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Adebayo: Lagos has made tax payment easier for corporate bodies, individuals

Mr. Ayodele Adebayo, Director, Personal Income Tax, (PIT), Lagos Internal Revenue Service (LIRS), in this interview with Sunday Ojeme, speaks on the need for individuals and corporate organisations to meet the January and March deadlines for filing tax returns and other issues

Putting things in very clear perspective, who are those that should actually file annual tax returns to the government?

When you talk about tax annual returns, to a large extent, it is a twoway process. It has to do with corporate organisations and individuals. Annual returns means filing of one’s income for individual, organisations, total emoluments being paid by that organisation and on behalf of the staff. On a yearly basis, which commences from the beginning of the year, to a certain period of time or the last working day. For individuals, it runs from January 2 for 90 days till March 31.

How then can individuals and organisations file their returns?

As I talk now, people are filing their returns because it is online. We have moved from the days of paper filing of returns to electronic processes and it is something that can be done at home, either by staff of an organisations or consultants. But most people do it from the comfort of their phones. Some do it from the comfort of their laptops. So I am only referring, technically, to the last working day.

If I work in Ogun State but reside in Lagos State am I supposed to pay tax to Lagos State?

What the law says is that…there is what is called Residency Rule. By that it means your tax must be paid where you are resident, and whatever income you have made within that state must also be declared by law, according to Section 41 and the necessary returns rendered to the taxing authority where you are resident.

Again what period are the returns supposed to be filed?

Just as I have said, for individual, January 2, up till 90 days, which is March 31. For corporate organisations, it starts from the beginning of January to the last working day of the month.

What are the penalties for failure to file returns?

Currently, filing of returns has commenced. For corporate organisations that fail to file its returns latest by the end of January, by law, according to PITAM (Personal Income Tax Amendment) Act, would be subjected to a penalty of N500,000.

Do you also have a grace period for defaulters?

Like I said, grace period is there. For instance, the irony of it all is that our people are so fond of doing things at the last minute. As we speak now, from the report I get on a daily basis I have about 5,600 organisations so far, but what are people doing until the last day. Sometimes there are technical issues. But so far, there has not been any technical issue. So the date still stands. January 2nd to end of January while for individuals is January 2 to end of March.

How do you deal with itinerant workers who are not often around?

For itinerant workers, we call them workers that are unsettled; most especially artisans and the likes. They are workers that move from one state to the other. They are very mobile and taxing them has always been an issue. What the law says is that for those period that they have worked in any state and the number of days they have worked should be subject to tax, and those taxes should be paid to the tax authorities in the state.

How do you also deal with expatriates in this regard?

When you talk of expatriates, they are what I will call people from other countries. People who have left their own countries to go and work in another country. Most expatriates sometimes are here on contract. Contract could be two years, contract could be three years and contract could be permanent employment for a given period. So while they are here the taxes on their total emoluments have to be paid to the state where they are resident through the organisation that has engaged them.

The issue of TIN has been made. very popular in recent time, is it possible to use my use my TIN as Payer ID?

For Lagos State we don’t use TIN. Lagos is the first state to have modernised taxation. So TIN is for JTB. Fortunately, a lot of states buy into it but we are still using the Payer ID. Even with your Payer ID and BVN we can generate your TIN for you. Payer ID card is a unique identification number for an individual and it cannot be used by any other person. But the challenge we had with that is that it is only now we are able to put some control measures in place. So your TIN is your unique identification. And part of what we do is that for those with multiple Payer ID, you write to us, we give it to the necessary department in charge of it and they will merge all your Payer ID for you into one. But even at that, if you have multiple it will still bear your name.. but what we observed is that a lot of people, if they go with Abimbola Shodimu today they might go tomorrow and go with Abimbola Shodimu then add another name. That is why part of what we have done is to do what is called validation. How do you validate? We do that with your NIN. We all know that NIN cannot be duplicated. We all know that BVN cannot be duplicated, so once you have your BVN, once you have your NIN we merge it with your Payer ID and it becomes a validated Payer ID, which cannot be changed

Have you had any cases of financial leakage since transforming into electronic mode of collection?

That is not possible because everything is automated. All payments go through a payment platform. It goes through the banks. And part of what we are also trying to do now is improve our processing and also enable us to access a lot of information. What we are also trying to do is a process of bill generation. You can’t just go into the bank to pay, a bill reference number must be generated for you. So it is through that reference number that payment can be made.

It is on record that at the peak of COVID-19 so many organisations were affected. How did this affect returns.?

Let me say that during COVID a lot of measures were put in place. Let me put it this way, that was the year we were able to achieve 100 per cent. Several committees were put up and some were coming to the office skeletally but a lot of people were working online from home. I must commend the management. A lot of resources were deployed. It was not just about giving direction, we had to spend money on resources. We had to provide Internet and data for people. We bought phones so people could communicate with tax payers. So a lot of infrastructures and many things were provided to make sure we were in touch with all the agents, the agencies, individuals, companies we were expecting payments from, and to a large extent it worked out.

Does LIRS have incentives for highly compliant individuals and organisations?

Truthfully, that was in place many years back, but for now we haven’t been able to do that again. But it is something that we are looking at, not only looking at the financial end of it…cause I remember in the days of the former governor it was more of recognition. We are looking at it on how we can also work with organisations that are heavily compliant. But let me also say during COVID that we just talked about a lot of things were put in place, concessions were given to those organisations, individuals that spent money on COVID and audit was carried out and for those organisations that were owing we also gave them concessions. Certain measures were taken to support those organisations.

How do you handle case of nonremittance by employers after deductions of their staff.

We have a whistleblowing mechanism and if you go to our website you see it there. For it to have substance, we believe it is not proper it should be done by LIRS. So we have engaged a world class consultant to be in charge. So all the whistleblowing mechanism runs through them. I must say we have had a lot of people coming to challenge their organisations they work for. Let me say we have been able to help a lot of people. Part of what we do is we write the organisations, invite them and let them know that the remittances have not been adequate and we want them to come and state their own positions. In the course of that some will tell us they are sorry and that they would make amends. They have to pay it and in addition to that they also pay the penalty because it is money that is due to the state. So they suffer penalty and also suffer interest. And for such organisations they won’t want to do that again. So if you are a victim of such feel free to report.

Has there been any case of imprisonment?

No. There is no case of imprisonment

How about permanent closure of the premises?

No. If you close the company, a lot of life will be at stake and let me tell you what the law says. Part of what the law says is that if you are given certain penalty and you fail to pay, what the law says is that you will pay whatever is owed from the preceding year as a penalty in addition to what you owe. For me that’s OK. If you close the organisation, it will affect the GDP of the state because what are you going to benefit but by law if they fail, we prosecute them and they can go to jail but we would not want to go through that route. If you go through that route, we know our legal system, it will go through ages. Even if you are able to get a judgement there can be an appeal, if you get an appeal judgement in your favour there will be a Supreme Court, and I can tell you that such judgement could last for donkey’s years. Part of what the Federal Government and JTB have dine is to set up Tax Appeal Tribunal to resolve tax disputes and the rest of it, and it’s been helpful.

How can tax payers contact LIRS?

Very easy. We have what we call Contact Centre. We have tye help desk. Of you go into our Internet you see it there. A you need is just go into the Internet on your Google, just type etax.netlirs it will give you everything then you check the unit you want to contact.

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