr. You’ve got a deposit within the financial institution, and you might be entitled to curiosity cost. That curiosity cost is topic to withholding tax. But when I don’t have your TIN, as an alternative of charging you at x, I’ll cost you at 2x. I’m certain that they are going to be reaching out via telephone or no matter to say, ‘Please submit your TIN in the event you don’t wish to be surcharged double the speed. So, it’s one thing that may catch up.

Contemplating the problem of economic inclusion that our regulators have been hammering on, do you assume this new regulation with the WHT won’t make folks keep away from the banks and hold their funds at dwelling to keep away from paying taxes?

You’re already paying the tax anyway as a result of you might have a deposit there. Whether or not you provide your TIN or not, you might be already paying. When the financial institution is paying you curiosity that your deposit has earned, robotically, they might take what they need to have taken. However ideally, these are the issues they’ll mixture collectively and share with you in order that if you end up submitting your returns as effectively, you may embrace them. You may also inform the federal government that you’re a taxpayer. ‘I’m a taxpayer, so I must know the way you might be spending my cash,’ and once they ask how a lot you might have paid, you may say, ‘See, the financial institution deducted this quantity from my account as taxes.’ That’s why, in the event you see the financial institution statements from banks which might be outdoors our jurisdiction on a quarterly foundation, they may absolutely advise you of the sum of money they’ve deducted as tax for you, which they’ve remitted to their tax authority.

The requirement shouldn’t be new. So, the monetary inclusion that now we have won’t be impeded; if something in any respect, it is going to be accelerated. You’ve got been maintaining your cash within the financial institution it by no means occurred to you that you’ve got been paying taxes however now, you’re going to get a notification that you’ve got been paying taxes. So, it provides you a way that you’re a good citizen of this nation. I at all times say that tax is the one factor that confirms your membership or your citizenship wherever you end up as a result of it’s like that’s your membership price that you’re paying to the federal government.

Speaking about particular person submitting, which is completely different from company submitting, proper? How does it work?

People have an obligation to file their tax returns, and so they don’t have to attend until March. The person who already is aware of how a lot he earned from January 2024 to December 24, nothing stops her or him from submitting now. You possibly can file now.

Taxpayers could require substantial help from LIRS, regardless that you might have talked about that the web site, the e-tax platform, could be very straightforward to make use of. So how can companies attain out to LIRs on this?

Now, I’ve stated this earlier than. For the comfort of everybody, now we have adopted ICT, however the reality of the matter is that not all people is ICT-savvy. So, the spectrum begins from zero to 100. There are people who find themselves at zero; they only don’t know something about ICT. We have now factored that into our processes. And there are some people who find themselves halfway, and there are some individuals who don’t want our help. They’re good.

They will use the chatbot that now we have on the system; since you understand how to make use of it, simply ask the query, and it’ll inform you what to do. You may also name our numbers. We have now brokers and workers members that may attend to you. If they’ll’t clear up the issue, they may take your particulars, as a result of it’s being recorded, they may escalate it, and they’re sure by our service dedication to get again to you inside 24 to 48 hours max.

Then some folks could have the talents however don’t have the gear or the infrastructure. So, in each one in every of our places of work, now we have a devoted Assist Desk, and it’s at zero price.

I wish to emphasise that it’s at no price to the taxpayer. You go there, and they’re that can assist you construction your report, assist you file it, and you then enroll your self. They are going to take pointless precautions. There are some needed issues that it’s essential signal to point out that you’re the one who stated they need to add these data for you. Apart from that, for a few of our taxpayers or tax brokers, now we have devoted account officers or relationship managers who liaise instantly, one-on-one, with them.

That service is to the highest PAYE operators as a result of they supply considerably all that the state is utilizing for all of the issues that individuals see. So, they want particular consideration. However for others as effectively, all these amenities are there. And if in case you have any challenges, get via to our assist desk after which the decision centre. All this stuff are put in place only for the comfort of the taxpayer.

Are you able to recall situations the place among the folks manning the assistance desks demanded cash from taxpayers for help?

Whether it is escalated, the particular person might be dismissed. Whether it is executed and the taxpayer reviews it and it’s confirmed, it’s a dismissal. The rule could be very easy. You’re paid as an worker to help taxpayers to conform. And it’s clearly said that’s what you might have been paid to do. You gather your individual wage each month. So, in the event you do it, ???????