The Lagos State Government has unveiled plans to intensify tax enforcement by recovering unpaid taxes directly from the bank accounts of defaulters and through third parties linked to them, including employers, tenants, debtors and business associates.
The move was disclosed in a public notice issued by the Lagos State Internal Revenue Service (LIRS) on the “Power of Substitution pursuant to Section 60 of the Nigeria Tax Administration Act, 2025”.
The notice, dated January 21, 2026, was signed by the Executive Chairman of LIRS, Ayodele Subair.
In the notice, the revenue service said it was informing “the general public, particularly employers, financial institutions, business operators and tax agents, of the provisions of Section 60 of the Nigeria Tax Administration Act, 2025 (NTAA 2025) relating to the Power of Substitution vested in the relevant tax authority.”
LIRS explained that the provision “empowers the Lagos State Internal Revenue Service to direct any person holding money on behalf of, or owing money to, a taxpayer who has failed to pay an established final tax liability when due, to remit such money to the Service in settlement (or partial settlement) of the outstanding tax.”
According to the agency, the substitution power is “a lawful collection mechanism designed to ensure efficient recovery of unpaid taxes, including Personal Income Tax (PIT), Capital Gains Tax (CGT), Stamp Duties and Withholding Tax (WHT) administered by LIRS.”
It warned that where a taxpayer “fails, neglects or refuses to settle any established outstanding tax liability when due,” the service may activate Section 60 of the Act to recover the funds through third parties connected to the taxpayer.
Those who may be required to remit such payments include “banks and other financial institutions,” “employers,” “tenants, debtors, or customers of the taxpayer,” “agents, business partners, and any person holding money on behalf of the taxpayer,” as well as “any person owing money to the taxpayer, whether presently due or accruing.”
LIRS stated that “once a substitution notice is issued, the person served is statutorily required to remit to LIRS the amount specified in the notice from funds belonging to, or payable to, the defaulting taxpayer,” adding that “the tax liability is deemed paid to the extent of the remittance made pursuant to the substitution.”
The service cautioned that “failure to comply with such a directive constitutes an offence under the Act.”
Specifically addressing financial institutions, LIRS said banks are required, upon receiving a substitution notice, to “remit the stated amount to LIRS without delay” and “provide confirmation of compliance through the LIRS e-Tax platform.”
Banks are also expected to “report the taxpayer’s available balances and any encumbrances as may be requested.”
The agency further warned that it “reserves the right to apply the maximum penalties or seek criminal prosecution as prescribed by the Act, in cases of deliberate evasion, fraud, or persistent non-compliance.”
On enforcement measures, LIRS said affected taxpayers would be notified of penalties “through formal notice of assessment, electronic communication, or any other authorized means under the Act.” It added that failure to comply could lead to actions such as “garnishment of bank accounts,” “distrain action,” “enforcement of liens,” and “prosecution where applicable.”
Despite the tougher stance, the revenue service noted that taxpayers retain the right to “request clarification on imposed penalties,” “apply for review or objection within the statutory timelines,” “seek Advance Rulings on compliance obligations,” and “access dispute resolution processes provided under the Act.”
LIRS urged residents and businesses in Lagos to “review their tax compliance status,” “regularize outstanding obligations,” “file and remit taxes as required by law,” and “engage with LIRS proactively to avoid sanctions.”
(SAHARA REPORTERS)
Post A Comment: