The Lagos State Internal Revenue Service, LIRS, during the week sealed six companies for failure to remit N18.73 million personal income taxes of their workers to the state government. The Assistant Head of Distrain Unit of the LIRS, Mrs Oluwalomona Ekosanmi, disclosed this in Lagos after an enforcement exercise.
Ekosanmi, who led the enforcement team, said that the affected companies had tax liabilities of between 12 months and six years. Ekosanmi urged firms operating in the state to regularly remit personal income taxes of their workers to the service to avoid any embarrassment and disruption that would come with distrain.
“Tax-payment is a civic responsibility of everyone because it is a major source of government’s revenue and also the only means government can provide the basic amenities for its citizens to improve their living standards,” she said. Meanwhile, some of the affected companies complained of unfair treatment from LIRS, saying that the service did not notify them before coming to close their premises.
Ekosanmi, however, said that LIRS usually sent two letters of notice to the defaulting companies before they embarked on the clamp-down exercise. According to her, LIRS sends tax liabilities demand notice and notice of intent to the affected companies as required by the Personal Income Tax Act (Amendment) of 2011.
“Each of the letters that we sent to the companies was received and acknowledged by any of the companies’ staff or the management of the firms. “So, for some of the companies to say that LIRS did not notify them before coming to seal their premises is not an excuse.
“Normally, firms are not even supposed to wait for anybody to remind them of their statutory obligation of remitting taxes to the government of the land where they operate,” she said. The team leader said that the enforcement exercise would continue until tax-payers imbibed the culture of voluntary tax compliance.
The affected companies includes an oil and gas firm, a paint manufacturing firm, an electrical firm and a conglomerate, among others. Meantime, the state’s Internal Revenue Service two weeks ago also shut down seven companies for failing to remit about N58.8 million personal income taxes of workers to government.
Vanguard reliably gathered that the Head of the Distrain Unit of the LIRS, Folasade Coker-Afolayan, announced this in Lagos. Coker-Afolayan, who led the enforcement team, said that the companies were sealed during a state-wide tax enforcement drive. She said that the affected companies’ tax liabilities covered between one and four years.
According to her, the enforcement will continue until companies and workers imbibed the culture of voluntary tax compliance. “Tax evasion is a crime and it is a serious crime to evade tax for so many years. “Tax payment is also a civic responsibility for everyone because that is the only way government can provide the necessary infrastructure for the citizens and also improve their standard of living,” she said.
Coker-Afolayan also urged companies to remit the personal income tax of their workers promptly to avoid closure of their business premises. She said that LIRS usually followed due process by notifying companies severally before shutting down defaulting ones. She also said that a notice of intent had been sent to the affected companies in accordance with the Personal Income Tax Act amendment 2011.
“As to whether they received the notices or not, that is purely an internal matter of the companies,” she said. Coker-Afolayan advised companies operating in the state to remit their taxes promptly and not to wait until government enforced the tax laws. Meanwhile, some of the affected companies accused the state government of not giving them a fair hearing on the alleged tax issues.
They also said that the LIRS enforcement approach was barbaric and inimical to business growth and economic development. They urged the state government to establish a quasi-legal body for effective resolution of the allegations levelled against operating business concerns.
3.5 million evade tax in Lagos
The Lagos State Government said about 3.5 million of its residents were currently guilty of tax evasion, which it said, absolutely violated the country’s 1999 Constitution and other extant legal instruments. The government added that it determined to capture the 3.5 million tax evaders in the state’s tax net while lamenting the continual decline in allocations from the Federal Government and dwindling oil price in the international market.
The Chairman of the Lagos Internal Revenue Service, LIRS, Mr. Olufolarin Ogunsanwo, disclosed this in a statement issued after a meeting with the agency’s staff, stressing the need to capture more people in the state’s tax net so that its internally generated revenue (IGR) could be used to cushion the effect of the shortfall.
He explained that the expanded tax net would enable the government continue to provide corresponding development projects in the state, thereby advocating willful compliance by Lagosians with tax remittances as against tax audit presently in practice.
He described the tax audit system as avoidable, unnecessary and waste of human resources that could be channelled into other areas of growth if tax payers embraced remitting taxes without being compelled.
He pointed out that the state “has eight million taxable Lagosians. But only 4.5 million are so far captured in the tax net of the state government, which means about 3.5 million Lagosians are still tax evaders. “We will ensure that those who are yet to be captured in the state’s tax net will be brought in. I can assure you that within the next six months the IGR of the state will have increased proportionately,” Ogunsanwo said.
He said the leadership of LIRS would henceforth leverage on the use of technology to ease the process of revenue collection and also reduce if not eliminate some perceived bottlenecks that could be resolved with the use of technology.
He also urged officials of the revenue agency to always make civility their watchword in the daily discharge of their responsibilities, maintaining that the ethical demand of tax collection “is premised on broadening tax net without causing unnecessary hardship to the tax payers.