The Special Adviser to the Chairman of the Lagos State Internal Revenue Service (LIRS), Abideen Akande, has disclosed why filing an annual tax return is compulsory for every Lagos resident.
He also revealed penalties for defaulters and the intent of the tax reform.
In an interview with Helen Oji for Guardian Nigeria, Akande said: “Filing of returns allows the tax authority to know how much you have earned in the preceding year and how much tax, if any, you have already paid in advance. Nigeria operates a self-assessment tax system. This means that you voluntarily declare your income for a defined period.”
He continued: “Filing of returns by individuals involves disclosing the income you earned in the previous year because that year has already ended.
“The interesting thing is that people often talk about constitutional rights, but shy away from constitutional obligations.
“Unlike the filing by employers that is done in January, which is predicated only on statutory provisions, filing by individuals is actually predicated on both the Constitution and the law. That tells you how important it is. In any organised society, you must have a tax system. As the saying goes, ‘aside from taxes, the only other certainties are death and change.’ So, tax compliance is inevitable.
“Here in Nigeria, it is based on self-assessment. You declare how much you earned. If you have already paid some tax in the preceding year, or if tax was deducted from your income at source, you disclose it to the tax authorities. Then, of your own volition, you may say: ‘This is how much I earned, and this is how much has already been deducted from me.’ If you still owe the State government, say, N5 or N10, you go ahead and pay it.
“If you cannot pay immediately, you can approach the tax authorities and request a payment plan. For instance, you may say: ‘Please allow me to pay N3 now, N3 next month, and N4 later.’ If the tax authority is satisfied that you are genuinely facing financial challenges, it may approve the arrangement. But if it believes you are simply trying to evade payment, it may decline your request and proceed to recover the money, using the provisions available under the law.”
He added that filing tax return is “not optional” rather it is a must.
He said: “Even if by your own assessment, you believe you do not owe the government any money, you are still expected to file. For example, you may indicate that all the income you earned last year was below N840,000, which is around the annual equivalent of the minimum wage threshold. In that case, you would automatically not be liable to pay tax.
“However, you must still declare that you earned N800,000 from different sources.
The government has set a threshold below which it does not tax the poor; your tax liability in that situation would be zero, but you still need to inform the government that you earned that amount of money you claimed.”
On where to file tax returns, he said: “You simply go to the e-tax platform at e-tax.lirs.net. You input your details, and the system guides you to the filing page. It shows where to enter your income, your expenses, and any taxes that may have been withheld from you. Remember that the form called ‘Form A’ is a declaration of income and claim for reliefs.
“Now, regarding what we are filing: it is the income of the preceding year. Since we are in 2026, you will file income earned from January 1, 2025, to December 31, 2025. You must disclose all income sources: salary, side businesses, rent and even investment income like dividends.
“Dividends are usually taxed at source, so the tax deducted is final. For instance, if you received N100,000 in dividends from BUA Cement, the company would already have deducted the applicable tax before payment. You still declare the income, but it will not be taxed again.
“This helps the tax authority to understand the full size of economic activity in the state, which also contributes to measuring the Gross Domestic Product (GDP) of Lagos State, including household economic activities.”
He added that “the filing window opens from January 1 and the deadline is March 31.”
As for the penalty for non-complainace, he said, “Under the new law, a taxable person who fails or refuses to file returns, or knowingly submits incomplete or inaccurate returns, is liable to an administrative penalty. The penalty is N100,000 for the first month of default and N50,000 for each subsequent month until compliance is achieved. N100,000 can buy your internet data for an entire year. So, it makes more sense to comply than to pay such penalties.
