June 8, 2023

FG, Lagos join forces to drive tax compliance

tax increment

By Cynthia Alo

The Federal Inland Revenue Service (FIRS) and the Lagos Internal Revenue Service (LIRS) have signed a Memorandum of Understanding (MoU) to establish a Joint FIRS and LIRS Audit and Investigation Team, AIT, aimed at driving exchange of information between both agencies.

In the communique signed by Ayodele Subair, Executive Chairman, LIRS, and Muhammad Nami, Executive Chairman, FIRS yesterday, the general public, taxpayers and tax practitioners are charged to provide full support and cooperation to both agencies in the execution of their tax collection mandate.

According to the MoU, the overall objective of the Joint Tax Audit would be to improve tax administration by reducing tax compliance cost thereby enabling ease of doing business in the country.

Speaking on the MoU, Subair, said while the importance of the agreement was to foster greater collaboration between the two agencies, “There is no reason to debate the above as it has been established that tax compliance and good governance are expected to co-exist as the undividable social contract that binds citizens and governments anywhere in the world. Therefore, citizens and governments are expected to fulfil their end of the bargain in achieving a balance.”

Also speaking on the MoU, Nami said, “the cooperation would enable the two authorities to work as a team in sharing relevant information that would assist both parties in their tax administration and enforcement roles as it would also provide capacity building between both tax authorities.

“We will carry out a joint audit and investigation as a team, we will also conduct an 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.”

The communique says while the notice of this MoU was issued for the information and guidance of the general public, taxpayers and tax practitioners in line with the memorandum of understanding, the collaboration between both Agencies in the area of exchange of information will ensure efficiency, accurate assessments and increased revenue for funding of Government expenditure.

FIRS and LIRS, the communique says further, are leveraging on their existing distinct competencies in tax administration to collaborate in the areas of exchange of information, harmonization of an integrated tax system and joint tax audit or investigation exercise (where necessary) in carrying out their respective mandates for the purpose of optimizing tax revenue to the Federal Government and the Lagos State Government respectively.

The collaboration is expected to improve tax administration with a view to enhancing tax revenue generation, creation of a robust database and improve on the country’s tax-to-GDP ratio.

The parties (FIRS and LIRS) are expected to establish a Joint Audit or Investigation Team to be known as the FIRS/LSBIR JAIT to be referred to as “JAIT”, whose membership will be determined by both parties to conduct a joint audit or investigation exercise which shall be concluded timeously.