The Lagos State Internal Revenue Service (LIRS) has reiterated that every resident of Lagos State is required to file an annual tax return, stressing that the process is compulsory regardless of whether the individual owes tax or not.
The Special Adviser to the Executive Chairman of LIRS, Abideen Akande, explained that the filing requirement is based on Nigeria’s self-assessment tax system, which requires individuals to voluntarily declare their income for a specific period. According to him, the process allows the tax authority to determine how much residents earned in the previous year and how much tax has already been paid.
Akande noted that the assessment period is now aligned with the calendar year, covering income earned from January to December. He explained that while employers submit their annual tax returns between January 1 and January 31, individuals are required to disclose income earned in the preceding year within the January 1 to March 31 filing window.
He said the obligation is backed not only by statutory provisions but also by the Constitution, highlighting the importance of tax compliance in an organised society. Under the self-assessment system, individuals declare their income, including taxes already deducted at source, and pay any outstanding balance if necessary.
According to him, taxpayers who cannot immediately settle their liabilities can approach the tax authority to request a structured payment plan. However, he warned that attempts to evade tax payments could lead to enforcement actions under existing laws.
Akande clarified that the filing requirement applies to all residents and is not targeted at any specific group. Even individuals whose income falls below the taxable threshold must still file returns to disclose their earnings.
For instance, he explained that someone who earned less than N840,000 in a year may not be liable to pay tax because the amount falls below the taxable threshold. However, the person is still required to declare the income to the government.
To simplify compliance, the LIRS has digitised the filing process. Akande said the service began introducing electronic filing around 2017 and later adopted a hybrid system before fully transitioning to a digital platform after the COVID-19 pandemic.
He explained that residents can now file their returns online through the LIRS e-tax portal, where the system guides users through the process of declaring income, expenses and taxes already deducted at source.
The filing process, he said, also allows taxpayers to claim statutory reliefs provided under the law. These include deductions for pension contributions, health insurance, National Housing Fund contributions, mortgage interest payments and life insurance premiums.
However, he noted that taxpayers cannot claim both mortgage interest relief and rent relief at the same time. Under the current law, rent relief is capped at N500,000 or 20 per cent of gross income, whichever is lower.
Akande added that individuals are required to disclose all sources of income earned in the previous year, including salaries, business earnings, rental income and investment returns such as dividends. Although dividends are usually taxed at source and not taxed again, they must still be declared.
He explained that this comprehensive reporting helps the government understand the scale of economic activities within the state and contributes to measuring the Gross Domestic Product of Lagos.
The LIRS official advised residents not to wait until the last minute before filing their returns, noting that the filing window runs from January 1 to March 31 each year.
He also clarified that taxpayers are assessed only on income actually received within the relevant period. For example, if an employee was paid for only part of the year due to delayed salaries, only the income received during that period would be declared.
Akande further dismissed concerns about double taxation where employers have already deducted tax from salaries. He explained that individuals are still required to file their returns to declare other sources of income and allow tax authorities to reconcile records.
Addressing fears of multiple taxation, he said data from LIRS showed that under the new tax regime, a large proportion of taxpayers would either pay less tax or none at all.
According to him, about 54.7 per cent of taxpayers are expected to pay zero tax, while 43.7 per cent will pay less than before. Only about 1.6 per cent will pay more under the new system.
He said the reform was designed to ease the financial burden on low-income earners and allow households retain more money for essential needs such as food, healthcare and education.
Akande also encouraged individuals in the informal sector to file their returns, noting that the process has been simplified for them.
He warned that taxpayers who fail to file may be subjected to presumptive tax assessments, which could result in higher liabilities than if they had filed voluntarily.
For example, a taxpayer who declares a turnover of N3 million may end up paying no tax if their actual income falls below the taxable threshold. However, someone with the same turnover who refuses to file could be assessed a presumptive tax of one per cent, amounting to N30,000.
He warned that failure to file tax returns attracts penalties under the law. A defaulter is liable to an administrative penalty of N100,000 for the first month of default and N50,000 for each subsequent month until compliance is achieved.
Akande urged residents to comply with the filing requirement before the March 31 deadline to avoid penalties and ensure proper documentation of their income.
