Tax harmonisation: FIRS signs MoU with LIRS for joint tax operations and audit

The Federal Inland Revenue Service (FIRS) yesterday signed a Memorandum of Understanding (MoU) with the Lagos Internal Revenue Service (LIRS) where the two tax authorities would collaborate on joint tax audit, investigation and automatic exchange of information.

The MoU signing ceremony which took place at the State House, Marina, Lagos State, Monday was executed by the Executive Chairman, FIRS, Mr. Muhammad Nami, and the Executive Chairman, LIRS, Mr. Ayodele Subair, and was witnessed by the Honorable Minister of State, Budget and National Planning, Prince Clem Agba as well as the Lagos State Governor, Mr. Babajide Sanwo-Olu.

(L-R) Executive Chairman of the Lagos State Internal Revenue Service, Ayodele Subair and Executive Chairman, FIRS, Muhammad Nami during the signing of Memorandum of Understanding (MoU) between Federal Inland Revenue Service (FIRS) and Lagos State Internal Revenue Service, on collaboration on Exchange of Information and implementation of Joint Tax Audit and Investigation Exercise, at the State House, Marina, Lagos State. 6th February 2023.

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, the FIRS Executive Chairman noted that the cooperation would enable the two authorities to work as a team to achieve these objectives.

We will carry out joint audit and investigation as a team

“We will carry out joint audit and investigation 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 presumptive tax regime as far as issues of tax administration is 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.

Another key issue I want to emphasize is 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,” the FIRS boss stated.

In his message to the people of Lagos, Mr. Nami stated 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.”

Mr. Nami explained that without funds received by the government through taxes, governments all over the globe would not be able to provide critical infrastructures such as roads, hospitals, internationally rated airports, schools and be able to cater for security and safety of their citizens.

He stated 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.”

Lagos State would earn more revenue from taxes,

The Lagos State Governor, Mr. Babjide Sanwo-Olu in his remarks stated 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 percent was unimpressive and unacceptable, stating that other nationals within the Sub-Saharan region are doing better.

“Other nations even within the Sub-Sahara region are doing between 14 to 15 percent. 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.”

Mr. Sanwo-Olu noted that with this collaboration, the State was on track to rise above its N1.7 trillion to within the region of four to five trillion Naira.

The Honorable Minister of State, Budget and National Planning, Prince Clem Agba commended the two tax authorities for this landmark agreement, and appealed to other states to follow suit.